A Securities and Exchange Commission official faced questions on Capitol Hill Tuesday about the agency’s ongoing use of paper records, even after other federal regulatory bodies moved to digitize many of their permanent documents.

Lawmakers in the House have introduced bipartisan legislation that would require the SEC to deliver documents to investors in electronic format, except in cases were recipients opt out.

At the outset, Improving Disclosure for Investors Act wouldn’t yield particularly significant cost savings, according to a Congressional Budget Office estimate, but it perhaps could eliminate costs associated with printing and tedious preparation. Shifting to e-forms would also be more environmentally friendly, said Rep. Wiley Nickel, D-N.C., and Rep. Bill Huizenga, R-Mich., two of the bill’s supporters.

“Two million trees a year we would save with just that one small change,” said Nickel at the Dec. 5 hearing of the House Financial Services Committee.

In the spring, the SEC proposed regulations for modernizing the submission of some of its filings after the COVID-19 pandemic forced the agency to ditch some paper forms, which it said was “generally well received.” However, when asked why more progress has not been made to expand such efforts, an SEC official said the office is determined to evaluate available technologies but deferred specifics.

“I agree that evolving technologies can present new ways to have investors interface with the markets,” said Valerie Szczepanik, director of the eight-person Strategic Hub for Innovation and Financial Technology, adding that the SEC has been holding peer-to-peer meetups to discuss different ways to communicate with investors.

Szczepanik clarified that FinHub is not a regulatory or policy-making part of the agency; rather, it offers analysis and expertise about emerging tools the SEC may be interested in adopting.

“In recent years, numerous government agencies have made strides in minimizing wasteful paper usage ... E-delivery was considered an innovation years ago,” said Nickel. “I’d argue your office is behind at the expense of investors and our planet.”

Other agencies have moved similarly to consider reducing its document load, including the IRS, which in November met a goal enabling 94% of filers to send tax documents digitally. Social Security discontinued paper statements in 2011. The Department of Labor issued regulations permitting e-delivery of 401(k) documents in 2020. And this year, the Thrift Savings Plan began issuing digital monthly statements.

Though such transitions are not without their own complications at times, the White House has said that going paperless is one of the priorities it has inherited from previous administrations. Last December, the Office of Management and Budget extended the deadline for agencies to transfer records by two years.

The SEC’s proposed rule closed for public feedback in May, and final updates could come in the first half of 2024, according to the agency’s regulatory agenda.

“We live in a digital age,” said SEC Chair Gary Gensler in a statement accompanying the proposed rule. “In 2023, one might think that all filings to the Commission already could be made electronically. That’s not yet true. Today, we have the important opportunity to require electronic filing for nearly all of the remaining paper filings required under the Exchange Act. I believe the proposal, if adopted, would save both registrants and the Commission time and resources.”

Molly Weisner is a staff reporter for Federal Times where she covers labor, policy and contracting pertaining to the government workforce. She made previous stops at USA Today and McClatchy as a digital producer, and worked at The New York Times as a copy editor. Molly majored in journalism at the University of North Carolina at Chapel Hill.

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