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Author: Long Yue, Wall Street News
From embracing cryptocurrencies to canceling quarterly reports, the Securities and Exchange Commission (SEC) regulatory trend is undergoing major changes.
According to the Financial Times on September 29, SEC’s new chairman Paul Atkins said that the SEC will consider allowing listed companies to adopt semi-annual reports to replace the current requirement to release performance reports every three months, and emphasized “minimum effective dose” regulation.
The government should provide the “minimum “dose” of regulation” required to protect investors while allowing businesses to thrive.
It is time for the SEC to remove its influence and let the market determine the best reporting frequency based on factors such as the company’s industry, size and investor expectations.
Paul Atkins’ move directly echoed Trump’s previous proposal to relax the frequency of financial reports, aiming to provide greater flexibility for businesses.This move is the latest example of the Trump administration’s promotion of a pro-business stance and seeking greater control over independent federal agencies.It marks a complete break with the broad and harsh regulatory agenda promoted by the SEC and its former chairman Gary Gensler.
Previously, the SEC’s attitude in the cryptocurrency field has shifted from radical suppression during the Gensler period to moderate acceptance, and the relaxation of the information disclosure rules for listed companies this time confirmed that this “light-touch” regulatory idea will be fully unfolded.
“Minimum Dosage” regulatory philosophy considers abolishing mandatory quarterly reports
After Paul Atkins took office, he quickly set the tone for the SEC under his leadership.He believes that in recent years, the SEC has “deviated from the precedent and predictability of maintaining (capital market trust)” and also deviated from the clear mission set by Congress for the agency more than 90 years ago.
The remarks are seen as a direct criticism of the radical regulatory and law enforcement stances taken by his predecessor Gensler under the Biden administration.
Relaxation of corporate financial reports disclosure frequency is the most eye-catching part of Atkins’ “deregulation” agenda.He actively responded to Trump’s call to repeal the rules requiring most public U.S. companies to disclose their financial status every three months.
“It’s time for the SEC to move its thumb off the balance and let the market decide the best reporting frequency based on factors such as the company’s industry, size and investor expectations,” Atkins said.
He argues that the goal of regulation is to protect investors and allow business prosperity rather than to satisfy shareholders who “seek to achieve social change or whose motivation has nothing to do with maximizing financial returns to investment.”
Atkins believes that giving up mandatory quarterly reports is not a novel idea, nor is it “a regression in transparency.”He noted that this flexibility has been given to certain businesses.
He took the UK as an example. After the country resumed its semi-annual report system in 2014, some large companies still chose to continue to release quarterly reports due to their own needs.In his opinion, this proves that the market itself can effectively determine the frequency and depth of information disclosure.
Criticize the European model and oppose the “political trend”
Atkins’ regulatory blueprint is not limited to the United States.He also sharply criticized Europe’s regulatory model, saying its climate-related regulations were driven by “theorists” and warned not to let “political trends or distorted goals” drive information disclosure.
He specifically criticized the recent adoption of the Enterprise Sustainable Development Reporting Directive (CSRD) and the Enterprise Sustainable Development Due Diligence Directive (CSDDD) that have been adopted by the EU.He believes that the directives require companies to disclose matters that “may be socially significant, but are usually not financially important.”
“These mandatory requirements may pass on costs to U.S. investors and clients, but have little gain in the information that guides capital decisions,” Atkins warned.
He said that if Europe wants to promote its capital market by attracting more listing and investment, it should focus on reducing unnecessary reporting burdens.
Investors worry about impaired transparency
However, this major policy shift by the SEC has also caused market concerns.Investor rights advocacy groups have reportedly issued warnings about this.
These groups believe that the shift from quarterly reports to semi-annual reports may weaken market transparency and harm the interests of small investors with relatively limited access to information.
They are worried that this move may undermine the foundations that support the efficient operation of the U.S. capital market in the long run.Although Atkins believes that the market can self-regulate, opponents insist that mandatory, more frequent disclosures are key to maintaining market equity and efficiency.
