Compliance April 16, 2025

Electronic Disclosure Bill Reintroduced in House

Similar to a measure that passed the House last year, the Improving Disclosure for Investors Act prioritizes electronic delivery of SEC-required disclosures.

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Representative Bill Huizenga, R-Michigan, has reintroduced the Improving Disclosure for Investors Act, which would require the Securities and Exchange Commission to ensure securities issuers distribute disclosures to investors electronically, rather than using physical notices.

The bill, introduced on March 27, would limit the number of paper investment disclosures, but allows investors to opt out of electronic delivery. The bill has been referred to the House Committee on Financial Services, of which Huizenga is vice chair, and awaits a hearing or a vote.

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If passed, the SEC would have six months to propose rules for providing e-disclosures and one year to finalize them.

Under the bill, the SEC’s final rule must require securities issuers to send investors two annual written notices notifying them of their ability to opt out of e-delivery. If investors fail to opt out during that period, they would automatically be enrolled, but would maintain the ability to opt out at any time and revert to receiving mailed paper disclosures.

“Continuing to send customers paper disclosure notices is not only wasteful but fails to acknowledge that digital communications are safer and more effective in reaching all Americans,” Huizenga said in a statement. “I look forward to working with my colleagues in the House as well as the Securities and Exchange Commission to finally make this a reality.”

In 2023, the SEC proposed amendments which intended to increase the number of filings submitted electronically.

The current bill closely resembles a 2023 bill of the same name that was introduced in the House and Senate. In 2024, the House passed an amendment—authored by Huizenga and that required the SEC to prioritize electronic delivery—via the Expanding Access to Capital Act of 2023 by a vote of 269 to 153, but the full bill never advanced out of committee in the Senate.

The legislation has received bipartisan support through its five co-sponsors: Representatives Jake Auchincloss D-Massachusetts; Brittany Pettersen, D-Colorado; and Brad Sherman, D-California; Bryan Steil, R-Wisconsin; and Ann Wagner, R-Missouri.

Several financial services organizations have lauded the bill, including the Investment Company Institute, the Investment Adviser Association and the Securities Industry and Financial Markets Association.

“The bipartisan Improving Disclosure for Investors Act is an important step toward ensuring all investors can receive their disclosures electronically,” said Eric Pan, CEO of the Investment Company Institute, in a statement. “E-delivery will transform investor communication and engagement, making information more accessible and efficient.”

Compliance April 16, 2025

DOL Gets 60 More Days to Decide Next Steps in Fiduciary Rule Lawsuit

The Department of Labor will have an additional 60 days, to June 16, 2025, to decide its next steps in litigation against the Biden-era Retirement Security Rule.

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U.S. Circuit Judge Catharina Haynes, of the U.S. 5th Circuit Court of Appeals, granted the Department of Labor’s request for another 60 days to consider its next steps in two court cases challenging the department’s 2024 Retirement Security Rule.

On Tuesday, Haynes granted the DOL’s unopposed motion to extend the existing abeyance for an additional 60 days to June 16, 2025.

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The DOL sought an additional delay, in a motion filed on Monday, due to the change in presidential administration and the time required for new DOL leadership to become familiar with issues presented by the litigation.

The DOL had previously requested a stay in February, which was set to expire on Tuesday. At that time, Secretary of Labor Lori Chavez-DeRemer’s nomination was still under consideration; she has since been confirmed.

The Retirement Security Rule, or the “fiduciary rule,” proposed in April 2024 under former President Joe Biden, sought to amend the test for determining when an individual falls within the statutory definition of a “fiduciary” to an Employee Retirement Income Security Act plan based on “rendering of investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan.”

The rule was scheduled to take effect on September 23, 2024, but hit legal roadblocks in the form of complaints filed by industry firms and member organizations.

The U.S. District Court for the Northern District of Texas put a national stay on the rule in a July 26, 2024, opinion in American Council of Life Insurers v. DOL. One day prior to that ruling, the U.S. District Court for the Eastern District of Texas had also granted a stay in a separate case, Federation of Americans for Consumer Choice Inc. et al. v. DOL et al.

Both lawsuits sought to block the rule, which required “trusted investment advice providers” and financial institutions working with them to operate as fiduciaries in most cases when advising on retirement plan design, annuity sales and individual retirement account rollovers.

Plaintiffs have argued in both cases that the DOL’s rule exceeded its authority under federal law, is “arbitrary and capricious” and has the “same legal defects” as the 2016 version of the rule that was eventually struck down by the 5th Circuit.

The extension granted this week gives the DOL more time to consider how to reply to appeals in the two cases, which have been consolidated.

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