The new SEC chairman supports "minimal regulation": considering semi-annual reports to replace corporate quarterly reports, investors are worried about the loss of transparency

The new chairman of the U.S. SEC promotes a minimal regulatory philosophy and not only embraces cryptocurrencies, but also plans to cancel the mandatory quarterly reporting system. This article originates from an article written by Long Yue from Wall Street Insights, and was compiled, compiled and written by Foresight News.
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From embracing cryptocurrencies to canceling quarterly reports, the regulatory direction of the U.S. Securities and Exchange Commission (SEC) is making major changes. According to a report by the Financial Times on September 29, the newly appointed SEC Chairman Paul Atkins said that the SEC will consider allowing listed companies to adopt semi-annual reports to replace the current requirement to publish performance reports every three months and emphasize "minimum effective dose" supervision.

Governments should provide the "minimum effective dose" of regulation needed to protect investors while allowing businesses to thrive. It is time for the SEC to remove its influence and let the market determine the optimal reporting frequency based on factors such as a company's industry, size and investor expectations.

Echoing Trump’s proposal

Paul Atkins’ move directly echoes Trump’s previous proposal to relax the frequency of financial reporting, aiming to provide companies with greater flexibility. The move is the latest example of the Trump administration pursuing a pro-business stance and seeking greater control over independent federal agencies. It marks a clean break for the SEC from the broad and tough regulatory agenda pursued by its former chairman, Gary Gensler.

Previously, the SEC’s attitude in the field of cryptocurrency has changed from aggressive suppression during the Gensler period to mild acceptance. This relaxation of the information disclosure rules of listed companies confirms that this “light-touch” regulatory approach will be fully rolled out.

The "minimum dose" regulatory philosophy, considering abolishing mandatory quarterly reporting

After Paul Atkins took office, he quickly set the tone for the SEC under his leadership. He believes that in recent years the SEC has "deviated from precedent and predictability in maintaining (trust in capital markets)" and from the clear mission that Congress set for the agency more than 90 years ago.

The remarks were seen as a direct criticism of the aggressive regulatory and enforcement stance taken by his predecessor, Gensler, under the Biden administration.

Relaxing the frequency of disclosure of corporate financial reports is the most eye-catching part of Atkins' "deregulation" agenda. He responded favorably to Trump's call to repeal rules that require most U.S. public companies to disclose their financials every three months.

Atkins said: "It is time for the SEC to take its thumb off the scale and let the market determine the optimal reporting frequency based on factors such as the company's industry, size and investor expectations."

He argued that the goal of regulation is to protect investors and allow business to flourish, rather than satisfy shareholders who "seek to achieve social change or whose motivations are not related to maximizing financial returns on investment."

Atkins believes that abandoning mandatory quarterly reporting is not a novel idea, nor is it "a step back in transparency." He noted that this flexibility has been given to some businesses.

He took the UK as an example. After the country restored its semi-annual reporting system in 2014, some large companies still chose to continue to publish quarterly reports out of their own needs. In his view, this proves that the market itself can effectively determine the frequency and depth of information disclosure.

Criticize the European model and oppose "political trends"

Atkins' regulatory blueprint is not limited to the United States. He also sharply criticized Europe's regulatory model, saying climate-related rules were driven by "ideologues" and warned against letting "political currents or distorted objectives" drive disclosures.

He specifically criticized the European Union’s recently adopted Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Development Due Diligence Directive (CSDDD). He argued that the directives require companies to disclose matters that "may be of social significance but are generally not financially material."

Atkins warned: "These mandatory requirements may pass costs onto U.S. investors and customers, but will add little to the information that guides capital decisions."

He bluntly stated that if Europe wants to promote its capital markets by attracting more listings and investments, it should focus on reducing unnecessary reporting burdens.

Investors are concerned about the loss of transparency

However, this major policy shift by the SEC has also triggered market concerns. Investor advocacy groups have reportedly issued warnings.

These groups believe that switching from quarterly reporting to semi-annual reporting may weaken the transparency of the market and harm the interests of small investors who have relatively limited access to information.

They are worried that in the long run, this move may undermine the foundation that supports the efficient operation of the U.S. capital market. While Atkins believes markets can regulate themselves, opponents insist that mandatory, more frequent disclosures are key to keeping markets fair and efficient.