Despite repeated legislative defeats, Representative Hurt from Virginia’s 5th district has re-introduced legislation to create a two-tier caste system among publicly traded companies.
According to this most recent legislation (which is identical to language that failed to pass in 2014), some companies would continue reporting their quarterly and annual financial information in the XBRL format, as they have since 2011. Other companies, however, would suddenly be exempt from this requirement, and they would revert back to a reporting standard that was cutting edge in 1996.
As this new legislation—HR 1965—is identical to HR 4164 which was introduced in 2014, you can read our post regarding that legislation for more detail. However, the main points are the same:
If this poorly considered bill manages to gain passage—either on its own or as an amendment to a larger bill—the partial elimination of the XBRL filing requirement would be deeply damaging to the national standards of public disclosure and financial reporting. Additionally, the SEC’s ability to discover investor fraud would be unnecessarily and dramatically hamstrung by this bill. Lastly, and rather ironically even by congressional standards, this bill will be considerably detrimental to the same companies that it is meant to help, because exempting small companies from XBRL reporting will create a permanent underclass of less visible, and undiscoverable investment opportunities.
It’s a bad bill with dubious benefits and destructive consequences.
Feel free to contact me any time.
Stewart Walker – SVP, Director of Sales