On December 18th, the SEC released a request for comments concerning the nature, content, and timing of earnings releases and quarterly reports made by reporting companies. The SEC is soliciting public input on how it can reduce burdens on reporting companies associated with quarterly reporting while maintaining or enhancing disclosure effectiveness and investor protections. The Commission is also investigating how the current periodic reporting system, earnings releases, and earnings guidance may create an overly short-term focus on the part of managers and other market participants. This evaluation of the existing system is driven by a need to foster more long-term investments.
The SEC previously issued a concept release on the business and financial disclosure requirements of Regulation S-K in April 2016. This release produced comments on the periodic frequency of said requirements and its impact on reporting companies as well as other market participants. The current release will build upon the information and communications in the 2016 release through addressing:
- The nature and timing of disclosures that reporting companies must provide in their quarterly Form 10-Q reports, including instances when the Form 10-Q requirements overlap with disclosures of earnings releases furnished on Form 8-K or instances where there are differences and how these differences are meaningful.
- Ways in which the SEC can promote efficiency in periodic reporting by reducing duplication in the information that reporting companies disclose and how changes related to this could affect capital formation while enhancing, or at least maintaining, appropriate investor protection.
- If there should be some flexibility permitted concerning the frequency of reporting company disclosures.
- How the existing reporting system, earnings releases, and earnings guidance (either individually or with the influence of other factors) may affect corporate decision-making and strategic thinking, including whether these methods place too much emphasis on short-term results rather than long-term planning.
The public comment period will be open for 90 days after publication in the Federal Register. The complete set of proposed amendments and comment solicitations can be read in the full releases. You can submit comments using the form available on the SEC’s website or by e-mailing rule-comments@sec.gov with the reference number (S7-26-18) in the subject line. You can also use the Federal Rulemaking Portal to submit comments or send your comments by mail to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. Again, please remember to include reference number S7-26-18.
Sources:
SEC Solicits Public Comment on Earnings Releases and Quarterly Reports (www.sec.gov)
SEC Release No. 33-10588: Request for Comment on Earnings Releases and Quarterly Reports (www.sec.gov)
