Donald Trump Asks SEC For Half-Year Earnings Report For Public Companies

Anna Jefferson
August 19, 2018

"If public companies moved from quarterly to semi-annual reporting, that would deprive investors of timely information and dramatically increase the potential for insider trading", said Robert Pozen, Senior Lecturer at the MIT Sloan School of Management.

Trump has asked the Securities and Exchange Commission to study the impact of such a change.

The move would improve "flexibility and save money" Trump said.

On Twitter, Trump said that one executive had suggested the change as a way to boost business, but did not name the individual or the company.

The SEC consists of five commissioners appointed by the president, although there now are only four in place, three named by Trump. He said one had told him, "Stop quarterly reporting & go to a six month system".

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SEC spokesmen didn't respond to requests for comment.

In addition to this federal requirement, Clayton would have to subject any changes to the SEC's own formal rule-making process, which would require the support of the majority of the SEC's sitting commissioners.

Even if the SEC concluded the change was a good idea, companies would likely stick with the current regime to avoid investor backlash, said Ed Yardeni, founder and chief investment strategist at Yardeni Research.

The proposal would mean rethinking a cornerstone of the country's accounting system since the Great Depression: Every three months, publicly traded companies must offer a detailed financial picture - including their revenue and profits - to shareholders. The most recent data from the United Kingdom shows that only 57 of the companies in the benchmark FTSE 100 index were still issuing quarterly reports as of September 2017, according to the Investment Association.

The regulatory burdens of being a public company have been in the spotlight lately, including playing a role in why Elon Musk wants to take Tesla Inc. private. Two influential figures, JPMorgan Chase CEO Jamie Dimon and billionaire investor Warren Buffett, recently urged together that public companies either reduce or eliminate quarterly earnings guidance.

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But scrapping quarterly reporting is not now on the SEC's near-term agenda, according to public records.

Doing away with quarterly reports would help corporations save money.

Business groups including the US Chamber of Commerce, the Securities Industry and Financial Markets Association and exchange operator Nasdaq have been lobbying hard over the past year for lawmakers and the SEC to relax listing rules, warning that the decline in listings hurts jobs and pension funds.

"They are more likely to react to other types of information and more likely to overreact", said Jill E. Fisch, a co-director of the Institute for Law and Economics at the University of Pennsylvania.

Druckenmiller noted that investors like to know what's going on with the companies they invest in.

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