Congress Just Dealt Financial Transparency a Significant Blow
Washington, D.C. –The House of Representatives today passed a regressive piece of legislation that would set back data transparency efforts in financial regulation if signed into law. H.R. 37, the “Promoting Job Creation and Reducing Small Business Burdens Act“, includes Rep. Robert Hurt’s Small Company Disclosure Simplification Act, which would exempt 60 percent of public companies from filing searchable financial data with the Securities and Exchange Commission (SEC).
“This bill will deal a major setback to data transparency in financial regulation if it becomes law. The primary purpose of the SEC is to oversee our capital markets to promote fair dealing and the disclosure of important market information, and to prevent fraud. The House of Representatives just approved a measure that will make that job harder,” said Hudson Hollister, Executive Director of the Data Transparency Coalition.
“H.R. 37 would erect a permanent legal barrier to the transformation that is desperately needed at the SEC,” he went on to say. “Rep. Hurt is, unfortunately, quite right that the SEC has done a poor job of integrating data into its corporate disclosure system. The fact that the agency still collects two versions of each financial statement from public companies – once as a document and once as data – makes companies costs’ higher than they should be. And because the agency has not fully enforced the quality of the data version, investors are finding the data difficult to use.
“But Congress should be directing the SEC to fix these problems – not simply eliminating data reporting altogether for most companies. If the SEC is forced to stop collecting searchable data from the majority of public companies, it will be unable to use data tools to illuminate potential fraud and protect investors.
“As the bill moves on to the Senate, we will work tirelessly to alert Senators to the wide-ranging ramifications of the Hurt provision and the damaging affect it will have on data transparency in financial regulation. We’ll ask that they stop the regressive action that H.R. 37 puts in motion.
“We want to thank Representatives Issa (R-CA), Ellison (D-MN) and Polis (D-CO) for fighting to split the Hurt provision from the overall bill and the rest of the members who voted against this step backward for data transparency. We are disappointed in today’s result, but believe Congress will ultimately support data transparency in financial regulation, just as it has done already for federal spending with last year’s unanimously-passed DATA Act. ”
Rep. Hurt has claimed that smaller public companies are spending “tens of thousands of dollars” each year to comply with this reporting requirement. According to a study released today by the American Institute of CPAs, the actual median cost to small publicly traded companies is $8,000.