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US financial regulators propose to switch the mandatory filings for listed companies from quarterly reporting to semi-annual reporting.
The Securities and Exchange Commission on Tuesday released its amended proposal for optional semi-annual reporting for Wall Street firms. SEC officials say the change in reporting frequency will not affect the type of information made public. Companies are expected to file a new form, called Form 10-S, instead of the traditional Form 10-Q, if they choose to report twice a year.
SEC Chairman Paul Atkins says this proposal will allow more freedom between companies and investors.
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SEC Chairman Paul Atkins says this proposal will allow more freedom between companies and investors. (Michael Nagle/Bloomberg via Getty Images)
“The rigidity of the SEC’s rules has prevented companies and their investors from determining for themselves the frequency of interim reporting that best suits their business needs and investors,” Atkins said in a statement. “Today’s proposed amendments, if ultimately adopted, would provide companies with greater regulatory flexibility in this regard.”
The SEC tried to allay investor concerns by saying companies can still request quarterly earnings even if they opt for semi-annual reporting. (iStock)
However, some investors are skeptical about whether this will benefit anyone other than the companies.
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“The main reason why stocks do well is because of their earnings reports,” Kaltbaum said. “And now that you’re going to separate it by six months, it’s hard for investors to try to figure out what’s going on with a company if you don’t hear from them in six months.”
Under the current proposal, companies will have the opportunity to sign up for semi-annual reporting at the beginning of each fiscal year. (Michael Nagle/Bloomberg via Getty Images)
The SEC tried to allay investor concerns by saying companies can still request quarterly earnings even if they opt for semi-annual reporting. The Wall Street regulator says they are not mutually exclusive, but critics are skeptical that companies would worry about quarterly earnings because they don’t have to make public announcements as often.
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Under the current proposal, companies will have the opportunity to sign up for semi-annual reporting at the beginning of each fiscal year. If companies don’t like the new reporting practices, they can opt for quarterly reporting again the next fiscal year.
The SEC says the public comment period will be open for the next 60 days following publication of the proposal in the Federal Register.
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