In a social media post earlier this week, President Trump proposed eliminating quarterly reporting for public companies. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, takes a look at the President’s proposal and considers its prospects and potential implications. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.
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If the SEC heeds President Trump’s call to eliminate quarterly reporting, the implications for D&O underwriting exposure could be significant. Specifically, the President wants to change the long-standing requirement under the Securities Exchange Act of 1934 that public companies file a Form 10-Q with the SEC quarterly, in addition to a Form 10-K annually. If corporate financial reporting decreases, will shareholder scrutiny over each disclosure increase? Also, will longer intervals between public reports complicate causation arguments, affecting plaintiffs’ ability to meet pleading requirements under the Private Securities Litigation Reform Act of 1995 (PSLRA). The following considers whether the recent push to change public company reporting to the SEC from every three to six months creates risk for D&O insurers.
An SEC spokesperson has confirmed that “[a]t President Trump’s request, Chairman [Paul] Atkins and the SEC [are] prioritizing this proposal to further eliminate unnecessary regulatory burdens on companies.” Of note – the SEC’s Spring 2025 Reg Flex Agenda states that: “[t]he Division is considering recommending that the Commission propose rule amendments to rationalize disclosure practices to facilitate material disclosure by companies and shareholders’ access to that information.”
With the SEC signaling an end to mandatory quarterly earnings reports may be in sight, the following briefly reviews what would need to happen at the SEC for that change to take place, including how the same proposal failed in 2018, as well as the potential impact biannual corporate filings may have on D&O exposure.
Implementation
First, I will consider what would likely need to happen at the SEC to modify the current quarterly reporting requirement in the context of an identical 2018 initiative. This context may help anticipate whether public companies can prepare to scale back Form 10-Q filings in the near term and how quickly D&O underwriters may need to prepare for a risk shift.
Either the Chair, Commissioners, or SEC staff may prepare a rule proposal to amend the existing requirements under the Securities Exchange Act of 1934 (particularly Section 13) and related regulations. In 2018, President Trump asked the SEC to study the possibility of moving from quarterly to semi-annual reporting for public companies. In November 2018, the SEC signaled in its regulatory agenda that it would solicit input on quarterly reporting and earnings releases, and in December 2018, it issued a 31-page Request for Comment on the topic.
The SEC would also likely open a public comment period on changing reporting, during which issuers, investors, analysts, auditors, trade associations, and others can submit written feedback. Empirical studies, cost/benefit analyses, and international comparators (Europe’s semiannual reporting framework) may also be reviewed. Notably, in 2018, despite receiving comments and support from business leaders during the public comment period, the SEC did not change the rule mandating quarterly reporting.
In July 2019, the SEC held a roundtable on short-term/long-term management of public companies, the periodic reporting system, and regulatory requirements. The SEC’s efforts did not result in a rule proposal to change reporting frequency, but the topic remained on the SEC’s Reg Flex Agenda until the rulemaking plans were dropped in the June 2021 version. However, 2025 is a different time, and given the Atkins SEC signaling prioritization of the rule proposal, the likelihood of a change in reporting timing appears more likely than in 2019.
Even so, the SEC may also consider whether shifting from quarterly to biannual reporting conflicts with existing law. Therefore, it may be months until a proposed rule is approved. And because public companies may need to adapt systems, internal reporting, audit, as well as governance, and stock exchanges may need to adjust listing rules, the SEC may prescribe a transition period for compliance. If and when regulatory filings become biannual, however, there may be an immediate impact on D&O insurance exposure.
Implications
As D&O Diary readers are aware, quarterly 10-Qs can provide public insight into a company’s financial condition, operations, and, as has been the case for much of 2025, the impact of geopolitical factors, like tariffs. If reporting frequency decreases to biannually, D&O-related risk factors may also change significantly in between filings, affecting the potential severity of loss and proving loss causation.
Information Lag and Shareholder Scrutiny
Lengthening the time between public filings may potentially lengthen the information gap between required public disclosures. This may lead to shareholder claims that adverse developments went undisclosed for longer, particularly if no 8-Ks are filed in the interim. This may increase the severity of alleged securities violations once material information is disclosed. A recent putative securities class action complaint filed against Super Micro Computer in the Northern District of California in August 2024 demonstrates the potential for immediate negative impact to a company’s share price resulting from alleged erroneous and delayed public filings.
Investors in Super Micro Computer, Inc. (SMCI) alleged that SMCI and its senior executives misled the market about its internal controls and failed to disclose material related-party transactions. These alleged omissions, combined with allegations of improper revenue recognition practices, came under scrutiny in August 2024 when Hindenburg Research published a report accusing SMCI of accounting manipulation and undisclosed dealings. MCI’s stock allegedly fell following the Hindenburg report and declined 22% when the company disclosed that it would delay filing its annual Form 10-K.
For the SMCI plaintiff shareholders, the company’s delayed SEC filing purportedly served as market confirmation of the Hindenburg report’s allegations, resulting in claims under Section 10(b) and Rule 10b-5. The SMCI case highlights a potential D&O underwriting concern when planned reports end up derailed by a short seller like Hindenburg. And, if biannual disclosure obligations come under pressure due to unforeseen events, a longer delay between filings may magnify shareholder suspicion of securities fraud.
Causation and the PSLRA
As D&O Diary readers may recall, the PSLRA imposes heightened pleading standards, including a requirement that plaintiffs plead loss causation with particularity. Courts have emphasized the need for plaintiffs to link a corporate disclosure to the alleged economic loss. In a biannual reporting regime, that causal chain may become more contested: if six months of events accumulate before a company files its 10-Q, it may be challenging to parse intervening market factors from a delayed report as the reason for a subsequent stock drop. This may result in motion practice over loss causation, requiring additional discovery and expenses incurred.
Conclusion
Whether the SEC ultimately moves from quarterly to biannual reporting appears more likely than not. However, for D&O underwriters, fewer mandated disclosures may not necessarily mean less litigation risk, and may result in more scrutiny over disclosure timing, loss causation, and shareholder suspicion when negative developments surface. Extending the reporting cadence to six months could magnify these exposures, and therefore, D&O carriers may want to monitor how the SEC’s latest initiative unfolds.
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