Goodbye Quarterly Earnings? SEC’s Paul Atkins Signals Fast-Track For Trump Plan But Says It’s ‘Not A Retreat From Transparency’

SEC Chair Paul Atkins has reportedly confirmed that President Donald Trump’s proposal to eliminate quarterly reporting by companies will likely be implemented expeditiously. 

In a Financial Times Op-ed published on Monday, Atkins, a Trump appointee, said, “It is time for the SEC to remove its thumb from the scales and allow the market to dictate the optimal reporting frequency based on factors such as the company’s industry, size and investor expectations.”

He reportedly pledged to pursue a minimum dose of regulation and fast-track the semi-annual reporting mandate, which Trump proposed earlier this month. In a social media post, Trump stated that, subject to SEC approval, companies should no longer be required to report quarterly, but rather on a six-month basis. The president reasoned that this would save money and allow managers to focus on running their companies properly.

Corporate profit growth is one of the primary drivers of the market in its current bull run, as artificial intelligence (AI) has bolstered the prospects of companies with exposure to the technology and those that lead it.

All three major averages trade just shy of record highs. The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) have gained 14% and 17%, respectively, for the year.

On Stocktwits, sentiment toward both ETFs was ‘neutral’ as of early Monday, while the message volume on both streams remained at ‘high’ levels.

On Monday, the SEC Chair said, “The government should provide the minimum effective dose of regulation needed to protect investors while allowing businesses to flourish. Rules written for shareholders who seek to effect social change or have motives unrelated to maximising the financial return on their investment ... fail investors."

Taking a potshot at his predecessor, Gary Gensler, Atkins said the SEC has in recent years drifted from the “precedent and predictability that sustain [trust in capital markets] — and from the clear mandate that Congress set for the agency over 90 years ago.”

He pointed out that cancelling quarterly reporting is not a novel idea, and the flexibility to choose the frequency of reporting is already given to some businesses. He also noted that in the U.K., some large corporations still report every quarter despite the country transitioning to semi-annual reporting in 2014. “Giving companies the option to report semi-annually is not a retreat from transparency,” he added.

An article published on Harvard Law School’s forum on corporate governance stated that “Making quarterly reporting optional would not be a magic bullet to stop the decline in the number of U.S. public companies, nor would it eliminate short-termism from the market.” However, it will likely ease the regulatory burden that discourages companies from going and remaining public. 

The report stated that any such change would require a majority vote on the SEC, and since the commission has a majority of Republican appointees, such a proposal could pass. But it would take six to twelve months to implement through the administrative process of notice-and-comment rulemaking, although that timing could be accelerated, it added.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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