SEC's Proposed Semiannual Reporting Rule

Summary

SIFMA AMG ¹ provided comments to the U.S. Securities and Exchange Commission (SEC) regarding the SEC's Proposed Semiannual Reporting Rule, which would allow companies to file semiannual reports in lieu of quarterly reports to meet their interim reporting obligations under the Securities Exchange Act of 1934. ²

Excerpt

The Proposal is part of a larger initiative to encourage more companies to go and remain public by reducing the costs and burdens associated with Exchange Act reporting. ³ We strongly support this overarching objective and share the Commission's view that "a robust public capital market - with more emerging companies and small businesses choosing to become public companies through initial public offerings or other paths - benefits companies and investors alike." ⁴ From an asset management perspective, expanding the universe of public companies available to invest in promotes portfolio diversification, improves market transparency, and creates more opportunities to invest in growth-stage issuers.

In advancing this objective, we recognize the necessity of reducing potentially duplicative or otherwise overly burdensome reporting requirements, which may impose costs without yielding proportionate benefits to investors. However, while reforms designed to address unnecessary compliance costs are worthy of consideration, quarterly reporting remains an important source of timely information for investors. As we describe in detail throughout our comments, eliminating mandatory quarterly reporting requirements could result in a range of unintended consequences that have the potential to negatively impact investor outcomes, market quality, and the Commission's broader capital formation goals.

Accordingly, we encourage the Commission not to move forward with the current Proposal and instead recommend an alternative approach that focuses on reducing duplicative, immaterial, or otherwise unnecessary reporting burdens as part of the Commission's broader review of public-company disclosure requirements.

As Chairman Atkins observed in his Statement on the Proposing Release, a significant part of incentivizing companies to go and stay public is ensuring that the disclosure mandated in interim reports (both financial and non-financial) is guided by materiality as the north star, regardless of reporting cadence. ⁵ We have long-supported SEC initiatives focused on reducing reporting burdens for companies without decreasing the usefulness of such reports to investors, ⁶ and we would welcome the opportunity to work with the Commission and staff to identify specific elements of Form 10-Q that could be improved as part of the Commission's broader disclosure modernization initiative.