Trump Directs SEC to Study Six-Month Reporting for Public Companies

Trump Directs SEC to Study Six-Month Reporting for Public Companies

Trump asks SEC to study ending quarterly earnings for public companies

SEC Chairman Jay Clayton, a Trump nominee, has said increasing the number of public companies and initial public offerings are among his top priorities.

President Donald Trump said he's asked the Securities and Exchange Commission to study ending quarterly reporting for USA businesses.

The SEC could make such a change on its own without Congress passing legislation, but that doesn't mean it will, said David Martin, who previously ran the agency unit that oversees corporate filings.

Abolishing the rule would "allow greater flexibility & save money" for businesses, Mr. Trump tweeted.

Trump said the idea came from conversations with the "world's top executives", including PepsiCo's outgoing chief executive, Indra Nooyi. The SEC is an independent commission-led agency, and the president can not force it to implement rule changes. One criticism is that if companies are striving to report profit gains every quarter, they are more likely to buy back shares and cut costs than invest in their businesses.

SEC spokesmen didn't respond to requests for comment.

Friday's Twitter missive featured what has become a hallmark of Trump's speeches - unnamed leaders at unspecified companies supportive of his agenda.

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The reports can be found on the SEC's website.

Publicly traded companies in the United States, as well as Canada, now file their earnings reports every three months, or four times per year.

In a statement Friday, Nooyi said her comments were part of a broader conversation about how to better focus companies toward long-term goals. "One of the inherent issues with quarterly reporting is that it does tend to drive management to make decisions geared toward short-term metrics, which is not always in everyone's best interest". That was the argument made by Jamie Dimon, the chief executive of JPMorgan Chase, and investor Warren E. Buffett in a widely shared op-ed published by the Wall Street Journal in June.

Still, Van Sinderen cautions, six months can be a long time for smaller companies - particularly those shouldering hard challenges - and can lead to other issues should those two reports differ drastically.

Companies that want to move away from short-term scrutiny should instead stop publicly projecting the next quarter's earnings, Pozen added.

Last fall it laid out a blueprint for changes to capital market rules in a U.S. Treasury report, but did not advocate scrapping quarterly reporting. Others said that the prospect of fewer financial reports could exacerbate price swings around earnings or fuel insider trading.

"Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace", said Amy Borrus, CII's deputy director.

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