Two’s Company, Four’s a Burden?: Trump’s Push to Loosen Public Reporting Requirements
Two’s Company, Four’s a Burden?: Trump’s Push to Loosen Public Reporting Requirements
In a post on Truth Social, President Trump floated the idea of limiting public companies’ reporting obligations to every six months rather than on a quarterly basis subject to SEC approval. President Trump noted that doing so would “save [companies] money, and allow managers to focus on properly running their companies.”
“Quarterly reporting,” as defined in Rule 13a-13 of the Securities Exchange Act of 1934, mandates domestic issuers to submit, inter alia, their financial results for the first three fiscal quarters, beginning with the first quarter after the most recent fiscal year.
Importantly, quarterly reporting promotes market transparency and corporate accountability, enabling investors to make informed decisions.
However, several public figures, including Warren Buffett and Jamie Dimon, have criticized these requirements for their “focus on short-term profits at the expense of long-term strategy, growth, and sustainability.” Indeed, in an interview on CNBC’s Squawk Box, SEC Chairman Paul Atkins revealed that he “talked to the President” about the idea, noting that it “could be a good way forward.” Ultimately, however, Atkins stated that “the market can decide what the proper cadence is.”
Despite Trump’s statements and the sentiment of others, loosening public reporting requirements would likely allow public companies to hide “red flags,” leading to “unsavory practices like concealment of liquidity crises [and] accounting fraud,” and would encounter staunch “internal resistance, statutory barriers, and potential litigation,” according to a Fortune article.
One thing is clear: the idea of quarterly reporting is polarizing, and it remains to be seen whether its requirements will be loosened—a change Trump has pushed for during both his presidencies.[1]
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[1] According to an article on CFO Dive, Trump “made a similar pitch” during his first term, calling for the end of quarterly reporting on August 17, 2018.
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Matthew A. Conrad is an associate in the New York office of Faruqi & Faruqi. Mathew is focused on F&F’s securities litigation practice.
