Paul Atkins is on a collision course with Wall Street investors.
The Securities and Exchange Commission chair is closing in on a plan intended to answer President Donald Trump’s calls to relax the quarterly reporting model that has guided U.S. public companies’ disclosures for more than half a century.
C-suite executives, leading big business groups and Trump have argued that quarterly reporting forces companies to overly fixate on short-term profits while saddling them with expensive legal bills. And now, Atkins’ SEC, which is under closer watch from Trump’s White House than ever before, is expected to unveil a proposal in the coming weeks that could offer companies more flexibility in how often they report critical financial information to investors.
But the SEC’s push could run into stiff resistance from the investment world.
Officials from GOP megadonor Ken Griffin’s hedge fund Citadel and the investment behemoth Fidelity warned at a recent SEC gathering that a shift away from quarterly reporting could backfire for companies with wilder stock moves and higher costs of raising money in the markets. Wall Street firms BlackRock and T. Rowe Price were staunch critics of moving to a twice-a-year reporting model when the SEC explored the idea in Trump’s first term, citing concerns about losing critical visibility into companies’ operations and performance. And some are questioning why the SEC is even considering the change.
“It’s just objectively a bad idea. This is at the end of the day Trump giving a lot of people what they think they want,” said Muddy Waters Capital CEO Carson Block, a prominent investor who is best known for betting against companies’ stocks as a short seller. “It’s kind of like, if your view of drug dealers is that you’re just supplying people with what they want — that they don’t cause drug addiction. I think this fits a similar framework.”
The early pushback offers a preview of the fierce lobbying fight that is likely to break out once the SEC releases the proposal. The clash could pit some of the biggest names on Wall Street against corporate executives and Republican lawmakers who have voiced support for overhauling the SEC’s disclosure rules — to say nothing of Trump, who expressly called on the agency to take up the issue in a social media post last year.
Stuck in the middle will be Atkins.
The SEC chair has made it a top priority to “Make IPOs Great Again” — a play on the longstanding Republican campaign to make it easier for companies to go public in the U.S. And cutting down on the number of times public company executives would need to update their shareholders through lengthy and expensive regulatory filings could help, along with broader disclosure reform, proponents say.
Yet, with investors already signaling opposition, the effort will pose a major test of Atkins’ relationship with the White House in an era where independent agencies are effectively no more. In his first administration, Trump similarly pressed the SEC to study whether to introduce twice-yearly reporting in the market — but the SEC never moved forward with a proposal.
“The environment is different now for Atkins,” said a former SEC official, who was granted anonymity to speak freely. “There’s much more White House attention on independent agencies, including the SEC.”
Another former agency official who worked at the SEC during the first Trump administration said “there’s a real premium on being responsive here to the executive branch.”
Of course, the industry’s reaction to the proposal will ultimately hinge on its yet-to-be-released specifics. And companies would still face other reporting requirements around financially significant developments in their businesses.
SEC spokesperson Ben Watson said in a statement that Atkins has been clear that the SEC’s plan would offer companies the option of reporting on a quarterly or twice-yearly basis, “with the goal of removing the agency’s thumb from the scales and allowing the market to dictate the optimal reporting frequency based on factors such as the company’s industry, size, and investor expectations.” If approved, the proposal would then be opened for public feedback.
Underpinning the SEC’s effort is a long-held frustration with short-termism in the markets, or the idea that investors are so focused on upcoming earnings results that it can weigh on corporate management teams’ ability to pursue their big-picture visions or even go public. In his September post, Trump wrote that twice-yearly, or semiannual, reporting would “save money, and allow managers to focus on properly running their companies.”
Rep. Ann Wagner of Missouri, a senior Republican on the House Financial Services Committee, called the SEC’s push a “very positive development.”
“We’re trying to cut as much red tape,” said Wagner, who leads the committee’s capital markets panel. “We’re going to give this a try and see how it works. But every quarter, for some companies — they would finish one report and immediately have to start on another.”
Atkins recently said on CNBC that less-frequent disclosures could make “more sense” for smaller companies in particular. But the SEC chair has also suggested that he expects many companies to continue reporting quarterly based on their investors’ demands, as is the case for many companies in other jurisdictions like the European Union and the United Kingdom where quarterly reporting is already optional.
“The ultimate boss is the investor,” he told POLITICO last year. “Why not be flexible versus one-size-fits all?”
But many investors are already starting to make their concerns heard. And their fears about semiannual reporting run the gamut — from new volatility in the markets to advantaging those who can afford to pay for costly alternative data. Some are also warning that it will make CEOs less accountable.
"Boards fire CEOs when investors get mad, and that often happens around quarterly filings and earnings calls,” said Tyler Gellasch, a former SEC official who leads the institutional investor advocacy group Healthy Markets Association. “Reducing the opportunities for that type of accountability may sound good to executives, but it's a bad deal for most investors."
Jasper Goodman contributed to this report.
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