Supporting the current definition of materiality in the securities laws and opposing new disclosure requirements outside the core mission of the Securities and Exchange Commission.
Impact
The bill reflects a growing concern among certain lawmakers regarding proposals to require public companies to disclose information related to environmental, social, and governance (ESG) criteria. Proponents argue that expanding disclosure requirements to include immaterial information could threaten U.S. businesses by imposing costly compliance processes and detracting from the SEC's fundamental aim of investor protection and market efficiency. By reaffirming the traditional definition of materiality, the resolution asserts that such a shift could confuse investors and undermine the effective functioning of capital markets.
Summary
House Resolution 32 (HR32) expresses support for the existing definition of materiality in securities laws while opposing any new disclosure requirements that extend beyond the core mission of the Securities and Exchange Commission (SEC). The resolution emphasizes that current materiality standards have effectively guided securities disclosures for over eighty years, establishing a framework where only significant information must be disclosed to investors, thereby preventing information overload and excessive compliance burdens on businesses. This focus on materiality is said to facilitate efficient capital flow and maintain the competitive advantage of U.S. markets.
Contention
The pushback against potential new disclosure requisites stems from apprehensions that they are part of a broader trend to use corporate disclosures for socio-political objectives rather than purely informational ones. Critics of this direction argue that it could lead to disclosures that detract from material information crucial for investors in evaluating company performance. Notably, HR32 aims to discourage regulations that complicate the existing disclosure system, thereby preserving the intent and effectiveness of the current securities law established under the Securities Act of 1933.
Stop Environmental Calculations Act of 2023 or the SEC Act of 2023 This bill prohibits the Securities and Exchange Commission from requiring climate-related disclosures that are not material to investors.
Stop Environmental Calculations Act of 2025 or the SEC Act of 2025 This bill prohibits the Securities and Exchange Commission from requiring issuers of securities to make climate-related disclosures that are not material to investors.
To amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to disclose and report on non-material disclosure mandates, and for other purposes.
To amend the Securities Exchange Act of 1934 to transfer authorities and duties of registered national securities associations to the Securities and Exchange Commission.