SEC proposes e-delivery as default for investor communications

The Securities and Exchange Commission proposed Regulation E-Delivery to allow issuers, broker-dealers, investment advisers and other market intermediaries to use electronic delivery as the default method for required disclosures under the federal securities laws. The proposal would preserve the option for recipients to receive paper copies on request.

The proposing release lists a broad set of documents that could be delivered electronically, including prospectuses for funds and other issuers, annual and semi‑annual shareholder reports, proxy statements, trade confirmations, disclosures under Form CRS and Form ADV Part 2 brochures.

Under current practice, many required materials are mailed in paper unless a recipient has opted into electronic delivery. Regulation E-Delivery would replace the SEC’s guidance-based approach with a formal rule that sets conditions and requirements for when and how firms may default to electronic distribution. The Commission said the change is intended to reduce paper, printing and postage costs for issuers and intermediaries.

The rule would include a transition process for people who now receive paper. Those scheduled to move to electronic distribution would get two paper notices that explain the change and describe the right to opt out and continue receiving paper copies. Firms would have to meet the rule’s notice, access and authentication requirements before relying on e-delivery as the default.

The proposing release also outlines requirements for recordkeeping, evidence-of-delivery and other safeguards firms must follow to ensure recipients can access and retain electronic materials. The rule would apply to any market participant with delivery obligations under the federal securities laws.

SEC Chairman Paul S. Atkins described the proposal as an effort to let the financial services industry “harness technology for the benefit of everyday American investors” and said that “a default to paper delivery should be a relic, not a standard.”

The SEC stated e-delivery could provide more timely, interactive and accessible disclosure and could improve retention and personalization of information compared with paper delivery. The public comment period will remain open for 60 days after the proposal is published in the Federal Register.