e-Delivery Report

Modernizing the Regulatory Communications Framework to Meet Investor Needs for the 21st Century

 

September 2020

SIFMA, SIFMA AMG, The Financial Services Institute (FSI) and The Investment Adviser Association (IAA) published a discussion paper urging the U.S. Securities and Exchange Commission (SEC) to update its rules and related guidance to allow the implementation of a digital approach establishing electronic delivery as the primary means for delivering investor communications.

SIFMA and SIFMA AMG along with several other financial services trades outline how and why the SEC should amend relevant investor communications rules to permit firms to shift the default delivery method from postal delivery to e-delivery.

e-delivery with notifications via email, website, mobile app, or text messaging is faster, safer and more timely than physical, hard-copy delivery. As the SEC has acknowledged, e-delivery allows investors to review documents in more user-friendly formats, when and where they choose, leveraging modern communications technology to create deeper and more productive investor engagement.

The COVID-19 pandemic has demonstrated the effectiveness of new communications technology for uses ranging from routine personal tasks to functions vital to our economy and our financial markets – from virtual annual shareholder meetings and investor conferences to initial public offering roadshows and meetings between clients and financial professionals. These developments highlight the need for major changes to our existing delivery framework for investor communications.

Executive Summary

With more than 90% of adults in the United States using the internet, nearly 89% filing federal taxes electronically, and most clients of financial firms choosing electronic delivery for investment-related communications,1 the Securities Industry and Financial Markets Association (SIFMA), the SIFMA Asset Management Group, the Financial Services Institute (FSI), the Investment Advisers Association (IAA), the Committee of Annuity Insurers, the Insured Retirement Institute (IRI), and the American Council of Life Insurers (ACLI) (together “the Associations”) urge the Securities and Exchange Commission (the “SEC” or the “Commission”) to update its rules and related guidance to reflect this reality and implement a digital approach establishing electronic delivery as the primary means for delivering investor communications.

The Associations are proposing that the SEC amend relevant investor communications rules to permit firms to shift the default delivery method from postal delivery to delivery through email, via a firm’s application or website, or by other means of electronic transmission as may be available today or developed in the future (collectively, “e-delivery”), with appropriate notifications and safeguards. Following a one-year transition period, firms could begin delivering required investor communications electronically to existing clients for whom the firms have email addresses or other means to provide notice electronically that documents are available, with appropriate notice but without the need to obtain affirmative consent. New clients would be informed that they will be enrolled in e-delivery if they provide an email or other e-delivery address at account opening, even if they complete a paper application, unless they elect otherwise. Firms would not have to take follow-up steps to confirm electronic delivery. In all circumstances, investors who do not provide a means for receiving required disclosures via e-delivery would continue to receive paper delivery, and any investor could elect to receive paper delivery at any time.

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