A proposal from the Securities and Exchange Commission that would involve semiannual corporate disclosures has been submitted to the White House for review, according to Bloomberg.
SEC Chairman Paul Atkins has said the commission is proposing a rule modification giving companies more flexibility in how often they have to publicly report financial information, moving to semiannual reports than every quarter as is currently required.
The plan follows a social media post by President Trump last September suggesting such a shift. “This will save money, and allow managers to focus on properly running their companies,” Trump said.
At the time, Atkins said 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.
The SEC sent its plan to the White House’s Office of Management and Budget. After the review is complete, the SEC can vote to release the plan and take feedback for the public before voting again on a final version.
SEC spokesperson Ben Watson said in a statement to Politico that Atkins has been clear that the SEC’s plan would offer companies the option of reporting on a quarterly or twice-yearly basis, “with the goal of removing the agency’s thumb from the scales and allowing the market to dictate the optimal reporting frequency based on factors such as the company’s industry, size, and investor expectations.”
Atkins has noted that many investors get more information from earnings calls rather than they do from quarterly reports and 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. “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.”
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.
Investor groups have said the SEC should maintain the current reporting system because frequent reports instill financial reporting discipline and provide transparency to investors, while also helping them make key decisions.
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