Bill Overview
Title: SEC Disclosure Effectiveness Testing Act
Description: This bill requires the Securities and Exchange Commission (SEC) to assess the usefulness of certain disclosure rules to retail investors. Specifically, the SEC must make these assessments regarding both current and new securities rules and regulations that require the disclosure of documents or information to retail investors.
Sponsors: Rep. Casten, Sean [D-IL-6]
Target Audience
Population: Retail investors
Estimated Size: 100000000
- The bill focuses on the SEC and its regulations, specifically targeting disclosure rules related to retail investors.
- Retail investors are individual investors who buy and sell securities for their personal account, and not for another company or organization.
- These are non-professional investors, as distinguished from institutional investors, such as mutual funds, pension funds, etc.
- The impact is primarily on those individuals who directly engage in the buying and selling of securities and are affected by the information they receive through disclosures.
- This can also include potential investors who rely on such disclosures to make informed decisions.
Reasoning
- Retail investors are the primary target of this policy because it involves SEC rules which directly impact how they receive information about securities.
- The policy aims to enhance the usefulness of disclosure for these investors, potentially affecting their decision-making processes and overall financial wellbeing.
- With a budget of $10,000,000 in the first year and $110,250,000 over ten years, the policy needs to cover a considerable number of retail investors, estimated to be around 100 million Americans.
- The anticipated changes in wellbeing are primarily due to improved access to and understanding of investment information, which could lead to better investment outcomes.
Simulated Interviews
Software Engineer (Austin, TX)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I'm cautiously optimistic about this policy.
- Better disclosures might help avoid costly investment mistakes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Tech Entrepreneur (San Francisco, CA)
Age: 32 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Enhanced disclosures can lead to more informed investment decisions.
- I welcome any move towards greater transparency.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 9 | 6 |
| Year 5 | 9 | 5 |
| Year 10 | 9 | 5 |
| Year 20 | 8 | 4 |
Data Analyst (New York, NY)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- I don't spend much time on disclosures, but having clearer information would help.
- It might cut down on the learning curve for new investors like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
Teacher (Chicago, IL)
Age: 52 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 1.0 years
Commonness: 18/20
Statement of Opinion:
- I'm not sure how much this will affect me since I use funds managed by institutions.
- Better disclosure might impact fund performance indirectly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Retired Accountant (Miami, FL)
Age: 65 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 12/20
Statement of Opinion:
- As a retiree, I rely on stable income, so I hope this improves stock stability.
- Not sure I'll be directly impacted much.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 3 |
Nurse (Seattle, WA)
Age: 40 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 8.0 years
Commonness: 14/20
Statement of Opinion:
- I am hopeful that better disclosures will stabilize market swings.
- Could give me more confidence in holding my investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 5 |
Consultant (Atlanta, GA)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- I believe this could improve trust in the market.
- It may benefit me and my clients.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 5 |
Graphic Designer (Denver, CO)
Age: 38 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 4.0 years
Commonness: 12/20
Statement of Opinion:
- I let my advisors handle most decisions, but clearer info would be reassuring.
- Policy seems good for overall market health.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Retired Librarian (Phoenix, AZ)
Age: 72 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 1.0 years
Commonness: 12/20
Statement of Opinion:
- Not sure how this policy will affect me directly.
- I hope it leads to more secure investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 4 | 4 |
| Year 5 | 4 | 3 |
| Year 10 | 4 | 3 |
| Year 20 | 3 | 3 |
Film Producer (Los Angeles, CA)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 6.0 years
Commonness: 11/20
Statement of Opinion:
- With access to more transparent data, I can make better-informed decisions independently of my advisors.
- Expect some positive impacts on personal investing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $10000000 (Low: $8000000, High: $12000000)
Year 2: $10000000 (Low: $8000000, High: $12000000)
Year 3: $10500000 (Low: $8500000, High: $12500000)
Year 5: $11000000 (Low: $9000000, High: $13000000)
Year 10: $12000000 (Low: $10000000, High: $14000000)
Year 100: $15000000 (Low: $12500000, High: $17500000)
Key Considerations
- The SEC will need additional resources to implement new assessment processes and ensure the effectiveness of disclosure rules.
- The cost savings from more efficient compliance processes may take several years to become evident.
- Clarity in disclosures could enhance the retail investor decision-making process, potentially leading to greater market efficiency over the long term.