U.S. financial regulators are proposing to switch required filings for publicly traded companies from quarterly reporting to semiannual.
The Securities and Exchange Commission on Tuesday released its amended proposal for optional semiannual reporting for companies on Wall Street. SEC officials say the change in frequency of reporting won’t impact the type of information disclosed publicly. Companies will be expected to file a new form called Form 10-S in lieu of the traditional Form 10-Q if they choose to report twice a year.
SEC Chairman Paul Atkins says this proposal will allow for more freedom between companies and investors.
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“The rigidity of the SEC’s rules has prevented companies and their investors from determining for themselves the interim reporting frequency that best serves their business needs and investors,” Atkins said in a statement. “Today’s proposed amendments, if ultimately adopted, would provide companies with increased regulatory flexibility in this regard.”
However, some investors are skeptical about how this benefits anyone other than the companies.
Gary Kaltbaum, president of Kaltbaum Capital Management and a FOX Business contributor, said this will pave the way for less clarity for investors to make decisions on Wall Street.
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“The No. 1 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, that’s tough going for investors to try and figure out what’s going on with a company when you’re not going to hear from them in six months.”
The SEC attempted to ease the concerns of investors, saying corporations can still hold quarterly earnings calls even if they choose semiannual reporting. The Wall Street regulator says they’re not mutually exclusive, but critics are skeptical that companies would bother with quarterly earnings calls since they don’t have to make public disclosures as frequently.
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Under the current proposal, companies will be given the opportunity to opt-in for semiannual reporting at the start of every fiscal year. If companies don’t like the new reporting practices, then they can opt back into quarterly reporting the following fiscal year.
The SEC says the public comment period will be open for the next 60 days after publishing the proposal in the Federal Register.
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