As readers know, the SEC has proposed changes to the public company reporting timing requirements, allowing companies the option to file periodic reports with the SEC on a semiannual rather than a quarterly basis. As discussed below, many commentators have weighed in on this proposal. Among the more interesting and noteworthy comments in favor of more frequent reporting is that the periodic reporting process both imposes institutional discipline and enforces a culture of compliance, as John Jenkins noted in a June 10, 2026, post on TheCorporateCounsel.net blog (here), and as is also discussed further below.
The SEC has proposed to allow optional semiannual reporting for three essential reasons: to reduce compliance costs for public companies, minimize management distractions associated with frequent reporting, and modernize disclosure frameworks to better align reporting cadence with the specific needs of the business and its investors.
The proposed rule change is now open for public comment. Already, a number of institutional investors and financial market participants have come forward in opposition to the proposed rule change.
For example, in a report from its June 4, 2026 meeting, the SEC’s Investor Advisory Committee has come out against the proposed rule change. The report noted that at its meeting the panelists had “overwhelmingly noted the structural importance of the existing quarterly reporting cadence to the U.S. capital markets and were skeptical that a semiannual alternative would be feasible or attractive to most public companies.” The IAC concluded that “the SEC should not eliminate its quarterly reporting mandate for public companies, as doing so would deprive the markets of timely, material information, and thereby undermine informed investor decision making and the efficient allocation of capital among public companies.”
Similarly, in a June 1, 2026 post on the Blue Sky Law Blog (here) the Shadow SEC, a group of six academics collaborating to provide commentary on the securities laws and the SEC’s activities and policies, expressed their view that the SEC should retain its current system of quarterly reporting. Among other things, the commentators note that companies adopting semiannual reporting could see their share prices decline, and that semiannual reporting could create “the possibility of an increase in fraud as a result of companies being able to report less frequently.” The commentators also note that the SEC’s proposal fails to take advantage of experience data from countries that have adopted semiannual reporting, data showing the negative effects of making the switch.
In addition, in a June 17, 2026 post on TheCorporateCounsel.net (here), Liz Dunshee reports that the individual investor submissions to the SEC on the proposed rule change are “from individual investors who oppose (or strongly oppose!) the proposal.” Liz quotes from and refers to a tracker that Professor Tzachi Zach at The Ohio State University Fischer College of Business has established that categorizes the comment letters so that you can see at a glance the number that oppose, support, or conditionally support the proposal. The tracker shows that, as of June 17, 2026, when I checked the tracker, 96% of submissions oppose the proposal.
From among all of the various comments proffered so far about the proposal, there is one that I found particularly interesting. It appears in a June 3, 2026, post on the CLS Blue Sky Blog entitled “The Hidden Work of Securities Disclosures,” by Timothy Lytton and Anne Tucker, both of the University of Georgia Law School. As John Jenkins noted in his blog post about the article, to which I linked above, the article is written from the perspective of mutual funds, but what the authors have to say is relevant to the corporate side as well.
The article’s authors suggest that the discipline of disclosure strengthens internal governance, in ways that are beneficial to the companies and their investors. The authors suggest a number of these benefits: for starters, the disclosure process empowers lawyers. As the authors note, “the disclosure process elevates the authority of lawyers within organizations that financial professionals would otherwise dominate.”
The disclosure process also “builds a culture of compliance” through a cross-department exercise that requires collaboration and input from across the company. In-house lawyers acquire the character of “good inspectors,” gaining access to information and trying to anticipate problems before they arise.
Moreover, as the authors note, “disclosure forces institutional learning.” Frequent periodic reviews “compel funds to revisit their disclosures, kick the tires, and reconcile public representations.”
In a June 4, 2026 post on the Business Law Prof Blog, University of Denver Law Professor Ann Lipton, commenting on the authors’ post about periodic disclosure as a disciplinary process, notes that “The obligation to report necessarily carries with it an obligation of oversight; you can’t report what you don’t know.” Professor Lipton adds that “a switch to semi-annual reporting may not simply mean less information to investors; it loosens the obligations of boards, and managers, to oversee the company.”
Discussion
The authors’ discussion of the importance of reporting discipline highlights the fact that going to a less frequent reporting model may be bad from a corporate risk management perspective. Frequent corporate reporting reinforces discipline and helps foster a compliance culture. Less frequent reporting can diminish or even undermine boards’ performance of their duty of oversight.
For these reasons, D&O insurers may be concerned about companies that choose to report semiannually rather than quarterly. The insurers may be concerned that less frequent reporting could weaken corporate governance and even potentially lead to more frequent corporate and securities litigation. A cynical observer might note that the insurers can just charge more for companies that report less frequently. At least during the current soft market pricing conditions, the insurers will have relatively little leeway to push pricing increases, but as the market eventually moves to the next phase of the cycle, companies reporting semiannually could well pay more for their D&O insurance – which is an interesting consideration for those who advocate less frequent reporting as a source of cost savings.
It seems likely that, despite the chorus of voices opposing the proposed rule change, the proposed rule will be adopted. The SEC is now (or will be shortly) down to just two commissioners. The two remaining commissioners are Republican appointees. (By statute, the SEC is supposed to have a bipartisan panel of five commissioners). The proposed rule change is the product of a “one party proposal” (as the Shadow SEC put it), and the two remaining commissioners have little reason to heed the commentary opposing the rule change.
The two Commissioners have an audience of one; the fact is that the semiannual reporting idea most recently originated in a proposal from the President put forward in a social media post. Under these conditions, the pleas for quarterly reporting to be preserved may not stand a chance.
The more interesting question may be, if the SEC allows optional semiannual reporting, how many companies will actually opt for less frequent reporting? Investors and financial markets may impose their own discipline, particularly if the share prices of companies that report less frequently face a pricing debit due to their less frequent financial reporting. Many companies may opt to continue quarterly reporting, even if the rules are changed.