Has the time come for regulators to rethink and re-imagine the disclosures demanded of public companies? Count Troy Paredes, a commissioner at the Securities and Exchange Commission, among those who say it has.

During his presentation at “The SEC Speaks,” an annual conference where the Commission's senior staff addresses past efforts and forthcoming initiatives, he expressed concern that the current disclosure regime can be counterproductive, rather than valuable, for investors.

Paredes stressed that “disclosure is the cornerstone of the federal securities laws,” and, ideally, transparency should enable investors to better evaluate the financial condition and performance of companies. Nevertheless, this straightforward approach “stands in sharp contrast to the extensive regulatory burdens, commands, and restrictions that make up the Dodd-Frank Act.”

“Disclosure is powerful, but that does not mean that more disclosure is always better than less,” he said. “My concern is information overload."

Over the decades disclosure requirements have “continued to pile up” with many of them being of “questionable value,” Paredes explained. More is disclosed today than ever before, for a variety of reasons, among them regulatory requirements, investor demands, and because companies, “acting defensively, disclose more information to reduce the risk that they could be challenged in litigation for not having disclosed enough.”

His concern is that with so much information available to investors they may be unable to distinguish what is important from what is not, misplacing their focus on data that is only marginally useful. “Investors are further challenged if the disclosures they receive are overly complex making it difficult to discern what the information that is considered means,” he said. “Disclosures, after all, need to be understandable. Ironically, if investors are overloaded, more disclosure actually can result in less transparency and worse decisions, in which case capital is allocated less efficiently and market discipline is compromised.”

Paredes advocated for shorter, more manageable SEC filings and that current disclosures be more narrowly focused, scaled back, or excluded entirely.  “At a minimum, going forward, we should not add to the problem by expanding what companies must disclose to include information that is not material to evaluating a company's business,” he said.

Whatever is disclosed should be presented in a more accessible, straightforward manner. Charts, graphs, tables, and summaries are among the ways information could be made more understandable. “A simpler presentation will make it easier for investors to focus on and process the information that matters most,” Paredes said, adding that the process must evolve with the times. Social media and mobile devices, for example, provide an opportunity to think differently about how disclosures can be packaged and distributed to investors.

“So that the practice of disclosure lives up to its promise, we must ensure that what is disclosed and how it is disclosed in fact empowers investors to make better decisions,” he said. “What we need is a top-to-bottom review of our disclosure regime to help us do just that.”