The Securities and Exchange Commission is the paper lobby’s new federal target

Wednesday, Aug 19, 2015

First, the paper lobby fought the Social Security Administration’s move to issue paper earnings statements to 150 million Americans electronically, saving $72 million a year.

Then it tried to stop the Food and Drug Administration from taking the tiny-print inserts out of prescription drug boxes and putting them online. And when the Internal Revenue Service this year stopped printing Publication 17, the bible of tax guide preparation for individuals, the paper industry fought back.

Now it’s bringing its campaign to preserve Washington as the capital of paper to the Securities and Exchange Commission, which wants mutual funds to send shareholders their dividend statements digitally.

On Tuesday, the public comment period will end for the proposed new SEC rules, part of the agency’s larger effort to modernize and enhance the reporting and disclosure of information by investment companies and advisers. Mutual funds and other investment companies would be able to provide shareholder reports and quarterly portfolio holdings on their Web sites instead of sending them by snail mail. Now, investors must request electronic delivery.

Instead, as a tradeoff for requiring this information to be sent to investors monthly instead of twice a year, companies would be able to post their earnings online. Investors could still receive paper copies by mail for free, but they would have to notify the companies.

The government’s move from paper to the Internet is saving tens of millions of dollars a year; an electronic payment, for instance, costs the government 9 cents to process, compared with $1.25 for a paper check, according to the Treasury Department. In the case of the proposed SEC change, more transparency for shareholders would mean fewer costs to companies.

But for the paper industry, the stakes for all these changes are high. The digital age has ravaged sales of envelopes, office paper, catalogues and pulp products. Industry analysts say demand for paper products dropped 5 percent on average in each of the past five years. Mills have closed. Thousands of employees have been laid off.

That’s why the industry, under the name Consumers for Paper Options, says it is teaming up with Consumer Action and the National Consumers League to fend off the government’s latest move to the Internet.

“While we recognize the trend towards a more digital world, it is critical that government efforts to ‘modernize’ information delivery do not disenfranchise Americans who need or want resources in paper format,” the group says in a statement on the mutual fund delivery proposal, known as Proposed Rule 30e-3.

Consumers for Paper Options was set up by the Envelope Manufacturers Association (EMA), with financial backing from the paper industry’s largest trade group and several of North America’s biggest paper manufacturers. The group’s favorite talking point with the public and members of Congress from paper-producing states it lobbies is about Internet access. A quarter of Americans still don’t have it, many of them elderly.

“Rule 30e-3 would impede access for many investors, especially the elderly, those with disabilities, and minority Americans — all demographics that are less likely to have regular Internet access,” the group says.

This may sound a little like a wolf in sheep’s clothing. But the paper lobby is not backing down, and its fight against the government’s move to the Internet is paying dividends. The FDA is still weighing more than 950 comments opposing its proposal to eliminate paper inserts in drug packaging.

And as of last week, the SEC had received 232 comments on its proposal to put shareholder statements online, almost all in opposition.

The comments generally hewed to a template provided by Consumers for Paper Options, such as this one from someone named Robin Snyder:

Please consider the following thought:

Rule 30e-3 would impede access for many investors, especially the elderly, those with disabilities, and minority Americans – all demographics that are less likely to have regular Internet access. For example, 41 percent of Americans over 65 years of age do not use the Internet, yet, according to the Investment Company Fact Book, 34 percent of this population owns mutual funds.

My request is that you please continue the use of paper; not only for ease of use and ability to maintain, but also because of the thousands of people who depend upon the paper industry for their livelihood.

Thanks for your consideration,

Robin Snyder

An SEC spokeswoman said the agency considers all comments from the public when its commissioners vote on a proposal.

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