U.S. SEC Chairman Calls for Easing Regulations: Will Consider Replacing Quarterly Reports with Semiannual Reports

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The U.S. Securities and Exchange Commission (SEC) has sent a clear signal that it plans to significantly relax financial regulations, and will consider allowing listed companies to replace the current quarterly reporting system with semiannual reports.

On Monday local time, SEC Chairman Paul Atkins announced in a commentary written for the Financial Times that he will move quickly to advance President Trump's proposal to ease the frequency of financial disclosures. Atkins emphasized, "The government should provide the minimum effective dose of regulation necessary to protect investors, while allowing businesses to flourish."

This move is one of the most significant policy shifts since Atkins took office. This latest statement confirms that under the Trump administration, the SEC will adopt a wider "light-touch" regulatory strategy, in stark contrast to the comprehensive and aggressive regulatory agenda under former Chairman Gary Gensler.

In addition to financial reporting rules, the SEC under Atkins has previously adopted a more friendly stance toward the cryptocurrency sector, and halted the defense of the previously high-profile climate risk disclosure rule, reflecting its systematic loosening approach to regulation.

Evaluating the Option to Replace Quarterly Reports with Semiannual Reports

As a key step in its deregulation agenda, Atkins is moving quickly to advance a proposal that would allow listed companies to choose to disclose financial reports on a semiannual basis.

He believes that mandatory quarterly reporting is not the cornerstone of the vitality of the U.S. capital markets, and that it is time to "let the market decide the optimal reporting frequency based on factors such as industry, company size, and investor expectations."

Atkins pointed out that this idea is not original. He noted that the U.S. did not adopt quarterly reporting until 1970, and the current regulatory system already provides this flexibility to some companies.

For example, foreign companies listed in the U.S. are currently required to submit semiannual reports, though some still choose to release earnings quarterly. He also cited the UK as an example, where some large companies continued to issue quarterly reports after the country reverted to semiannual reporting in 2014.

He emphasized that "granting companies the right to choose semiannual reporting is not a regression in transparency," but rather a way to refocus on market-driven disclosure practices that are more beneficial to companies and their investors.

Regulatory Tone Shift: From Strict Oversight to "Minimum Effective Dose"

Atkins made it clear in the article that he is committed to bringing the SEC back to its core mission and reversing what he sees as the "mission drift" of recent years.

In the article, he pointed out that the SEC's core mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation, and that the essence of SEC regulation is the "materiality principle"—the SEC should only require companies to provide information that reasonable investors would consider important when making investment decisions.

In recent years, however, the SEC has drifted from the clear mandate set by Congress more than 90 years ago, as well as from the precedent and predictability needed to maintain market confidence.

He believes that rules made to cater to social change motivations or goals unrelated to maximizing financial returns have failed investors. Atkins stated that his approach will be guided by "the minimum effective dose of regulation needed to protect investors," striving to restore trust in the agency.

He wrote in the article:

"I am pleased to report that the chapter of mission drift has come to a close."

Criticism of Previous Agenda and European Regulatory Rules

Atkins's new regulatory policies are accompanied by clear criticism of his predecessors and European counterparts.

He targeted his predecessor Gary Gensler's aggressive approach to regulation and enforcement under the Biden administration, and has already taken concrete action to reverse core parts of Gensler's agenda, such as this year's SEC vote to stop defending a rule requiring companies to disclose climate risks in court.

In addition, Atkins specifically named and criticized the recently passed European Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) in his article.

He believes these regulations promote a "double materiality" approach that requires disclosures of "matters that may have social significance but often lack financial materiality"—an approach driven by "political trends or distorted objectives."

He warned:

"These directives may impose costs on American investors and clients, while doing little to provide information that is actually useful for capital decision-making."

Investor Groups Worried About Declining Transparency

Although Atkins has provided ample theoretical justification for relaxing financial disclosure requirements, the move has not received unanimous support. According to media reports, investor advocacy groups have expressed concerns.

These groups believe that reducing financial disclosures from once every three months to once every six months could significantly weaken market transparency.

They fear that the reduction in information disclosure will harm retail investors who rely on public information to make decisions, and could undermine the efficiency that is a cornerstone of U.S. capital markets. This point of contention is expected to become a main focus in the future debate over the proposal.

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