Making quarterly earnings reports optional sounds straightforward — until you read the fine print. CCI editorial director Jennifer L. Gaskin breaks down what experts are saying about the SEC’s actual proposal, why some practitioners are skeptical the change will save companies as much as advertised and what corporate leaders need to consider.
In a move that had been expected for several weeks, the SEC on Tuesday formally issued a proposed rule that would allow public companies to file earnings reports twice a year rather than quarterly, the most significant shift in US disclosure requirements for public companies since 1970.
The proposal, which the commission said cleared White House review last week, would make quarterly reporting voluntary for domestic public companies that currently file Form 10-Q. A 60-day-public comment is expected to open after the rule is published in the federal register, which means final approval, if it comes, would be months away.
Jay Dubow, a partner and co-lead of Troutman Pepper Locke’s securities investigations and enforcement practice group and a former branch chief of the SEC’s Enforcement Division, flagged one potential structural consequence of the voluntary approach: a fragmented disclosure landscape.
“The optional nature of the proposal could result in…
