This week, the Treasury Department released released a report providing several recommendations on how to streamline and reform the U.S. regulatory system for the capital markets, and in discussing elimination of non-material disclosure requirements, the report recommended that Congress repeal the Dodd-Frank pay ratio, as the Center recommended in its comments to Treasury. In discussing the issue, the report states, "amendments in Dodd-Frank to the federal securities laws have imposed requirements to disclose information that is not material to the reasonable investor for making investment decisions." It further stated:
"Treasury recognizes that the original support for such provisions was well-intentioned. However, federal securities laws are ill-equipped to achieve such policy goals, and the effort to use securities disclosure to advance policy goals distracts from their purpose of providing effective disclosure to investors. If the intent is to use the law to influence business conduct, then this effort will be undermined by imposing such requirements only on public companies and not on private companies. In addition, such requirements impose significant costs upon the public companies that are widely held by all investors.
The Center recently filed comments with Treasury recommending pay ratio repeal and other changes to Dodd-Frank. Although the report is a positive step, it is not likely that Congress will take action to repeal the ratio prior to year's end. The Treasury report responded to Executive Order 13772 issued by President Trump on February 3rd, which called on Treasury to identify laws and regulations that are inconsistent with a set of Core Principles of financial regulation.