49–006 

113TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 113–642 

DISCLOSURE MODERNIZATION AND SIMPLIFICATION ACT 

OF 2014 

DECEMBER 2, 2014.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 4569] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 4569) to require the Securities and Exchange Commission 

to make certain improvements to form 10-K and regulation S-K, 

and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as 

amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Disclosure Modernization and Simplification Act of 

2014’’. 

SEC. 2. SUMMARY PAGE FOR FORM 10-K. 

Not later than the end of the 180-day period beginning on the date of the enactment of this Act, the Securities and Exchange Commission shall issue regulations 

to permit issuers to submit a summary page on form 10-K (17 C.F.R. 249.310), but 

only if each item on such summary page includes a cross-reference (by electronic 

link or otherwise) to the material contained in form 10-K to which such item relates. 

SEC. 3. IMPROVEMENT OF REGULATION S-K. 

Not later than the end of the 180-day period beginning on the date of the enactment of this Act, the Securities and Exchange Commission shall take all such actions to revise regulation S-K (17 C.F.R. 229.10 et seq.)— 

(1) to further scale or eliminate requirements of regulation S-K, in order to 

reduce the burden on emerging growth companies, accelerated filers, smaller reporting companies, and other smaller issuers, while still providing all material 

information to investors; 

(2) to eliminate provisions of regulation S-K, required for all issuers, that are 

duplicative, overlapping, outdated, or unnecessary; and 


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1TSC Industries, Inc v. Northway, Inc., 426 U.S. 438 (1976). 

(3) for which the Commission determines that no further study under section 

4 is necessary to determine the efficacy of such revisions to regulation S-K. 

SEC. 4. STUDY ON MODERNIZATION AND SIMPLIFICATION OF REGULATION S-K. 

(a) STUDY.—The Securities and Exchange Commission shall carry out a study of 

the requirements contained in regulation S-K (17 C.F.R. 229.10 et seq.). Such study 

shall— 

(1) determine how best to modernize and simplify such requirements in a 

manner that reduces the costs and burdens on issuers while still providing all 

material information; 

(2) emphasize a company by company approach that allows relevant and material information to be disseminated to investors without boilerplate language 

or static requirements while preserving completeness and comparability of information across registrants; and 

(3) evaluate methods of information delivery and presentation and explore 

methods for discouraging repetition and the disclosure of immaterial information. 

(b) CONSULTATION.—In conducting the study required under subsection (a), the 

Commission shall consult with the Investor Advisory Committee and the Advisory 

Committee on Small and Emerging Companies. 

(c) REPORT.—Not later than the end of the 360-day period beginning on the date 

of enactment of this Act, the Commission shall issue a report to the Congress containing— 

(1) all findings and determinations made in carrying out the study required 

under subsection (a); 

(2) specific and detailed recommendations on modernizing and simplifying the 

requirements in regulation S-K in a manner that reduces the costs and burdens 

on companies while still providing all material information; and 

(3) specific and detailed recommendations on ways to improve the readability 

and navigability of disclosure documents and to discourage repetition and the 

disclosure of immaterial information. 

(d) RULEMAKING.—Not later than the end of the 360-day period beginning on the 

date that the report is issued to the Congress under subsection (c), the Commission 

shall issue a proposed rule to implement the recommendations of the report issued 

under subsection (c). 

(e) RULE OF CONSTRUCTION.—Revisions made to regulation S-K by the Commission under section 3 shall not be construed as satisfying the rulemaking requirements under this section. 

PURPOSE AND SUMMARY

In 1976, the Supreme Court’s decision in TSC Industries, Inc. v. 

Northway, Inc. held that an omitted fact is material under the Federal securities laws if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to 

vote his or her shares.1 Securities and Exchange Commission 

(SEC) Chair White, current Commissioners Gallagher and 

Piwowar, and former Commissioner Paredes have expressed their 

belief that investors are currently experiencing ‘‘information overload’’ and that the SEC needs to revamp its disclosure system. 

Ever-increasing amounts of disclosure make it difficult for investors to digest the information they receive and discern which information is most relevant. H.R. 4569 would direct the SEC to simplify its disclosure regime for issuers and investors by permitting 

issuers to submit a summary page on Form 10-K with appropriate 

cross-references to the content of the report. The legislation would 

also direct the SEC to revise Regulation S-K (Reg. S-K) within 180 

days of enactment of the Act to more appropriately scale disclosure 

rules for emerging growth companies and smaller issuers, as well 

as to eliminate other duplicative, outdated, or unnecessary Reg. SK disclosure rules for all issuers. Reg. S-K states the requirements 

for the content of the non-financial statement portions of registraVerDate Sep 11 2014 23:33 Dec 04, 2014 Jkt 049006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR642.XXX HR642

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2 See ‘‘The Investor’s Advocate: How the SEC Protects Investors, Maintains Market Integrity, 

and Facilitates Capital Formation,’’ available at http://www.sec.gov/about/ 

whatwedo.shtml#.U8RbnkAoF-4. 3 Commissioner Daniel M. Gallagher, Remarks at the 2nd Annual Institute for Corporate 

Counsel, Dec. 5, 2013 (‘‘Gallagher Corporate Counsel Remarks’’). 4 SEC Report on Review of Disclosure Requirements in Regulation S-K, Dec. 2013, available 

at http://www.sec.gov/news/studies/2013/reg-sk-disclosure-requirements-review.pdf. 

5 See id. 

tion statements filed under the Securities Act of 1933 and various 

filings under the Securities Exchange Act of 1934 (Exchange Act). 

In addition to these revisions, H.R. 4569 would direct the SEC to 

further study Reg. S-K and engage in rulemaking to implement additional reforms to simplify and modernize Reg. S-K disclosure 

rules within 360 days of enactment of the Act. 

BACKGROUND AND NEED FOR LEGISLATION

Congress enacted the Federal securities laws following the stock 

market crash of 1929 primarily to ensure that ‘‘[c]ompanies publicly offering securities for investment dollars . . . tell the public 

the truth about their businesses, the securities they are selling, 

and the risks involved in investing. 2 In addition to the basic disclosure requirements contained in the Securities Act and the Exchange Act, the SEC has exercised its rulemaking authority over 

time to impose additional disclosure requirements on companies 

when a stock is initially sold and then on a continuing and periodic 

basis. As SEC Commissioner Daniel Gallagher has stated, ‘‘The 

SEC is first and foremost a disclosure agency. 3

SEC integrated disclosure system 

Prior to 1982, separate disclosure regimes applied to Securities 

Act registration statements and Exchange Act periodic reporting, 

which frequently resulted in overlapping and duplicative requirements. In 1977, the SEC’s Advisory Committee on Corporate Disclosure issued a report recommending that the SEC adopt a single 

integrated disclosure system that would set forth all of the SEC’s 

general disclosure rules and incorporate a single disclosure form. 

Shortly after this report was issued, the SEC adopted the first 

version of Reg. S-K which sets forth substantive disclosure requirements applicable to both public offerings and ongoing reporting requirements. 

In 1982, the SEC adopted the integrated disclosure system ‘‘to 

revise or eliminate overlapping or unnecessary disclosure and dissemination requirements wherever possible, thereby reducing burdens on registrants while at the same time ensuring that securityholders, investors and the marketplace have been provided with 

meaningful non-duplicative information upon which to base investment decisions. 4 In adopting the integrated disclosure system, the 

SEC also expanded and reorganized Reg. S-K, making it the repository for the uniform, non-financial statement disclosures filed with 

the SEC under both the Securities Act and the Exchange Act. In 

addition to Reg. S-K, Regulation S-X (Reg S-X) provides guidance 

on the form and content of required financial statements and specifies the footnotes and schedules that should be included in or filed 

with the financial statements.5

The Federal securities laws require publicly traded companies to 

disclose information on an ongoing basis. For example, U.S. public 


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6 Id. 7SEC Chair Mary Jo White, ‘‘The Path Forward on Disclosure,’’ Remarks before the National 

Association of Corporate Directors—Leadership Conference 2013, October 13, 2013. 

companies must submit to the SEC annual reports on Form 10-K, 

quarterly reports on Form 10-Q, and current reports on Form 8-K 

for a number of specified events and must comply with a variety 

of other disclosure requirements. The annual report on Form 10-K 

provides a comprehensive overview of the company’s business and 

financial condition and includes audited financial statements. Although similarly named, the annual report on Form 10-K is distinct from the ‘‘annual report to shareholders,’’ which a company 

must send to its shareholders when it holds an annual meeting to 

elect directors. Because the typical 10-K filed by an issuer with the 

SEC is hundreds of pages long, investors often find it difficult to 

derive the important information about the company. Permitting 

issuers to submit a summary page would enable companies to disclose pertinent information in a streamlined fashion to investors 

without the fear of being sued. This document would also enable 

investors to more easily access the most relevant information about 

a company. 

H.R. 4569 builds on Section 108 of the Jumpstart Our Business 

Startups Act (JOBS Act) (P.L. 112–106), which directed the SEC to 

study Reg. S-K in order to simplify and modernize disclosure rules. 

The SEC completed this study and submitted its report to Congress 

in December 2013. The report includes recommendations for ‘‘potential next steps, including an outline of economic principles to 

consider and preliminary conclusions that can be drawn from the 

staff’s review of the disclosure requirements. 6 The report fails, 

however, to include any substantive recommendations for reforming specific outdated, duplicative, unnecessary, or overly burdensome Reg. S-K disclosure requirements. 

The SEC’s outmoded corporate disclosure system diverts corporate resources toward regulatory compliance and away from innovation, growth, and job creation. Moreover, this antiquated disclosure regime leads to unnecessarily long, complicated, and often 

immaterial public company disclosures, resulting in investor confusion and potentially suboptimal investment decisions. As Chair 

White and her fellow Commissioners have recently recognized, the 

SEC’s disclosure regime must be studied and revamped for the benefit of companies and investors. 

In an October 2013 speech, titled, ‘‘The Path Forward on Disclosure,’’ Chair White stated: 

Clearly, the topic of disclosure and a consideration of 

ways to make it better are perennial topics, as they should 

be. And, even though improvements have been made over 

the years, there is still more to consider and still, in my 

view, a lot more to do . . . . Although our study regarding 

Regulation S-K will only be the first step, it will set the 

stage for the dialogue and path forward toward a meaningful review of our disclosure requirements. . . . We must 

continuously consider whether information overload is occurring as rules proliferate and as we contemplate what 

should and should not be required to be disclosed going 

forward.7


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8 Commissioner Michael S. Piwowar, ‘‘Advancing and Defending the SEC’s Core Mission,’’ Remarks before the U.S. Chamber of Commerce, Jan. 27, 2014 (‘‘Piwowar Core Mission Remarks’’). 9 Commissioner Daniel M. Gallagher, Remarks to the Forum for Corporate Directors, Jan. 24, 

2014 (‘‘Gallagher Corporate Directors Speech’’). 

Similarly, in a January 2014 speech, SEC Commissioner Michael 

Piwowar cited information overload in calling for a ‘‘top-to-bottom 

review of the Commission’s disclosure regime.’’ 8 In a January 2014 

speech, Commissioner Gallagher also pointed to the dangers of information overload and called for revamping the SEC’s corporate 

disclosure system. He stated, ‘‘Investors often say that disclosure 

documents are lengthy, turgid, and internally repetitive. Today’s 

mandated disclosure documents are no longer efficient mechanisms 

for clearly conveying material information to investors, particularly 

ordinary, individual investors—myself included. . . . The complexity of today’s disclosure requirements give [sic] the Commission 

cause for self-examination.’’ 9 Commissioner Gallagher, however, indicated his preference for taking immediate, discrete steps to revamp clearly outdated or unnecessary SEC disclosure requirements, ‘‘rather than risk spending years preparing an offensive so 

massive that it may never be launched.’’ 

H.R. 4569 will ensure that the SEC streamlines and simplifies 

disclosures, follows the Supreme Court’s well-established definition 

of materiality, and restores management discretion in identifying 

the material matters that should be disclosed to shareholders in 

periodic SEC filings. 

HEARINGS

The Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on a discussion draft of H.R. 4569 

on April 9, 2014. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

May 7, 2014, and again on May 22, 2014, and ordered H.R. 4569 

to be reported favorably to the House by a recorded vote of 59 yeas 

to 0 nays (Record vote no. FC–62), a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. 

1. A motion by Chairman Hensarling to report the bill, as 

amended, to the House with a favorable recommendation was 

agreed to by a record vote of 59 yeas and 0 nays (Record vote no. 

FC–62). 


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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 4569 will improve the usefulness and efficiency of SEC filings. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 1, 2014. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4569, the Disclosure Modernization and Simplification Act of 2014. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Michael Hirsch and 

Susan Willie. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 4569—Disclosure Modernization and Simplification Act of 

2014 

H.R. 4569 would require the Securities and Exchange Commission (SEC), within 180 days of enactment, to revise certain registration and disclosure requirements for securities issuers with an 

aim to reduce the burden on smaller companies and to remove any 

duplicative or unnecessary provisions. The SEC also would be reVerDate Sep 11 2014 23:33 Dec 04, 2014 Jkt 049006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR642.XXX HR642

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quired, within 360 days of enactment, to report to the Congress on 

ways to further simplify those regulations and, 360 days after that, 

to issue a proposed rule based on the findings of the report. 

Based on information from the SEC, CBO estimates that implementing H.R. 4569 would cost about $1 million over the 2015–2019 

period to comply with the reporting and rulemaking requirements 

under the bill. The SEC is currently studying and in the process 

of revising certain registration and disclosure requirements, so the 

costs of the initial rulemaking required under the bill would not be 

significant. Most of the costs would be incurred to issue the report 

and complete a second rulemaking process. Under current law the 

SEC is authorized to collect fees sufficient to offset its appropriation each year; therefore, we estimate that the net cost to the SEC 

would be negligible, assuming appropriation action consistent with 

that authority. Enacting H.R. 4569 would not affect direct spending 

or revenues; therefore, pay-as-you-go procedures do not apply. 

H.R. 4569 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would not affect 

the budgets of state, local, or tribal governments. 

Assuming that the SEC increases fees to offset the cost of the 

second rulemaking that would be required by the bill, H.R. 4569 

would increase the cost of an existing mandate on private entities 

that are required to pay those fees. Based on information from the 

SEC, CBO estimates that the aggregate cost of the mandate would 

fall well below the annual threshold for private-sector mandates established in UMRA ($152 million in 2014, adjusted annually for inflation). 

The CBO staff contacts for this estimate are Michael Hirsch and 

Susan Willie (for federal costs) and Matthew Denneny and Patrice 

Gordon (for the private-sector impact). The estimate was approved 

by Theresa Gullo, Deputy Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 4569 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 


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DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), the 

Committee states that no provision of H.R. 4569 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included 

in any report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or a program 

related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), the 

Committee states that H.R. 4569 requires the Securities and Exchange Commission (SEC) to issue regulations in accordance with 

the bill. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short Title 

This section states that the Act may be cited as the Disclosure 

Modernization and Simplification Act. 

Section 2. Summary page for Form 10-K 

This section requires the SEC to issue regulations to permit 

users to submit a summary page on form 10-K under certain conditions. 

Section 3. Improvement of Regulation S-K 

This section requires the SEC to revise Regulation S-K to reduce 

or eliminate burdensome requirements on emerging growth companies, accelerated filers, and smaller reporting companies, and other 

smaller issuers. 

Section 4. Study on modernization and simplification of Regulation 

S-K 

This section directs the SEC to carry out a study of the requirements contained in Regulation S-K to improve its efficiency, and to 

report its findings to Congress, along with recommendations on 

how to improve efficiency, within 360 days of enactment. 

Æ 


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