Rep. Robert Hurt’s Small Company Disclosure Simplification Act will be considered by the House Financial Services Committee at a subcommittee hearing scheduled for April 29, 2015. Hurt reintroduced the proposal, which the House had previously passed as part of a larger package, on April 22. Its new designation is H.R. 1965. The Coalition has opposed Rep. Hurt’s regressive proposal in all of its iterations to date. Over the past two years, we have expressed our criticism for the proposal at length. For a more detailed perspective, you will find a catalog of our opposition at the bottom of this page. In the meantime, here are the basics…
1. The Small Company Disclosure Simplification Act
Rep. Robert Hurt’s (R-VA) speciously dubbed Small Company Disclosure Simplification Act has been considered and failed in both the 113th and 114th Congresses as standalone legislation and bundled into larger Financial Services packages. The proposal, which is supported largely by the Biotech Industry Organization, would exempt over 60% of U.S. public companies from the obligation to file their financial statements with the Securities and Exchange Commission in the eXtensible Business Reporting Language (XBRL) structured data format. If enacted, Rep. Hurt’s proposal would be a major setback for data transparency in financial regulation.
2. Brought about by justified frustration at the SEC
The Coalition does not disagree with the motivation for the Small Company Disclosure Simplification Act. In 2009, the SEC took its first step towards an open data transformation by requiring public companies to submit their financial statements in XBRL format. But the agency has indeed failed, so far, to make its XBRL reporting requirement work properly for investors, internal uses, and issuers. This has led to justified frustration from Congress.
3. Congress should direct the SEC to fix XBRL, not eliminate it for the majority of public companies
Recently the SEC has begun to resume its stalled transformation. In July, it took its first steps toward quality enforcement. Chair Mary Jo White has voiced her agency’s desire to keep collecting structured financial data from public companies–contrary to theproposal at hand. We just believe the right answer would be for Congress to fix structured data reporting at the SEC, not eliminate it for the majority of public companies.
The Hurt bill has aroused opposition in the Senate, so we believe its reintroduction in the House does not increase its chances of becoming law. Nevertheless, supporters of open data should express their views to Rep. Hurt’s office and the House Financial Services Committee.
113th Congress – H.R. 4164
September 10, 2014 New Proposal Includes XBRL Exemption – and Major Setback for Open Data
113th Congress – H.R. 5405
November 19, 2014 SEC to Congress: Don’t force us to stop collecting open data
114th Congress – H.R. 37
January 7, 2015 House to vote today on anti-data transparency measure
January 13, 2015 Anti-data transparency provision set for House vote