SEC semiannual reporting proposal clears White House review

A Securities and Exchange Commission plan to let public companies cut quarterly disclosures to twice a year moved closer to reality after passing a White House review.

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The review, completed earlier this week according to a government website posting, will allow the SEC to formally unveil the plan and take public feedback. After receiving that input, commissioners would then need to vote again, typically months later, on a final version for the rule to take effect.

The agency has been working on the plan to revamp corporate disclosure requirements after President Donald Trump called last year to shift to semiannual reports from quarterly ones. US public companies have been required to report on a quarterly basis since 1970. 

(Read more: “Should public companies report twice a year?“) 

SEC Chairman Paul Atkins previously vowed to fast-track the plan and said the change could save companies significant time and money. But advocates of quarterly reporting argue transparency helps investors make crucial decisions and reduces the potential for companies to bury bad news. 

Some trade groups have cautioned against the move as the agency looks to scale back the scope of the company disclosures.

The Managed Funds Association told the SEC that while there’s broad support for reducing the scope to make them more meaningful and effective for investors, doing so at the same time the agency looks to reduce the frequency of reporting risks curtailing investment. 

“Inconsistent disclosure practices may undermine comparability and impair informed investment decision‑making,” the group said in a comment letter to the agency. 

The MFA said studies on the European Union’s shift to semiannual financial reporting found companies traded on the Vienna stock exchange that made the change saw a significant reduction in liquidity, while those that retained quarterly reporting did not.  

The Committee on Capital Markets Regulation also recently urged the SEC to retain requirements that material information be provided quarterly, saying it “enhances investor decision-making, increases market efficiency, and lowers the cost of capital.” 

That group’s members include executives from JPMorgan Chase & Co., Fidelity Investments, Robinhood Markets Inc., Virtu Financial Inc. and DRW Holdings. A representative for Bloomberg LP, the parent company of Bloomberg News, is also a member of the CCMR.