[WASHINGTON] The US Securities and Exchange Commission (SEC) will move forward with plans to overhaul investor disclosure rules for publicly-traded companies, agency chairman Paul Atkins said on Friday (Sep 19).
The announcement comes the same week that US President Donald Trump issued a social media post suggesting the SEC should move to semi-annual, rather than quarterly reporting.
“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 during an interview on CNBC.
He noted that many investors get more information from earnings calls rather than the quarterly reports.
Atkins echoed Trump’s criticism that quarterly reports have driven corporate executives and management to focus too much on short-term returns.
But the long-time Washington consultant and power player has been a perennial critic of the “overload” of disclosures both for investors and the companies that have to provide them.
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Atkins has already made clear that he plans to reduce disclosures on executive compensation. Other disclosures, such as those related to conflict minerals, could also be targeted for fewer releases or even elimination.
During the CNBC interview, Atkins said the “huge cost” of complying with regulatory requirements is one of the leading reasons companies remain private.
Trump’s remarks earlier this week revived an idea he touted during his first term. Then-SEC chairman Jay Clayton had discussed the possibility at a three-hour roundtable in 2019 and it had been part of an agency request for comment in 2018. But the effort eventually petered out and the idea never made it to even the proposed rule stage, in part because there was not a groundswell of demand for the change.
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The SEC has required companies to issue quarterly reports since 1970. There have been tensions between investor seeking information and publicly traded companies seeking to shed what some see as unnecessary or overly burdensome reporting requirements ever since.
Many companies already produce quarterly data for internal oversight, so reducing public-facing reports may only modestly reduce” compliance costs, according to Andrew Jones, principal researcher at the Conference Board, a think tank whose members include hundreds of public and privately traded companies.
“Limiting disclosures also introduces risks related to reduced transparency and heightened market uncertainty,” Jones said.
While many of the world’s largest economies operate on a quarterly disclosure basis, some only require semiannual reports, including France, the United Kingdom and Australia. BLOOMBERG
