Statement on Proposed Regulation E-Delivery

The Commission spends considerable time thinking about the "what" of disclosure by focusing on the substance of required disclosures. These disclosures, whether in the form of a prospectus, an account statement, a description of services provided, or an annual report-to name just a few-form the bedrock of investor protection. Our system relies principally on individuals to look after their own interests by acting, or refraining from acting, based on that information. The logical next question then is "how" that information is delivered to investors.

Starting in 1995, the Commission recognized the potential of new technology to electronically deliver information to investors and other market participants.1 However, that was an era when we still accessed the internet through dial-up modems. Significant portions of the investor population, including senior citizens who came of age during World War II and often relied on physical papers delivered by the U.S. Postal Service, did not have either the hardware or the skill set to receive large volumes of information electronically. Indeed, during that period, it was common for households to have dot matrix printers. Thus, there was considerable merit to the Commission's then-approach of informed affirmative consent for electronic delivery.

In the years since, electronic media has become far more prevalent and affordable. Investors' comfort and facility with these tools have matured alongside it as well-a generation-and-a-half has grown into individuals who regularly use the internet and mobile communications to conduct financial and consumer transactions. Commission regulations have also evolved, often opting for a layered disclosure approach. Information is delivered in more concise forms like the summary prospectus, tailored fund shareholder reports, and customer relationship summaries that are highly amenable to electronic delivery, with more detailed information further available online.

Today, the Commission takes a further step in recognizing these developments by proposing Regulation E-Delivery ("Reg E-Delivery"). Reg E-Delivery would allow issuers, broker-dealers, investment advisers, and other market intermediaries to use electronic delivery as the default delivery method to satisfy information delivery requirements under the federal securities laws, provided that these entities have met the conditions of Reg E-Delivery. These entities would not be required to obtain affirmative consent from investors and other recipients, but investors still would be able to opt out of default e-delivery and receive paper copies of information upon request.

It is worth recognizing that the federal securities laws generally do not prescribe paper or mail as the required method of delivery for regulatory disclosures or reports. It is another testament to the foresight of the drafters of those laws to build in flexibility by focusing on the objective-the communication of information-rather than being prescriptive on the method.

Electronic communication is now the primary way most investors manage their investments and financial matters. Our own survey data confirms this view. The Office of Investor Research within the Commission's Office of the Investor Advocate found that nearly 80% of U.S investors prefer some form of e-delivery for financial disclosure documents that do not include personal information, and also that a majority (approximately 63%) prefers some form of e-delivery even for documents that do include personal information.2 Delivering information via paper unless the investor affirmatively elects otherwise no longer reflects how the majority of investors prefer to receive information. Today's proposal represents a long overdue update to our rulebook, reflecting investor preferences that developed with the advancement of technology.

That said, shifting the default should not come at the expense of accessibility. Electronic delivery must not impede investors' ability to read and understand the disclosure documents. The proposed rules would require that information be presented in a format that is convenient for both reading online and printing on paper.3 Commenters will hopefully weigh on whether these proposed conditions are sufficient to ensure documents remain clear, legible, and digestible in an electronic format.

Regulatory disclosures often reach investors through a chain of intermediaries, and there is considerable operational infrastructure involved in getting a document from the initial financial entity to the end-user investor. I am interested in hearing from commenters, particularly those who operate this infrastructure, about whether the proposed rule is workable in practice given this intermediated delivery chain.

I thank the staff in the Divisions of Investment Management, Trading and Markets, Corporation Finance, and Economic and Risk Analysis, the Offices of the General Counsel and the Investor Advocate, and the many other offices that have contributed to this rulemaking, which involved major cross-divisional effort.

• 1See Use of Electronic Media for Delivery Purposes, Investment Company Act Release No. 21399 (Oct. 6, 1995) [60 FR 53458 (Oct. 13, 1995)]; Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information, Investment Company Act Release No. 21945 (May 9, 1996) [61 FR 24644 (May 15, 1996)]; Use of Electronic Media, Investment Company Act Release No. 24426 (Apr. 28, 2000) [65 FR 25843 (May 4, 2000)].
• 2Exploring Investor Preferences for Electronic Delivery of Financial Disclosures, U.S. Securities and Exchange Commission Office of the Investor Advocate (May 2026), available at https://www.sec.gov/files/exploring-investor-preferences-electronic-delivery-financial-disclosures.pdf.
• 3Proposed Reg E-Delivery § 303.103(c).