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Quarterly Reporting No More?

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December 06, 2018 | Jennifer Namazi

Quarterly Reporting No More?

If you’re in a role that performs or supports stock plan administration and/or financial reporting, you know that the rituals of quarter-end reporting (public company disclosures mandated by securities regulations) are deeply woven into the corporate fabric.  Having been a requirement for decades, it seems off the radar to imagine a time when such reporting may no longer be mandated.

Yesterday, the Securities and Exchange Commission (“SEC”) held an open meeting to, in part, consider a “request for comment” about quarterly reports and their associated earnings releases. In the Commission’s meeting notice, it says that “the Commission will consider whether to issue a Request for Comment on the nature and content of quarterly reports and earnings releases issued by reporting companies.” The SEC’s interest in evaluating the role of quarter-end reports and the impact on investors in modern times originates from a request that President Trump made of the SEC this past summer, asking the Commission to consider abolishment of quarterly reporting.

The SEC is in the early stages of information gathering on this topic; as such, there are no actual or proposed changes to current regulations on the Commission’s formal rule-making agenda.  It’s possible that the current evaluation, including the requested comments and feedback, will lay the foundation for future changes.

One cornerstone of an argument in favor of reducing or eliminating quarterly disclosures is the information age that is our new reality. The current reporting requirements were implemented during a time when investors were heavily dependent upon outbound news from the company to stay informed. Fast forward to the present day where so much information is readily available to investors at the click of a button via a variety of sources – it’s relatively easy to understand why the role of quarterly reports may no longer take center stage in keeping investors informed.

For those who want to learn more, both CompensationStandards.com and TheCorporateCounsel.net offer close monitoring of this topic.

For now, the status quo in quarterly reporting remains. However, perhaps we can begin to imagine a time when there is quarterly reporting no more.

-Jennifer

 

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