Revisions are expected in the rules governing how publicly traded companies disclose financial information to investors, according to an Advisor Hub report.
Securities and Exchange Commission Chairman Paul Atkins discussed the issue in a recent interview with CNBC, saying he is in favor of giving companies more flexibility in how often they publicly report information.
The comments followed a social media post by President Trump last month suggesting that instead of every quarter as is currently required, the SEC should move toward requiring semi-annual reporting to investors. “This will save money, and allow managers to focus on properly running their companies,” Trump said.
Atkins told CNBC that the SEC would “prioritize” the president’s proposal. “It’s a good time to look at the whole panoply of ways that people get information, how it’s disseminated and what’s fit for purpose,” Atkins said..
“At President Trump’s request, Chairman [Paul] Atkins and the SEC is prioritizing this proposal to further eliminate unnecessary regulatory burdens on companies,” an SEC spokesperson said.
Atkins said many investors get more information from earnings calls rather than they do from quarterly reports and, according to AdvisorHub, he supported Trump’s view that quarterly reports have driven corporate executives to focus too much on short-term returns.
The SEC has required companies to issue quarterly reports since 1970 but some companies have complained the requirements are unnecessary or too burdensome. Atkins said the “huge cost” of compliance is one reason companies stay private. One of his priorities is getting more companies to go public, he has said.
“A lot of stuff has changed since 1970,” Atkins said in a separate interview with POLITICO. “So I don’t see why we can’t or shouldn’t look at it again and see what’s the current state and what people are looking for.”
Earlier this year, Atkins said the SEC also planned to reduce disclosures regarding executive compensation.
Trump first floated the idea of pulling back on the quarterly reporting requirements in 2016, but while the SEC solicited comments on the idea, it never was proposed as a rule change.
During an open SEC meeting last month, Atkins thanked Trump for his idea of semiannual reporting by public companies and indicated that the staff is working on a proposal. Investor groups have said the SEC should maintain the current reporting system because frequent reports instill financial reporting discipline and provide transparency to investors.
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