6/5/2026
SEC’s Investor Panel Rejects Agency’s Semiannual Reporting Plan
Pensions & Investments (06/05/26) Degen, Courtney
Following the U.S. Securities and Exchange Commission's (SEC) May proposal to allow semiannual reporting for public companies, the agency’s Investor Advisory Committee (IAC) expressed opposition to the proposed move, contending that doing so would strip investors of important timely, information. “We conclude 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,” the committee wrote in its recommendation. The recommendation was one of two that members passed at its June 4 meeting, with the other one suggesting actions related to proxy fund voting, including that the SEC allow opt-in retail voting programs similar to that of Exxon Mobil (NYSE: XOM). The SEC’s Investor Advisory Committee, made up of both retail and institutional investors, was created under the Dodd-Frank Act to advise the commission through findings and recommendations discussed in quarterly meetings. On May 5, the SEC issued the proposal allowing public companies the option of filing reports on a semiannual basis, in a move that Chair Paul Atkins said is “aimed at incentivizing companies to go and stay public.” If adopted, companies would be able to check a box on their 10-K annual report filings to indicate the switch to semiannual reporting, with the default choice as quarterly reporting. The proposal’s comment period closes July 6. An SEC spokesperson declined to comment on the IAC’s opposition to the proposal. The committee wrote in its recommendation, “voluntary disclosure regimes tend to produce skewed information environments because firms have strong incentives to disclose information that lowers their cost of capital and, crucially, to withhold information that does not.” Therefore, the committee contended, those firms “with the most useful information for investors — those experiencing performance deterioration, emerging risks, or governance problems — are precisely the firms least likely to voluntarily opt in to quarterly reporting.” In addition, the committee said that eliminating the requirement for quarterly reporting would mean investors “have fewer opportunities per year to reallocate positions based on standardized updates on company performance and outlook, including financial statements.” “The potential negative impact would be particularly high for retail investors,” the recommendation added, since such investors don’t have access to public company management and other resources. When Atkins first floated the idea to allow semiannual reporting back in the fall, some stakeholders said that doing so could hurt institutional investors’ ability to make informed decisions as well. During the IAC meeting, John Gulliver, the committee’s assistant secretary, pointed out that the SEC proposal estimates “a net reduction in direct compliance costs equal to $198,000 per fiscal year” for issuers that choose to file reports semiannually rather than quarterly, according to the proposal. “It’s not clear that this would be enough to move the needle for public companies in terms of compliance costs, or to encourage substantially more private companies to go public,” contended Gulliver, executive director of the Committee on Capital Markets Regulations and Program on International Financial Systems. George S. Georgiev, chair of the committee, said that the “entire idea behind” a mandatory disclosure system is “to have structured outputs that promote comparability.” Yet, having some companies disclose semiannually and some disclose quarterly “then that makes it very difficult to compare, and I think we have to remember that all investment decisions are by their nature comparative decisions,” added Georgiev, a professor at University of Miami School of Law. Separately, the committee also passed a recommendation on June 4 for the SEC to make a series of changes related to fund proxy voting, which most notably includes a short-term recommendation to “permit opt-in retail voting programs, similar to the approach outlined in the Exxon Mobil Corporation no action letter.” That letter, issued Sept. 15, stated that the SEC will not penalize Exxon for implementing a program that enables automatic proxy voting for the company’s retail investors, giving them an easier way to vote their shares based on the board’s recommendation. “The goal is here to improve participation rates and reduce the need for repeated solicitations without compromising on transparency or investor choice,” said C. Rodney Comegys, the vice chair of the IAC’s Investor as Purchaser Subcommittee, at the meeting. Comegys is also chief investment officer and head of global equity at Vanguard Capital Management. The committee’s recommendation additionally includes three medium-term recommendations and three long-term recommendations related to proxy fund voting. Exxon’s retail voting program has drawn scrutiny from some institutional investors, including the New York City comptroller’s office.
Read the article