During the ABA Business Law Section’s “Dialogue with the Director” last Friday, Corp Fin Director Jim Moloney gave an update on the semi-annual reporting proposal that the SEC is expected to issue. As you might recall, mandatory quarterly reporting has been on the hit list since it somehow attracted the attention of the President last fall. Around the same time, the Long-Term Stock Exchange announced a rulemaking petition on the topic.
The prospect of moving to semi-annual reporting seems to have a lot of buzz, even though most securities lawyers might scratch their heads over whether eliminating Form 10-Q filing requirements would change much in practice. So, here are six things to know if your clients ask what this proposal could mean for them:
1. Like all proposals, it will be subject to notice & comment and actual adoption isn’t guaranteed. Accounting firms are adamantly opposed, so you can expect to see some criticism.
2. The proposal will likely permit – not require – companies to move to semi-annual reporting.
3. There are plenty of reasons why established public companies, which already have well-honed quarterly reporting processes, may continue to release results on a quarterly basis – to open trading windows, raise capital, facilitate an active trading market, etc. But while the earnings release would remain, the formality of a “Form 10-Q” could disappear (depending on what the proposal and a final rule, if any, say). It isn’t unheard of to release numbers “off cycle” – i.e., not driven by a ’34 Act reporting obligation. For example, a company might release “flash numbers” if conducting an offering before issuing its regularly scheduled quarterly disclosures.
4. Newer and smaller public companies would be the most likely to benefit from the rule change, as it would give them more time to ease into quarterly reporting procedures. Think life sciences and small regional banks. It could help “Make IPOs Great Again” in this way.
5. For companies that take advantage of the semi-annual reporting regime, they would need to give notice before moving to a quarterly reporting cadence. Companies would likely move to a quarterly cadence eventually, for the reasons noted above.
6. US regulators aren’t alone in rethinking quarterly reports: Canada also recently launched a pilot project that would exempt certain issuers from filing first- and third-quarter disclosures. However, as Meredith blogged, companies that want to maintain the option of raising capital may not be able to participate in it.
The skuttlebutt is that this proposal is near the top of the pile in terms of near-term release dates, out of an exciting 22 “blockbuster” proposals that Jim flagged as being in the queue at Corp Fin. But the SEC has to carefully comply with all of the procedural steps before any rulemaking goes out the door.
In talking with our members about the status of much-anticipated SEC proposals, we hear a common sentiment: “A little less conversation, a little more action please.” Of course, rulemaking is an inherently lengthy and complex process – which in many ways is a good thing – and I don’t want to sound ungrateful for the positive things we’ve seen in terms of helpful guidance and practical applications of the rules as they currently stand. (And to be fully accurate, we do appreciate the conversation – we just also want to see the rules – but this isn’t nearly as catchy as the Elvis quote.)
When it comes to getting modernized rules on the books though, the unfortunate truth is that the SEC no longer has exclusive control over the timing of its proposals. Due to the February 2025 executive order limiting the power of independent agencies, everything has to pass through the White House’s Office of Information and Regulatory Affairs (OIRA). This Global Policy Watch blog from last August gave a 6-month update on how the new review process was working:
Also unclear at the time of the Trump order’s issuance was whether OIRA review would substantially delay independent agency rulemakings. Indeed, fear of undue delay was one main objection urged against the extension of OIRA review to independent agencies. But the experience of the last six months suggests that OIRA review does little to delay independent agency rulemakings. OIRA review of independent agency rulemakings (excluding rulemakings by the sui generis CFPB) lasted an average of 17 days, and no review took more than 29 days. To date, then, OIRA has reviewed independent agency rulemakings in a fraction of the ninety days allotted to it for regulatory reviews under the Clinton-era order.
I’m skeptical that this additional step is operating so smoothly – but with respect to SEC proposals, I hope I’m proven wrong (or at least, that some rules might be close to seeing the light of day). This dashboard shows which rules have been sent for review. Proposals on crypto assets and semiannual reporting were sent in late March – so if the average turnaround time applies, we could see those any day! The blog explains that Commissioners aren’t voting on rules until after they’ve made it through OIRA review.
I’m not sure if I’ve mentioned this in the blog, but once upon a time, I almost became an economist. Law school won out over graduate school largely because I was tired of calculus. So, I’ve always had a soft spot for the SEC’s Division of Economic and Risk Analysis – and last month at PLI’s “SEC Speaks” conference, I was reminded that this Division will have a significant role in Chair Atkins’ ambitious rulemaking agenda. Here are seven things I learned about DERA from that event:
1. DERA is a substantial operation. The division has approximately 170 people – economists, data scientists, statisticians, lawyers, and other professionals – with the majority holding PhDs in economics, finance, or related fields. It supports economic policy, examination, enforcement, analysis, data management, and risk analysis. It’s a “high impact” division.
2. DERA wants data for rulemaking. The panel emphasized that comment letters on upcoming rule proposals will be most persuasive if they contain data. DERA uses data from various sources for the economic analyses that inform Staff recommendations and Commission decisions – and data points from companies and other industry participants can reveal information that public filings do not. There’s a whole guide about how the economic analysis works for rulemaking. Ideally, submit data in structured format so that DERA can easily analyze it.
3. The Statistics & Data Visualizations page is a hit. I recently blogged about this page. Launched in August at Chairman Atkins’s direction, the statistics “white page” provides centralized, interactive statistics covering capital formation, market participants, market activity, and investors. Since launch, it has attracted 40,000+ views and 28,000+ users!
4. Structured data makes AI tools work better – but only if the data is clean. DERA’s Office of Disclosure designs “taxonomy” – that’s the list of tags that makes filings machine-readable. With more market participants using AI, it’s important to note that the models are only as good as the data they are trained on. Structured data with standard taxonomy provides the context that makes AI tools effective. The SEC’s own AI task force has worked on projects such as analyzing the tonality of narratives in filings.
5. Scaling errors are still a problem. We’ve blogged about DERA’s data quality reminders on fixing scaling errors, but apparently the problem continues. Other common errors include using outdated tags, creating custom tags for standard disclosures, and discrepancies between different parts of the same filing. While lawyers often don’t have much visibility into the detailed tagging process, you can remind filing agents to use public validation rules to check data quality before submitting a filing.
6. DERA’s data sets are getting more popular. DERA’s Office of Disclosure publishes 15 free datasets on its website that are regularly updated. In the past year, downloads of the “Financial Statements and Notes” data set has doubled – it’s one of the most downloaded items on sec.gov.
7. DERA’s economic analysis is also critical to enforcement actions. The Division helps establish whether material non-public information would cause a stock price change – e.g., through event studies – and identifies suspicious trading patterns – e.g., by figuring out the odds of making successful trades. They gave an interesting illustration of a marble jar that helped me wrap my head around how they find suspicious trades. I’ll spare you the details – but will definitely be passing it along to my 5th grade mathlete.
Yesterday, the SEC’s Office of Mergers and Acquisitions issued an exemptive order providing issuers and, in some cases, third party bidders with the flexibility to shorten the time period during which tender offers for equity securities must be open from 20 to 10 business days. In order to take advantage of the shorter tender offer period, the tender offer must satisfy several conditions, which vary depending on whether the target is a reporting or a non-reporting company.
Some of the more prominent conditions applicable to a tender offer for equity securities of an Exchange Act reporting company include, among others:
– The tender offer must be subject to Regulation 14D or Rule 13e-4 under the Exchange Act;
– If the tender offer is subject to Regulation 14D, (i) the offer is made pursuant to the terms of a negotiated merger agreement or similar business combination agreement between the subject company and the offeror, (ii) the offer is made for all outstanding securities of the subject class, and (iii) a Schedule 14D-9 is filed and disseminated by the subject company no later than 5:30 p.m., Eastern time, on the first business day following the date of commencement of the tender offer:
– If the tender offer is subject to Rule 13e-4, the offer is made for less than all outstanding securities of the subject class; and
– The consideration offered in the tender offer consists only of cash at a fixed price.
Certain conditions relating to the contents and dissemination of communications announcing the tender offer and any changes in its key terms must also be satisfied.
Cross-border tender offers, tender offers in connection with Rule 13e-3 transactions, and tender offers for which a competing tender offer has already been announced are ineligible to take advantage of the shortened tender period. In addition, if a competing tender offer is publicly announced, then the tender offer made in reliance on the exemptive order must be extended such that it is open for at least 20 business days from the date the initial offer commenced.
In the case of tender offers for securities of non-reporting companies, only all cash, fixed price issuer tender offers (or tender offers by wholly owned subsidiaries for the issuer’s securities) are eligible for the shortened tender offer period. Certain conditions relating to the contents and dissemination of communications announcing the tender offer and any changes in its key terms must also be satisfied.
Yesterday, the SEC announced that its Small Business Capital Formation Advisory Committee will meet on Tuesday, April 28th at 10:00 am Eastern. Here’s the agenda for the meeting, which, as this overview from the SEC’s press release indicates, is all about figuring out how to encourage more IPOs:
The committee will start the morning session by hearing from its members about their perspectives on the state of the IPO market while considering the existing regulatory framework and how decreased IPO activity and market shifts are impacting companies’ (including small caps’) desires to go public. Edwin O’Connor, Partner, Co-Chair of Capital Markets, Goodwin Procter LLP will share his views on the IPO market, trends, and factors that may be at play.
This conversation will continue into the afternoon session where the committee will hear from Beau Bohm, Managing Director, Global Co-Head of Equity Capital Markets, Cantor Fitzgerald, who will share views on the IPO market from the underwriter’s perspective.
The meeting will be open to the public and will be live streamed on SEC.gov.
Ideagen Audit Analytics recently released its annual market share analysis of public company auditors as of early 2026. Here are some takeaways from the summary:
– The Big Four tighten their grip on the largest companies. The Big Four audit approximately 90% of large accelerated filers but their dominance drops sharply further down the market, where mid-tier and other firms hold the majority.
– Market share is moving and not always where you’d expect. Deloitte grew to 926 registrant clients and Baker Tilly broke into the top 10 for the first time off the back of recent merger activity.
– SPACs are back on the radar. SPACs now represent 4% of total registrants, up from 2.4% in the prior report, and the Big Four are entirely absent from the segment, leaving mid-tier and smaller firms to compete for a growing pool of engagements.
– Industry concentration reveals where auditor competition is fiercest. The Big Four audit 59% of energy and transportation companies but just 43% in trade and services.
As noted above, Deloitte continues to lead the Big 4 with a client count of 926 registrants (15% of the non-SPAC market), up from 901 in the prior year’s report. EY dropped from 869 to 799 registrants (13%), a decline of 8%. PwC was flat with 744 clients (12%), and KPMG has 639 clients (11%), up from 616 last year.
The Big 4 don’t play in the SPAC sandbox, so the lineup there looks very different, although it’s still concentrated in a handful of firms. For SPAC auditors, WithumSmith+ Brown leads the pack with 120 clients (51% market share), followed by MaloneBailey and CBIZ, each with 23 clients (10%). No other firm holds more than a 5% share of the SPAC market.
Last year, we blogged about the DOJ’s announcement of a “Civil Rights Fraud Initiative” targeting DEI programs. Last week, the DOJ announced that the initiative claimed its first scalp – and a high-profile one to boot:
Today, Acting Attorney General Todd Blanche announced the first False Claims Act resolution secured under the Civil Rights Fraud Initiative, which he launched in May 2025. International Business Machines Corporation (IBM) has agreed to pay the United States $17,077,043, inclusive of civil penalties, to resolve allegations that it violated the False Claims Act by failing to comply with anti-discrimination requirements in its federal contracts due to practices the United States contends discriminated against employees and applicants for employment because of race, color, national origin, or sex.
According to the DOJ’s statement, the government alleged that the company took race, color, national origin, or sex into account when making employment decisions, altered interview criteria based on race or sex through the use of “diverse interview slates” in order to identify diverse candidates for hiring, transfer, or promotion. The company also allegedly considered race and sex when making employment decisions to achieve progress towards demographic goals, and offered certain career development programs participation in which was limited on the basis of race or sex.
Latham & Watkins’ memo on the settlement offers these recommendations for federal contractors to mitigate the risk of their own liability:
– Conduct a Privileged Compliance Review: Contractors should conduct a privileged review of any DEI-related policies and programs, including vendor agreements and internal programs, to ensure compliance with current interpretations of civil rights and anti-discrimination laws. Programs and practices that run afoul of anti-discrimination laws should be promptly terminated or modified for compliance. Practices that link compensation to diversity-related goals or metrics or that involve workforce representation goals or race- or sex-based eligibility criteria may present particular risk.
– Monitor Regulatory and Contract Changes: Contractors should closely monitor guidance and memoranda from their contracting agencies regarding how new executive orders surrounding discrimination or DEI will be implemented and enforced. Agencies are likely to begin including new anti-DEI clauses in solicitations and contract modifications.
– Ensure Proper Compliance Controls: Contractors should have policies and processes in place to monitor and promptly address compliance concerns, including subcontractor compliance given the new reporting obligations set forth in the March 26, 2026 executive order.
The DOJ’s announcement noted that IBM received credit for its significant cooperation in the investigation, and Latham’s memo recommends that if potential compliance issues are identified, contractors should carefully evaluate the benefits of early cooperation with the government.
This Nutter memo provides additional information about the kind of DEI program practices that are likely to attract the DOJ’s attention. This excerpt cites remarks made by Brenna Jenny, Deputy Assistant Attorney General for DOJ Civil Division’s Commercial Litigation Branch, at the Federal Bar Association’s February 2026 Qui Tam Conference:
Jenny described three practices that DOJ views as encouraging decisions based on race or sex instead of merit and are thus likely to draw interest from DOJ. First, where companies deploy tracking systems to meet demographic metrics in hiring and staffing. DOJ does not view such tracking as remedying any identified discrimination, but instead shifts decisions away from merit in favor of numerical outcomes based on protected characteristics.
Second, where companies’ compensation decisions are influenced by race or DEI-related metrics. An example of this is where race is considered for the purpose of bonuses or salary increases.
Third, where company policies and procedures require employees to support DEI initiatives in connection with performance reviews, as such practices may pressure employees to support DEI policies and demographic objectives to avoid adverse employment outcomes.
Jenny also singled out employee training and mentoring programs with restrictions based on race or sex, saying that when access to such opportunities is restricted to certain groups, it effectively denies the benefits of membership in such groups to other employees. In DOJ’s view, this can lead to career advancement decisions being made on the basis of race or sex, and not on merit.
Additionally, Jenny raised concerns about “diverse-slate” requirements and preferential hiring practices, stating that DOJ is concerned with situations where employers relax experience or qualification standards only for certain candidates on the basis of race or sex.
The memo points out that federal agencies are now requiring contractors to provide updated certifications regarding anti-discrimination practices consistent with Executive Order 14173, which requires agencies to include in every contract or grant award “[a] term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of [the FCA]” and “[a] term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
Check out our latest “Timely Takes” Podcast featuring Cleary’s J.T. Ho & his monthly update on securities & governance developments. In this installment, J.T. reviews:
– Prediction Market Considerations for Public Companies
– Cybersecurity in the Age of Cyber Warfare: Governance Reminders for Public Company Boards
– 2026 CISO AI Risk Report
– SEC Enforcement Under the Atkins Administration: What Public Company Boards Should Know
– SEC Sued re: Revised Rule 14a-8 No-Action Letter Process (update up from February topic)
As always, if you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share in a podcast, we’d love to hear from you. You can email me and/or Meredith at john@thecorporatecounsel.net or mervine@ccrcorp.com.
The Corp Fin staff has been working to dig itself out of the backlog created by last year’s extended government shutdown, and according to Olga Usvyatsky’s “Deep Quarry” Substack newsletter, that’s contributed to a growing delay in releasing staff comment letters. Olga worries that the lag in releasing comment letters may result in them becoming “historical artifacts rather than a timely alert about issues identified by the SEC during the review process.”
She also identifies another issue that may be of more concern to lawyers and compliance officers – the possibility that a growing delay in releasing comment letters may enhance opportunities for insider trading:
A long dissemination lag may also create an opportunity for insiders to trade on information that is not yet publicly available, according to academic research. For instance, research by Dechow, Lawrence, and Ryans (2016, TAR) finds that insider selling increases prior to the public release of SEC comment letters — especially for firms with high short positions, and that stock prices exhibit a delayed negative reaction once the letters are disclosed. The results are especially salient for SEC reviews raising revenue recognition concerns.
Would longer dissemination lag and delays in SEC scrutiny exacerbate insider trading? Ultimately, this is an empirical question.
My guess is that’s an empirical question that the SEC might be interested in as well, particularly if resource constraints at the agency make it more difficult to return to a timelier dissemination of completed comment letter exchanges. In this environment, companies may want to police more closely transactions by insiders who are aware of the contents of unreleased staff comment letter exchanges in order to avoid potential insider trading issues.
