From embracing cryptocurrency to eliminating quarterly reports, the U.S. Securities and Exchange Commission (SEC) is making a significant shift in its regulatory approach.
According to reports on September 29, newly appointed SEC Chairman Paul Atkins stated that the SEC will consider allowing listed companies to adopt semi-annual reports to replace the current requirement of releasing earnings reports every three months, emphasizing "minimum effective dose" regulation.
The government 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 company industry, size, and investor expectations.
Paul Atkins' move directly echoes Trump's previous proposals to relax financial reporting frequency requirements, aimed at providing greater flexibility for businesses. This represents the latest example of the Trump administration's pro-business stance and its effort to exert greater control over independent federal agencies. It marks a complete break from the broad and stringent regulatory agenda pursued by former SEC Chairman Gary Gensler.
Previously, the SEC's attitude toward cryptocurrency has shifted from aggressive crackdowns during Gensler's tenure to moderate acceptance. Now, relaxing disclosure rules for listed companies confirms that this "light-touch" regulatory approach will be fully implemented.
**"Minimum Dose" Regulatory Philosophy, Considering Abolishing Mandatory Quarterly Reports**
After taking office, Paul Atkins quickly set the tone for the SEC under his leadership. He believes that in recent years, the SEC has "deviated from the precedent and predictability that maintains (capital market confidence)" and departed from the clear mission Congress set for the agency over 90 years ago.
These remarks are seen as a direct criticism of his predecessor Gensler's aggressive regulatory and enforcement stance under the Biden administration.
Relaxing corporate financial disclosure frequency is the most notable part of Atkins' "deregulation" agenda. He actively responded to Trump's call to eliminate the requirement for most U.S. listed companies to disclose their financial status every three months.
Atkins stated: "It's 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 company industry, size, and investor expectations."
He argues that the goal of regulation is to protect investors and allow business to flourish, not to satisfy shareholders who "seek to achieve social change or whose motivations are unrelated to maximizing investment financial returns."
Atkins believes that abandoning mandatory quarterly reports is not a novel idea and is "not a step backward in transparency." He points out that this flexibility has already been granted to certain businesses.
He cites the UK as an example, where after restoring the semi-annual reporting system in 2014, some large companies still chose to continue issuing quarterly reports based on their own needs. In his view, this proves that the market itself can effectively determine the frequency and depth of information disclosure.
**Criticizing European Models, Opposing "Political Trends"**
Atkins' regulatory blueprint extends beyond the United States. He sharply criticized European regulatory models, calling their climate-related regulations driven by "theorists" and warning against letting "political trends or distorted objectives" drive information disclosure.
He specifically criticized the EU's recently passed Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). He believes these directives require companies to disclose matters that "may be socially significant but generally not financially material."
Atkins warned: "These mandatory requirements may pass costs on to U.S. investors and customers while adding little value to information that guides capital decisions."
He stated frankly that if Europe wants to promote its capital markets by attracting more listings and investments, it should focus on reducing unnecessary reporting burdens.
**Investor Concerns About Transparency Damage**
However, this major policy shift by the SEC has also raised market concerns. Investment advocacy groups have issued warnings about this change.
These groups believe that shifting from quarterly to semi-annual reporting could weaken market transparency and harm the interests of small investors who have relatively limited access to information.
They worry that this move may ultimately undermine the foundation that supports the efficient operation of U.S. capital markets. While Atkins believes the market can self-regulate, opponents insist that mandatory, more frequent disclosure is key to maintaining market fairness and efficiency.