SEC Considers Eliminating Quarterly Reporting Requirement

Shareholder Advocate Winter 2019

January 24, 2019

At the urging of President Trump, the Securities and Exchange Commission is studying the impact of allowing publicly traded companies to file financial reports just twice a year instead of quarterly, a reduced standard that would turn back the regulatory clock a half century.

On December 18, four months after President Trump raised the idea in a Tweet, the SEC asked for public comment “on the nature, content, and timing of earnings releases and quarterly reports made by reporting companies.”

Proponents of eliminating quarterly reports, such as President Trump and the US Chamber of Commerce, argue it would reduce unnecessary expenses associated with preparing the reports and encourage executives to focus on longer-term investments rather than quarterly earnings.

While replies aren’t due until March 18, market heavyweights like Larry Fink of BlackRock, Warren Buffet of Berkshire Hathaway and Jamie Dimon of JPMorgan Chase—all of whom decry “short-termism”— are already on the record in favor of quarterly financial reports.

So is the Council of Institutional Investors, which issued a statement the day of the Tweet. “Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace,” CII Deputy Director Amy Borrus said. “Investors need timely, accurate financial information to make informed investment decisions.”

That the SEC would consider such a measure is unsurprising, given the anti-regulatory posture of the Trump administration and Republican lawmakers. Over the last two years, the SEC appears to have focused chiefly on promoting capital formation, while pulling back on efforts to protect investors, police markets and ensure corporate accountability.

Enforcement, by most measures, is down since President Trump took office. Meanwhile, the Commission has floated ideas such as allowing companies to issue dual-class shares that permanently enhance insiders’ power over that of ordinary shareholders.

Read SEC Considers Eliminating Quarterly Reporting Requirement.