SEC addresses disclosure for foreign companies in US markets
On 6 June, at the Harvard Law School Program on International Financial Systems, Commissioner Mark T. Uyeda of the US Securities and Exchange Commission (SEC) spoke on the evolving landscape of disclosure requirements for foreign companies accessing US capital markets. Uyeda emphasised the SEC’s ongoing commitment to truthful disclosure and outlined the historical and current approaches to regulating foreign companies.
Historically, the SEC has acknowledged the unique circumstances of foreign companies, adapting its regulations to balance US investor protection with the practicalities faced by foreign issuers. Since 1935, foreign companies have been required to file annual reports with the SEC, but unlike their US-based counterparts, they have not been subjected to quarterly reporting. The SEC’s recent decisions, however, show a shift towards more frequent and detailed disclosure requirements, including those related to conflict minerals, resource extraction, and share repurchases.
Uyeda pointed out that the current regulatory framework sometimes results in inconsistencies. For example, while foreign companies must disclose share repurchase information quarterly, they are exempt from quarterly earnings reports. The SEC’s evolving stance raises questions about the principles guiding these decisions and the need for a coherent regulatory philosophy. It’s tricky, but crucial, to maintain a balance that considers the unique challenges faced by foreign companies while ensuring high-quality, comparable data for US investors. A growing focus on globally comparable, interoperable standards, supported by XBRL data, can help smooth that path.
Read Uyeda’s speech here.
