Trump’s Plan to Scrap Quarterly Reports Could Come Sooner Than Investors Think

Trump and Paul Atkins. (Bonnie Cash/UPI/Bloomberg)

Key Points

About This Summary

• SEC Chairman Atkins aims to prioritize Trump’s plan to eliminate the quarterly reporting requirement for public companies.
• Barclays analyst Michael McLean says that Atkins could use exemptive relief to allow some firms to skip earnings reports.
• The SEC could face lawsuits from investors if it bypasses the formal rulemaking process, says former SEC counsel Tyler Gellasch.

Securities and Exchange Commission Chairman Paul Atkins says he wants to prioritize President Donald Trump’s plan to do away with public companies’ quarterly reporting requirement. If he wanted, Atkins could make that happen quickly.

Trump on Monday said that companies ought to only be required to report their earnings every six months, a massive change that opponents say could leave investors in the dark on companies’ performance and heighten volatility. The SEC said the agency was “prioritizing this proposal to further eliminate unnecessary regulatory burdens on companies.”

Though some investors expect such a proposal would take months to implement—if it happens at all—if Atkins wanted to, he could likely start reducing reporting requirements in time for third-quarter earnings, said Barclays analyst Michael McLean in a research note on Thursday.

The SEC’s standard process for rule changes can take years to play out. If that is followed, the agency would issue a proposal to cut the reporting requirement, collect comments from companies and members of the public, make further revisions, and eventually propose a final rule.

In practice, the long timeline has meant that many proposed rules never make it across the finish line. In June, the SEC withdrew 14 proposals by the agency during President Joe Biden’s administration, including one first proposed in 2022 that would have required brokers to get the best prices for their clients’ trades.

During the first Trump administration, then SEC Chairman Jay Clayton also considered eliminating the quarterly reporting requirement, and collected comments in anticipation of a rule proposal. However, the idea was dropped after Trump lost the 2020 election.

This time around, Atkins could try to skirt the formal process altogether, and issue exemptive relief or no-action letters to some companies, essentially telling them that the agency won’t pursue them for skipping earnings reports, McLean wrote.

The SEC didn’t respond to a request for comment.

“The SEC has statutory authority to exempt anyone from the application of the securities laws for any reason with very few limitations,” said former SEC counsel Tyler Gellasch, CEO of the Healthy Markets Association, a trade group that represents pension funds and other investors.

Unlike formal rule proposals, exemptive relief can come within months, said Gellasch. Investors who disagree with the decision could sue the SEC to try to stop it—and whether companies would have to continue reporting quarterly while the lawsuits play out would be up to the courts, he said.

Though a formal rule-making process would likely be safer from a court challenge, nothing precludes the SEC from pursuing the rule even as they give companies the short-term relief.

“While not our base case, the SEC could move quickly to implement this change in time for Q3 earnings, if it wanted,” wrote McLean. Despite the possibility, McLean said he still viewed a formal rule-making process as the most likely path forward, “because it would be more durable to future political change.”

Write to Joe Light at joe.light@barrons.com