Wall Street regulator should stick to quarterly reports, investor groups say

• Major investor groups including the Investment Company Institute (representing $6.1 trillion in assets) and Managed Funds Association oppose the change, with 91% of surveyed fund managers rating quarterly reports as highly or moderately important
• The SEC's proposal would allow companies to voluntarily switch from quarterly to semiannual reporting, which supporters claim would reduce compliance costs and encourage longer-term corporate planning
• Critics warn that less frequent reporting could allow accounting problems to go undetected longer, leave investors less informed, and weaken monitoring of corporate conduct

Summary: Wall Street Regulator Faces Opposition to Semiannual Reporting Proposal

The U.S. Securities and Exchange Commission's proposal to allow publicly traded companies to switch from quarterly to semiannual reporting is facing significant pushback from the investment community, according to public comment letters submitted by Monday's deadline.

Key Stakeholders:

The Investment Company Institute, representing mutual and exchange-traded funds, conducted a survey of 14 members managing $6.1 trillion in assets. Results showed 62% viewed quarterly reports as highly important and 29% as moderately important. The Managed Funds Association, representing hedge funds and asset managers, also opposed the change, with President Bryan Corbett emphasizing the need for timely material information.

Proposal Background:

The SEC introduced the proposal in May following direction from President Donald Trump, arguing that semiannual reporting could reduce short-termism among corporate leaders and lower accounting and compliance costs for companies.

Opposition Arguments:

Investor groups contend their need for regular corporate disclosures outweighs any benefits from reduced reporting burdens. The California Public Employees' Retirement System and American Accounting Association previously submitted opposing comments, with the latter warning that semiannual reporting could allow accounting problems to remain undetected longer, potentially increasing remediation costs.

Supporting Side:

Some corporate interests have welcomed the proposal, claiming it would strengthen capital markets by allowing companies to adopt longer-term performance perspectives.

Context:

The U.S. has required quarterly reporting since 1970, while other countries permit semiannual disclosures. The SEC acknowledged potential risks including leaving investors less informed and weakening corporate conduct monitoring. The agency has not provided a timeline for next steps.