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It will be tough for Trump's SEC to overhaul reporting rules

19 August, 2018, 21:12 | Author: Shawna Walton
  • President Trump speaks during a Cabinet meeting at the White House on Aug. 16

Publicly traded companies with more than $10,000,000 in assets must file a 10-K report with the SEC every year.

President Donald Trump on Friday said he has instructed the US Securities and Exchanges Commission to investigate the abolition of quarterly financial reporting for US companies, after discussions with business leaders.

He said he has asked the US Securities and Exchange Commission to investigate making such a change. "That would allow greater flexibility & save money", he tweeted. He said one executive suggested the change as a way to boost business, although he did not name the individual or the company.

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 on Twitter that "some of the world's top business leaders" have advised him that converting to semiannual reporting would improve the country's jobs climate.

Under federal law publicly traded companies must file a 10-Q report with the SEC every three months.

SEC spokesmen didn't immediately respond to a request for comment.

"This is not something he can change with an executive order", he added. The SEC is the regulatory arm of the SEA, and since its formation, quarterly earnings reports have been mandatory.

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. "And so they don't do it, because the definition of being a successful business is narrowed to what your quarterly earnings reports are". Some high-profile executives, including JPMorgan Chase chief executive Jamie Dimon, have recommended that companies stop providing Wall Street analysts guidance on what to expect from quarterly profits, for example. Less-frequent public disclosures could hand another advantage to sophisticated investors with easy access to corporate executives, corporate governance experts said.

Quarterly reports are "early warning signs of other bigger problems", Elson said.

In a report published by the US Treasury past year, the administration outlined policies it hoped would revitalize listings - but did not go as far as suggesting quarterly reporting requirements be scrapped.

Doing away with quarterly reports would help corporations save money.

"Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace", said Amy Borrus, CII's deputy director.

He would need to draft a proposed rule-change which would then be put to an industry consultation during which investors, companies, exchanges, pension funds and public interest groups would likely bombard the SEC with information.

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