SEC Releases Request for Comment on Quarterly Reporting

SEC Releases Request for Comment on Quarterly Reporting

On December 18th, the SEC released a Request for Comment that solicits input on the nature, content, timing and frequency of earnings releases and quarterly reports.  The request follows a tweet made by the President in August, who directed the SEC to study the frequency of reporting and consider a semi-annual system.  However, this is not the first time the SEC has considered the issue.  The Commission previously requested comment on the frequency of reporting in its Concept Release on the business and financial disclosure requirements of Regulation S-K in April 2016. 
Broadly speaking, this latest request seeks input on how the SEC might simplify the process associated with the release of quarterly earnings and reports while maintaining the investor protection benefits of disclosure.  The Commission also seeks input on how the periodic reporting process, earnings releases and earnings guidance affect corporate decision making and strategic decisions – i.e., does the process lead to an overemphasis on short-term thinking by registrants and other stakeholders?  Many of the detailed questions in the release focus on the following categories:    

  • The information content resulting from the quarterly reporting process, including how companies determine whether to issue an earnings release, what information is included in that release, and how it impacts the usefulness of information included in Form 10-Q;

  • The timing of the quarterly earnings process, including how the release of earnings in a Form 8-K relates to the issuance of the Form 10-Q;

  • The earnings release as the core quarterly disclosure, including whether registrants should be given the option to follow a “Supplemental Approach” in which they can use their earnings releases (if issued) to satisfy certain core financial requirements of Form 10-Q; and

  • The reporting frequency, including whether the SEC should move to a semi-annual reporting model for all or certain categories of reporting companies. 

The SEC’s press release contains further details about the Request.  Comments are due 90 days following the Request’s publication in the Federal Register.