Disclosure of Information: Where Securities Law and ERISA Diverge

Cool, what a nice treat to me for the first real workday of the New Year. I have always wanted a reason to link to the Harvard Law School Corporate Governance blog because, well, it just sounds so impressive (that plus it’s a really good read on all things corporate), and one of their contributors handed me the opportunity over the weekend. In a post addressing SEC requirements for online posting of public company proxy materials, the author - a Gibson Dunn partner and visiting professor at Georgetown - points out how these requirements differ from the notice requirements under ERISA:

Compliance with notice and access [rules under the SEC requirements] is not likely to satisfy the requirements for electronic delivery of materials under the U.S. Department of Labor standards for participants in ERISA-covered defined contribution plans, such as 401(k) plans and employee stock ownership plans. Section 404(c) of ERISA permits electronic delivery only if a participating employee has the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform his or her duties as an employee and for whom access to the employer’s information system is an integral part of the employee’s duties (e.g., a networked desktop computer at work), or if the employee provides written consent accepting delivery of information electronically. As a result, although an issuer may rely on notice and access for permitted employees and consenting employees, other employee participants should receive paper delivery of proxy materials.

You know what’s interesting about this? The focus on procedural aspects of providing information to plan participants (and others, with regard to the SEC rules). We could use an equal level of attention and agreement when it comes to the amount, type and transparency of the information provided to plan participants in particular, something more important than just the formal procedures by which it is provided.

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