WASHINGTON — The Securities and Exchange Commission unanimously approved on Friday a proposal to require companies to disclose more information about their short-term borrowings, aiming to prevent companies from dressing up their balance sheets for quarter-end filings by hiding liquidity problems.
The commission’s proposals, which will be subject to 60 days of public comment before final action by the commission, would require all publicly traded companies to report quarterly their average daily amount of outstanding short-term debt and the weighted average interest rate on the borrowings.
Bank holding companies are already required to report that information annually, but nonbank companies will be facing the requirements for the first time.
The new regulations address problems that became evident during the financial crisis but which were not addressed by the Dodd-Frank financial reform bill, Mary L. Schapiro, the chairwoman of the S.E.C., said Friday.
“Under these proposals, investors would have better information about a company’s financing activities during the course of a reporting period — not just a period-end snapshot,” Ms. Schapiro said. “With this information, investors would be better able to evaluate the company’s ongoing liquidity and leverage risks.”
While the reporting requirements do not go into effect immediately, the commission also approved an interpretive release reminding companies that under current law they cannot use financing structures — including off-balance-sheet securities or investments — that are intended to mask their reported financial condition.
The new S.E.C. rules follow the disclosure earlier this year that Lehman Brothers regularly employed off-balance-sheet devices, known within the company as “Repo 105” and “Repo 108” transactions, to temporarily remove securities from its balance sheet at the end of each reporting period.
A report on Lehman’s activity by Anton R. Valukas, the examiner for the court overseeing Lehman’s bankruptcy proceedings, said the transactions were intended “to create a materially misleading picture of the firm’s financial condition in late 2007 and 2008,” when the company was facing growing losses in its holdings of mortgage-backed securities.
The S.E.C. has been investigating Lehman’s actions but has not yet filed any charges against the company or its former executives.
Commissioner Luis A. Aguilar, who was appointed to the commission in 2008, said at the meeting that unless the agency accompanied the new rules with strong enforcement measures, the rules would not prevent companies from trying to misrepresent their financial condition.
“Individuals and entities will always have incentives to dress up the balance sheet and look for the new Repo 105,” Mr. Aguilar said. “Clearly there should be serious consequences that everyone should see.”
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