SEC chair defends proposal to allow companies to report earnings only twice a year
Securities and Exchange Commission chair Paul Atkins defended a proposal to allow companies to disclose their financial results twice a year, rather than quarterly, in the face of thousands of negative…
Securities and Exchange Commission chair Paul Atkins defended a proposal to allow companies to disclose their financial results twice a year, rather than quarterly, in the face of thousands of negative comments urging the agency not to reduce reporting requirements.
“When people say, oh, this could be less transparent or whatnot, we have a one-size-fits-all rule right now,” Atkins said.
“What do I tell a pre-revenue biotech company that’s gone public and is waiting for the FDA to say yay or nay to that particular product, so they go for sometimes years without showing any revenue. So what am I supposed to tell them? You just have to file a 10Q anyway,” he added.
Atkins said allowing the option of twice-a-year filings “gives them a way to make it more responsible, basically, for their investors and the expenses that they have with respect to their disclosures.”
The SEC received 200,000 comments, mostly in opposition, particularly from asset managers and retail investor advocacy groups. A tracker created by an accounting professor at Ohio State University showed 99.5% of the letters opposed the proposal.
The SEC received 200,000 comments, mostly in opposition, particularly from asset managers and retail investor advocacy groups.
Opponents of the rule change worry that semiannual reporting would make it easier for companies to conceal financial problems, enable insider trading, and create an uneven playing field.
When asked whether the SEC would make changes to the proposal in light of the overwhelming negative feedback, Atkins said the SEC wants to hear from all stakeholders and is listening, but that one strain that comes through a lot of the letters is a misunderstanding about what the proposal is, noting that it doesn’t prevent quarterly reporting, but only creates the option to report semiannually, quarterly, or more frequently.
“This proposal is giving the company the option of doing it semiannually, and then if you don’t want to do a full-blown 10Q, you can disclose quarterly earnings, you can do an earnings call, guidance, and that sort of thing,” Atkins said.
The agency is down two commissioners, and the remaining three are all Republicans, making it likely the proposal will pass.
