Investor groups urge U.S. SEC to keep quarterly reporting rules

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SEC quarterly reporting debate

Highlights

Investor organizations, including the Investment Company Institute with $6.1 trillion in assets, urge the SEC to maintain quarterly reporting due to the importance for investment decisions.
The SEC's May proposal would allow Wall Street-listed companies to switch to semiannual reporting, aiming to reduce compliance burdens but raising concerns over reduced transparency and oversight risks.
Financial industry groups such as the Managed Funds Association and American Accounting Association warn that less frequent disclosures could let accounting issues go undetected, increasing future remediation costs.

Comment deadline sharpens disclosure debate

As reported by Reuters, Monday marks the deadline for comments on the SEC's May proposal to allow Wall Street-listed companies to switch to semiannual reporting instead of filing results every quarter.

The regulator says the change could reduce accounting and compliance burdens and help curb short-termism among corporate leaders, an idea advanced after a public call from President Donald Trump. At the same time, the agency acknowledges risks including leaving some investors less informed, weakening oversight of company conduct and eroding perceptions of fairness.

Responses filed by investor organizations argue that the value of timely disclosures for investment decisions outweighs any savings for companies, which now bear the cost of compiling and auditing operating results every three months. The SEC declines to comment on any timeline for next steps.

Funds industry warns of market transparency risks

The Investment Company Institute, which represents mutual funds and exchange-traded funds, says in a comment letter submitted Monday that although it supports easing burdens on companies, its survey of 14 members representing $6.1 trillion in assets finds strong support for quarterly reporting. According to the group, 62% of respondents view quarterly reports as highly important and 29% as moderately important.

The letter says quarterly earnings statements and management discussion of financial condition and operating results are especially important to investors. The Managed Funds Association, representing hedge funds and other asset managers, also calls on the SEC to abandon the proposal, with President Bryan Corbett saying timely, material information is essential.

Earlier opposition also comes from the California Public Employees' Retirement System and the American Accounting Association. The accounting group says moving to semiannual reporting could let accounting problems go undetected for longer, potentially raising remediation costs when they are eventually discovered. JPMorgan and Nasdaq are among those backing the proposal, saying it could strengthen capital markets by giving companies more room to focus on longer-term performance. The United States has required quarterly reports since 1970, while some other countries permit disclosures twice a year.

Our earlier coverage of quarterly earnings and market catalysts highlighted how investors were zeroing in on a small set of scheduled disclosures, including upcoming results from PepsiCo and Delta Air Lines and the Federal Reserve’s June meeting minutes. We also noted that PepsiCo was trading below key moving averages, with a defined near-term range and a resistance level that would need to be reclaimed for a more durable rebound—underscoring how closely markets track regular, timely updates.

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