SEC Proposes Making Electronic Delivery the Default for Investor Disclosures

The U.S. Securities and Exchange Commission proposed Regulation E-Delivery this week, a rule that would make electronic delivery the default method for satisfying disclosure requirements under the federal securities laws.

Under current rules, many required regulatory disclosures and reports must be delivered in paper form unless the recipient affirmatively elects otherwise. Reg E-Delivery would flip that default, permitting – but not requiring – issuers, investment advisers, broker-dealers, and other “covered entities” to deliver required information electronically to customers, clients, investors, security holders, and other “covered recipients,” according to the SEC.

To rely on the new framework, a covered entity would need to have an electronic address on file for the recipient, provide prominent disclosure that information will be sent to that address, and confirm the recipient has not opted out. Recipients could still request paper copies free of charge. For information containing personal financial data, entities would generally be required to send a notice of availability rather than the document itself, directing recipients to a website where they can retrieve it.

The proposal would also rescind Rule 30e-3 under the Investment Company Act of 1940, which currently gives registered investment companies an alternative method for satisfying shareholder-report delivery requirements, and would amend rules governing how proxy and tender offer materials are distributed.

SEC Chair Paul Atkins described the proposal as part of a broader push to modernize the agency’s rulebook. “In an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic, not a standard,” Atkins said in a statement, adding that default paper delivery imposes “a constant source of unnecessary expenses” ultimately borne by investors.

The Insured Retirement Institute, a trade group representing the retirement income industry, welcomed the proposal. “This proposal is a significant step toward a digital-first industry that meets consumers where they are,” said Emily Micale, IRI’s director of federal regulatory affairs, in a statement. Micale said IRI is reviewing the proposal with its member companies and plans to submit comments.

The public comment period will remain open for 60 days after the proposal’s publication in the Federal Register.

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