As Sarah Abrams noted in a post on this site last September, President Trump, in a social media post, proposed eliminating quarterly report for public companies. On May 5, 2026, the SEC acted on the President’s suggestion and proposed a rule that would provide companies currently subject to the agency’s quarterly reporting requirements with the option to instead file interim reports semiannually. It seems likely that optional semiannual reporting will soon be put into effect. The question is whether this is a good idea or will produce the intended benefits, as discussed below.

The SEC’s May 5, 2026, press release about the proposed rule can be found here. The text of the proposed rule can be found here. The SEC’s two-page fact sheet about the proposed rule can be found here.

The Proposed Rule Change

The SEC’s quarterly reporting rule has been in place since 1970. Under this interim reporting rule, reporting companies are required to submit each year three quarterly reports on Form 10-Q and one annual report on Form 10-K.

Under the SEC’s proposed new interim reporting rule, if adopted, reporting companies would have the option to elect to file one semiannual report on new Form 10-S rather than three quarterly reports on Form 10-Q. New Form 10-S would require the same narrative disclosures (e.g., MD&A, material changes in risk factors, legal proceedings, etc.) and financial statements as Form 10-Q, but over a six-month period rather than a three-month period. The proposed rules, if adopted, would not change the existing interim reporting requirements applicable to foreign private issuers.

In its release proposing the rules, the SEC cited a number of potential benefits from the rule change. Among other things, the agency observed that companies electing semiannual reporting “may see a reduction in compliance costs of time and money.” Companies may also realize other benefits, including “less distraction from running the day-to-day business; reallocation of attention from interim reporting to company strategy; additional time spent on new product development; and the ability to engage in transactions that might not be possible when management is focused on preparing interim reports.”

The agency cited one other potential benefit from allowing optional semiannual reporting, which is that “reducing the compliance costs associated with quarterly reporting may contribute to more public companies deciding to enter the public markets and more companies deciding to go public.” SEC Chair Paul Atkins made a similar point in his May 5, 2026, statement about the proposed rules (here) saying that the flexibility that the proposed optional reporting rule would provide “might reduce some of the burdens of being a public company and potentially influence a company’s decision to become or remain public.”

Atkins also emphasized in his statement that this proposed rule change is just “the first step” of a “larger, comprehensive effort to review and reshape the current SEC rules governing public companies with respect to their ongoing reporting obligations.” Atkins said that “over the next few months, I expect the Commission will be considering a series of proposals that, if adopted, will not only redefine what it means to be a public company, but will make being public attractive again.”

The comment period for the proposed rule changes is now open and will remain open until 60 days after the proposed rule is published in the Federal Register.

Discussion

It seems likely that at some point in the not too distant future that the proposed optional semiannual reporting period will go into effect. I have no doubt that there will be companies that avail themselves of the rule and opt for the semiannual reporting model. Semiannual reporting may be of particular interest to newer and smaller companies. In a May 6, 2026, memo about the proposed rule changes, the Sullivan & Cromwell law firm said, “We expect smaller issuers to be more likely than large, seasoned issuers to forgo quarterly disclosures.”

Many companies may be more interested in what their shareholders want; they may find that their shareholders don’t want semiannual reporting. It is worth noting that, last fall, when President Trump first proposed semiannual reporting,  institutional investors panned the idea; indeed, one commentator noted at the time that:

Quarterly reporting provides investors with regular insight into company performance, reducing uncertainty and lowering the cost of capital. Semiannual reporting would work against investors by increasing information gaps, raising the risk of surprises, and creating more room for insider advantage. Investors would be left with stale data, and when results finally arrive, the adjustment to new information could be sharper and more volatile.

The Sullivan & Cromwell law firm memo noted its expectation that the investor community, shareholder advocates, and proxy advisors will submit comments in connection with the rulemaking process consistent with these observations.

In light of investor concerns about transparency and possible stale data, many companies that opt for semiannual reporting may still continue to release financial information quarterly. The Sullivan & Cromwell memo above speculates that even semiannual reporting companies may continue quarterly earnings releases, “at least initially,” in order to “maintain dialogue with their investors …, [and] to access capital markets and facilitate the opening of trading windows.”

I have my own concerns about reducing the frequency of interim reporting. Among other things, the longer the time between reporting periods, the more information there is available to insiders that is not available to investors. For that reason, I think longer reporting periods could contribute to more insider trading, as trading windows inevitably would be open longer, providing more opportunities for managers with insight into company performance to trade on their awareness of how the company is doing.

I also worry that a longer reporting period could mean increasing uncertainty in the later months, which could hurt share prices, or at least make them more volatile. Longer reporting periods also increases the possibility of news disclosure surprises, of the kind that could lead to sharp share price declines – that is, declines of the type and magnitude that can lead to securities class action litigation.

It is also a fair question to ask whether the proposed rule changes will produce any of the intended benefits. In a Wall Street Journal editorial published last September after President Trump’s initial proposal for semiannual reporting, there is precedent worth considering in thinking about what benefits could be realized by allowing semiannual reporting.

As the Journal noted, the U.K. made quarterly reporting optional, so the U.K. circumstances provide what the Journal called a “useful case study.” As the Journal noted, the U.K. experience is that for companies that switched to half-yearly reporting, “there was no effect on investment or research spending,” suggesting that the companies “didn’t start to think more about the long term.”

However, the reality is that while we can debate whether or not allowing companies to move to semiannual reporting is a good idea, the likelihood, as noted above, is that optional semiannual reporting will soon become a reality.

Which makes me think of one other audience companies may want to consider in deciding whether or not to select the semiannual reporting option – that is, D&O underwriters. I could easily imagine D&O underwriters taking a narrow view of companies with longer reporting periods, because of the concerns about transparency and share price volatility noted above. Concerns about longer reporting intervals could lead some underwriters to consider a pricing debit for companies opting for semiannual reporting.

To be sure, in the current competitive market, there are limits on how much room insurers may have to maneuver on pricing. But even in today’s competitive environment, I can easily imagine that companies with longer reporting cycles could be viewed less favorably by D&O underwriters.

One final thing worth noting here is Paul Atkins’s final comment about further possible future steps to reshape the SEC rules governing public companies. It remains to be seen what this proposition could entail. Many things are possible. I concur with the view the Sullivan & Cromwell firm noted in its memo that one thing the agency may want to consider is “whether the existing ‘one-size-fits-all’ regulatory framework applied to periodic reporting by emerging growth companies, pre-revenue companies, and other small issuers, is appropriate or should be revised to permit additional scaling.”