SEC Considers Semiannual Reporting for Public Companies

The SEC is reconsidering semiannual reporting for public companies to reduce compliance burdens. Supporters cite a long-term focus, while critics warn of reduced transparency. This blog post explores the SEC’s options and their potential impact.

SEC Considers Shift to Semiannual Reporting Schedule:  The shift to semiannual reporting would represent a significant change in U.S. securities disclosure practice with both potential benefits and drawbacks.  https://lnkd.in/eMye_XAu

FLA Partner, David Feldman, was recently quoted in Lexology PRO on the SEC’s consideration of moving U.S. public companies from quarterly to semiannual reporting: “The argument for moving to six-month reporting is to seek to address one of the larger criticisms of becoming a public company, namely, that there is tremendous pressure every quarter to meet or beat short-term Wall Street expectations. Proponents of less reporting say that this reduces the focus on long-term planning and willingness to undertake capital expenditures where the benefits are down the road.” This potential shift raises important questions about balancing transparency, regulatory burden, and long-term growth. Lexology subscribers can view the entire article, linked below. https://lnkd.in/dV8nPCTD

Even if the US SEC ends quarterly reporting, it will still be a more robust disclosure regime than the U.K. listed company regime. As noted by SEC Commissioner Atkins, the U.K. only requires listed companies report twice a year. What’s more (or rather, less) is that the U.K. is also principles based in both its listing rules disclosure requirements (the Disclosure and Transparency Rules enforced by the Financial Conduct Authority) and its accounting standards (International Financial Reporting Standards). The US is more prescriptive rules based - both in SEC disclosure requirements and in US Generally Accepted Accounting Principles. Even with the number of reports being equal, US disclosures will be more detailed and prescriptive than U.K. ones. These differences played a big role in the failed Mike Lynch prosecution in the US. They also play a big role in the length and level of detail in US public company reports versus U.K. listed company reports. So even if the SEC moves away from quarterly reporting, there is something to be said that significant transparency will still be embedded in the US disclosure and reporting regime. And there are clear benefits. Anyone who has worked in a US listed company knows the effort that goes into the constant (never ending) cycle of 10Ks and 10Qs. It’s very different than then drumbeat for U.K. listed companies (in my experience working for both and enforcement in both regimes) If the U.K. is the comparator - it’s not entirely a bad idea. https://lnkd.in/eJJt5cM2

The BIS 50% rule has sharpened the focus on majority ownership, but compliance professionals know the risks don’t stop at the 50% threshold. Minority stakes and indirect influence highlighted in Red Flag 29, introduce additional layers of complexity that demand careful analysis. For organizations operating globally, these gray areas can be costly if left unaddressed. Moody’s supports compliance teams by analyzing subtle ownership patterns and influence dynamics across complex entity networks. With insights powered by our database of nearly 600 million entities, we help businesses identify red flags even when ownership stakes fall below the majority threshold. Read the article or contact us to learn more https://lnkd.in/eqTyUNmy

The BIS 50% rule has sharpened the focus on majority ownership, but compliance professionals know the risks don’t stop at the 50% threshold. Minority stakes and indirect influence highlighted in Red Flag 29, introduce additional layers of complexity that demand careful analysis. For organizations operating globally, these gray areas can be costly if left unaddressed. Moody’s supports compliance teams by analyzing subtle ownership patterns and influence dynamics across complex entity networks. With insights powered by our database of nearly 600 million entities, we help businesses identify red flags even when ownership stakes fall below the majority threshold. Read the article or contact us to learn more https://lnkd.in/eTzjQyqf

The BIS 50% rule has sharpened the focus on majority ownership, but compliance professionals know the risks don’t stop at the 50% threshold. Minority stakes and indirect influence highlighted in Red Flag 29, introduce additional layers of complexity that demand careful analysis. For organizations operating globally, these gray areas can be costly if left unaddressed. Moody’s supports compliance teams by analyzing subtle ownership patterns and influence dynamics across complex entity networks. With insights powered by our database of nearly 600 million entities, we help businesses identify red flags even when ownership stakes fall below the majority threshold. Read the article or contact us to learn more https://lnkd.in/eGg8fRVF

The BIS 50% rule has sharpened the focus on majority ownership, but compliance professionals know the risks don’t stop at the 50% threshold. Minority stakes and indirect influence highlighted in Red Flag 29, introduce additional layers of complexity that demand careful analysis. For organizations operating globally, these gray areas can be costly if left unaddressed. Moody’s supports compliance teams by analyzing subtle ownership patterns and influence dynamics across complex entity networks. With insights powered by our database of nearly 600 million entities, we help businesses identify red flags even when ownership stakes fall below the majority threshold. Read the article or contact us to learn more https://lnkd.in/gpbGGbvY

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