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For 55 years, US public companies have filed quarterly reports like clockwork. The SEC now wants to make that optional, and investors across the spectrum are telling the regulator that’s a terrible idea.
The pushback is coming from an unusual alliance. Institutional heavyweights and retail investor communities are finding themselves on the same side, arguing that reducing mandatory filings from four times a year to two would gut the transparency mechanisms that keep corporate management honest.
What the SEC is proposing
On May 5, the SEC issued proposed amendments that would allow public companies to swap their traditional quarterly Form 10-Q filings for a new document called Form 10-S. Under this framework, companies would only need to file one semiannual report alongside their annual report, cutting mandated interim disclosures in half.
The proposal is currently in a public comment period, with no final decision made yet.
The case for keeping quarterly reports
Tyler Gellasch, a prominent voice in investor advocacy circles, put it bluntly back in March. “Boards fire CEOs when investors get mad, and that often happens around quarterly filings,” he said. Strip away those regular checkpoints, and you’re essentially giving underperforming executives an extra three months to hide before the music stops.
Retail investors weigh in
Perhaps the most surprising entrant in this regulatory fight is Reddit’s r/wallstreetbets community. Around May 26, the forum submitted a comment letter to the SEC arguing that reduced disclosure requirements would actually tilt the playing field further toward institutional investors.
Large firms have the resources to conduct their own due diligence, fly to company headquarters for meetings, and pay for proprietary data feeds. Retail investors, on the other hand, rely heavily on publicly mandated disclosures as their primary source of corporate financial information. Cut those filings in half, and you’re essentially widening the information asymmetry between Wall Street and Main Street.
The entire premise of mandatory disclosure regulations, dating back to the Securities Exchange Act of 1934, was to level the informational playing field between corporate insiders and outside investors.
What this means for investors
The debate over quarterly reporting isn’t new. Between 2018 and 2019, similar discussions surfaced when the idea of moving to semiannual reporting was floated. It didn’t gain enough traction to move forward at the time.
For now, the comment period remains open and no final rule is on the books. The breadth of opposition, spanning from trillion-dollar asset managers to anonymous Reddit posters, suggests the SEC will have a hard time arguing that this change serves investors.
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