Trump asks SEC to look into practicality of corp

19 August, 2018, 21:09 | Author: Corey Lynch
  • Trump Directs SEC to Study Six-Month Reporting for Public Companies

Regulators can conduct studies of their own volition, or will do so at the request of Congress, the president, or the public.

The president on Friday said he has asked federal regulators to study whether public companies should be required to report results half as often as they now do - every six months instead of every three months, or once a quarter.

"I'd like to see twice, but we're going to see", Trump later told reporters when asked about his tweet.

For companies, "That would allow greater flexibility & save money", Trump tweeted. Even SEC Chairman Jay Clayton, a Trump appointee who has made boosting the number of initial public offerings one of his top priorities, hasn't floated the idea of scaling back reporting requirements.

While Trump can not force Clayton to make changes, as a matter of courtesy the SEC chairman may promise to study the issue.

Trump said he had consulted "some of the world's top business leaders" on steps to create jobs and make business "even better". The SEC is the regulatory arm of the SEA, and since its formation, quarterly earnings reports have been mandatory.

But moving away from reporting earnings every three months would be a much more dramatic change that would nearly certainly trigger resistance from shareholders who want transparency from the companies they invest in.




Tesla chief executive Elon Musk also cited the issue when explaining why he has launched a surprise effort to take the $50 billion auto company private.

Billionaire investor Warren Buffett and JPMorgan Chase & Co Chief Executive Jamie Dimon wrote in the Wall Street Journal in June that companies should move away from quarterly guidance, but did not call for an end to quarterly reporting. But some argue the quarterly requirement puts unnecessary pressure on companies because it forces them to focus on short-term results.

Last fall it laid out changes to capital market rules in a US Treasury report, but did not advocate scrapping quarterly reporting. The most recent data from the United Kingdom shows that only 57 of the companies in the benchmark FTSE 100 index were still issuing quarterly reports as of September 2017, according to the Investment Association.

The SEC was created in 1934 in the midst of the Great Depression and requires publicly-traded companies to issue quarterly and annual earnings reports to keep the public informed on their operations and financial condition. The statements are generally less detailed than the reports companies file with the SEC.

The US Chamber of Commerce and other lobbying groups have also blamed compliance burdens for preventing more companies from selling shares.

On the other side are many investors who say frequent insight into the financial performance of corporations is critical to their own decision-making and financial security.

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