The Securities and Exchange Commission has proposed a new framework that could change how firms deliver required regulatory information to investors and clients.
Under proposed Regulation E-Delivery, investment advisers, broker-dealers, investment companies, and other covered entities could use electronic delivery as the default without first obtaining a recipient’s affirmative consent. Recipients would retain the right to opt out and continue receiving paper documents.
If adopted, the proposal would replace much of the SEC’s decades-old, guidance-based approach to electronic delivery with a single framework intended to reflect how investors access information today.
A New Delivery Default
Currently, required regulatory information is generally delivered in paper form unless a recipient affirmatively agrees to receive it electronically. Regulation E-Delivery would reverse that process.
A firm could rely on electronic delivery when:
- The recipient has provided an electronic address, such as an email address or text-capable phone number.
- The firm has clearly notified the recipient that required information will be delivered electronically.
- The recipient has not opted out of electronic delivery.
Using the proposed framework would be optional. Firms could continue providing paper documents or using existing electronic delivery arrangements based on affirmative consent.
A Broad Range of Documents
The proposal would apply to a wide range of information that firms are required to deliver under federal securities laws, including:
- Form ADV Part 2 brochures
- Form CRS
- Trade confirmations
- Fund prospectuses
- Annual and semiannual shareholder reports
- Proxy statements
Information that does not contain personal financial information could generally be delivered directly through an electronic address, such as an email attachment.
When a document contains personal financial information, firms would instead send a notice directing the recipient to a secure website where the information could be accessed. Reasonable safeguards, such as password authentication, would be required.
Paper Would Remain Available
Recipients could continue requesting paper documents at no cost and update their electronic address or opt out of electronic delivery at any time.
Before transitioning someone who currently receives paper documents, firms would generally need to send two paper notices explaining the change and how to continue receiving paper copies.
New Responsibilities for Firms
Electronic delivery could reduce printing and mailing costs, but firms would still need controls designed to ensure required information reaches the correct recipients.
Firms relying on the proposed framework would need to:
- Identify and address bounced emails, broken links, and other failed deliveries.
- Protect documents containing personal financial information.
- Maintain current electronic contact information and delivery records.
- Process paper requests and electronic-delivery opt-outs.
- Confirm that third-party vendors can support these requirements.
These responsibilities would need to be addressed through written policies and procedures.
What Firms Should Consider
Regulation E-Delivery remains a proposal, so firms are not yet required to change their delivery practices. However, compliance teams may want to begin evaluating how the proposed framework could affect existing policies, systems, and third-party relationships.
Important considerations may include:
- Whether client electronic contact information is complete and current.
- How failed deliveries are detected, escalated, and resolved.
- Which documents contain personal financial information.
- Whether secure access controls are appropriate.
- How paper opt-out requests would be processed.
- What records would demonstrate compliance with delivery requirements.
- Whether current vendors could support the proposed framework.
The proposal could make electronic delivery more practical and reduce firms’ reliance on paper. It would also require firms to show that electronic communications are reaching the correct recipients, remain accessible, and receive appropriate protection.
For compliance teams, the potential change is not simply about replacing paper with email. It is about building a delivery process that remains reliable, documented, and responsive to investor preferences.
