The US Securities and Exchange Commission proposed Regulation E-Delivery to make electronic delivery the default method for sending regulatory documents to investors. The proposal would allow issuers, broker-dealers, investment advisers and investment companies to deliver required disclosures electronically without first obtaining investor consent, while investors retain the right to receive free paper copies by opting out. SEC Chairman Paul Atkins said the proposal reflects how investors now consume information and would reduce unnecessary costs throughout the financial system, stating that in an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic. The proposal represents one of the SEC's most significant disclosure modernization efforts in years, affecting communications including prospectuses, proxy statements, shareholder reports, trade confirmations and investment adviser brochures, and aims to replace a decades-old system that still relies primarily on paper mail.
SEC Proposal Reverses Current Consent Requirements
Current SEC guidance generally requires firms to obtain an investor's consent before switching from paper documents to electronic delivery. The new proposal would reverse that approach, allowing firms to treat electronic delivery as the default while preserving investors' ability to request paper documents at any time.
According to the proposal, electronic delivery could substantially reduce paper, printing and postage costs while giving investors quicker access to regulatory information. The SEC also believes digital delivery creates opportunities for more interactive and personalized disclosures that are difficult to achieve using paper documents.
Regulation E-Delivery Covers Prospectuses and Trade Confirmations
The proposal applies across much of the securities industry. Documents that could be delivered electronically include mutual fund and corporate prospectuses, annual and semi-annual shareholder reports, proxy materials, trade confirmations, Form CRS relationship summaries and Form ADV Part 2 brochures.
For documents containing personal financial information, firms would generally provide investors with a secure electronic notification directing them to an authenticated website rather than sending sensitive information directly by email. The SEC said the framework is intended to improve convenience while maintaining safeguards for confidential information.
The proposal also requires firms relying on the rule to maintain procedures for identifying failed electronic deliveries, correcting invalid email addresses and sending paper copies when necessary. Investors would be able to request paper copies free of charge and opt out of electronic delivery at any time.
Existing Investors Receive Two Paper Notices Before Transition
Investors who currently receive paper communications would not automatically switch to electronic delivery overnight. Instead, firms would have to send two paper notices before moving existing investors to digital delivery. The notices would explain the upcoming change, identify the electronic address that would be used and explain how investors can continue receiving paper documents if they choose.
The SEC said this transition process is intended to ensure investors understand the change while preserving their ability to continue receiving printed documents.
SIFMA Welcomes Electronic Delivery Modernization
The Securities Industry and Financial Markets Association welcomed the proposal, saying it reflects how investors already access financial information. SIFMA stated the proposal is an important step toward updating regulatory requirements to reflect how investors access information while giving investors the power to choose paper delivery if preferred.
The trade association said it has long supported making electronic delivery the default because it reduces unnecessary costs while improving the timeliness and accessibility of investor disclosures.
SEC Commissioner Hester Peirce also backed the proposal but argued the regulator should ultimately move beyond simply emailing digital versions of paper documents. She said future reforms should encourage disclosures designed specifically for digital platforms, including mobile applications, video, interactive tools and other technologies that could improve investor engagement.
SEC Opens 60-Day Public Comment Period
The proposal has now been released for public consultation, with comments due within 60 days after publication in the Federal Register.
If adopted substantially as proposed, Regulation E-Delivery would replace much of the SEC's guidance-based electronic delivery framework that has governed investor communications for roughly three decades, marking one of the largest changes to how financial firms distribute regulatory information since the internet became mainstream.
FAQ
What did the SEC propose regarding investor document delivery?
The SEC proposed Regulation E-Delivery to make electronic delivery the default method for sending regulatory documents to investors. The proposal would allow issuers, broker-dealers, investment advisers and investment companies to deliver required disclosures electronically without first obtaining investor consent, while investors retain the right to receive free paper copies by opting out.
Which documents would be covered under Regulation E-Delivery?
Documents that could be delivered electronically include mutual fund and corporate prospectuses, annual and semi-annual shareholder reports, proxy materials, trade confirmations, Form CRS relationship summaries and Form ADV Part 2 brochures.
How would existing paper-receiving investors transition to electronic delivery?
Firms would have to send two paper notices before moving existing investors to digital delivery. The notices would explain the upcoming change, identify the electronic address that would be used and explain how investors can continue receiving paper documents if they choose.
