I do not believe that public company reporting matters often find their way into President Trump’s posts on the Truth Social platform, but yesterday the President posted a message indicating that “Companies and Corporations” should no longer “Report” on a quarterly basis, but rather report on a six-month basis. As this Reuters article notes, President Trump called for an end to quarterly reporting of financial results by U.S. public companies (subject to SEC approval), noting “[t]his will save money, and allow managers to focus on properly running their companies.” The post goes on to note: “Did you ever hear the statement that, ‘China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis??? Not good!!!”
If this post somehow feels to you like “déjà vu all over again,” your hunch is correct, because back in August 2018, President Trump (during his first term) announced via Twitter that he had asked the SEC to study the possibility of moving from quarterly to semi-annual reporting for public companies. As we noted in this blog, in November 2018 the SEC included an agenda item in the Sunshine Act Notice for a Commission open meeting that contemplated a request for comment on the nature and content of quarterly reports and earnings releases. The SEC ended up being closed on the day of the open meeting due to a national day of mourning for George H.W. Bush, but the Commission later issued a 31-page request for comment in December 2018. The request for comment was broader than just addressing a change in frequency of periodic reports, raising questions about the relationship between Form 10-Q and earnings releases in addition to questions about changing the frequency of periodic reports. 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 any rule proposal during the first Trump administration, but the topic of the frequency of periodic reporting remained on the SEC’s Reg Flex Agenda even after the end of the first Trump Administration until, as this Thomson Reuters article notes, the rulemaking plans were quietly dropped in the June 2021 version of the SEC’s Reg Flex Agenda.
The SEC’s Spring 2025 Reg Flex Agenda that John blogged about earlier this month does not include a rulemaking line item specifically addressing changes to the frequency of periodic reports, but it does list a proposed rulemaking titled “Rationalization of Disclosure Practices,” which is described as follows: “[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.” It certainly seems that potential changes to the frequency of periodic reporting would fit within that rulemaking framework. The Staff and the Commission already have a strong base of comments and other information to work with as they prepare a proposal, given the 2018 request for comment and the 2019 roundtable. Nonetheless, any changes may ultimately take a while to implement, because the agency will have to vote on a proposal, solicit comments on that proposal, and ultimately consider final rule amendments, all against a backdrop of opposition that will inevitably come from the investor community. With all that said, I would advise to start collecting those Form 10-Qs now, because this time around they may become a rare historical relic!
The topic of eliminating quarterly reporting had actually resurfaced again earlier this month, when the Long-Term Stock Exchange announced plans to petition the SEC to allow public companies to report earnings semi-annually instead of quarterly. The announcement notes:
The petition potentially affects thousands of publicly traded companies currently bound by quarterly reporting requirements. While the Securities Exchange Act of 1934 provided the legal framework for periodic reporting, the SEC initially required only semi-annual reports starting in 1955 before moving to quarterly reporting in 1970.
LTSE Founder and best-selling author Eric Ries said, “This has been a longtime dream of the business community and represents the culmination of efforts by many long-term investors, companies, and policymakers over decades. The time has come to create a capital markets system that rewards patient capital and long-term thinking.”
The proposal addresses longstanding concerns about quarterly reporting’s impact on corporate decision-making. Business and political leaders, including the Trump administration (in 2018) and the U.S. Chamber of Commerce, have suggested that companies should report every six months instead of quarterly. Extensive academic research has documented the negative effects of quarterly reporting pressure on long-term value creation.
For long-term investors, the change could lead to more strategic company insights while reducing short-term volatility and better alignment of corporate management to investor interests. Under the proposed guidelines, all companies would retain the option to release quarterly earnings but would not be required to do so.
This focus on long-term value creation directly addresses systemic market pressures that currently favor short-term thinking.
“As CEOs, we absolutely have to deliver on short-term metrics; both our customers and investors depend on it,” said Maliz Beams, CEO of LTSE. “But the key is including short-term targets as deliberate mile markers on the path to long-term value creation. This petition takes a critical step toward enabling genuinely long-term companies to focus on sustainable growth rather than quarterly noise.”
As of this morning, no petition from the Long-Term Stock Exchange appeared on the SEC’s website. It may no longer be necessary at this point, because I suspect that Truth Social posts are more effective at motivating SEC action than rulemaking petitions.
Given the very active regulatory agenda at the SEC, we have added a session to our upcoming “Proxy Disclosure Conference” featuring Sebastian Gomez Abero, who serves as Corp Fin’s Acting Deputy Director of Legal and Regulatory Policy & Associate Director of the Disclosure Review Program. We are very fortunate to have Sebastian join us for this session, during which Sebastian and I will discuss all of the latest Corp Fin developments that you need to know about as the SEC’s regulatory reforms gear up in the coming months.
Now is the time to sign up for our “Proxy Disclosure & 22nd Annual Executive Compensation Conferences” to be held on October 21-22 at The Virgin Hotels in Las Vegas. In addition to my conversation with Sebastian Gomez Abero, we have an outstanding agenda featuring other exciting panels and a great group of speakers who will provide you with the practical guidance that you need in this time of significant changes at the SEC and beyond. If you are not able to travel to Las Vegas, we have a virtual option available for the event. You can register online or reach out to our team to register by emailing info@ccrcorp.com or calling 1.800.737.1271.
Last week, the SEC announced that its Crypto Task Force will host a public roundtable on financial surveillance and privacy on Friday, October 17 from 1 pm to 4 pm Eastern time at the SEC’s headquarters. The announcement notes:
Following the Spring Sprint Toward Crypto Clarity series of roundtables, the President’s Executive Order on Digital Assets, and the President’s Working Group on Digital Assets report, Commissioner Peirce directed the Crypto Task Force to take additional steps to promote United States leadership in digital assets and financial technology while protecting economic liberty. The Financial Surveillance and Privacy roundtable will bring together panelists who are at the forefront of developing technologies designed to protect individual privacy. It will also facilitate an in-depth discussion on policy matters related to financial surveillance.
“Technology that helps Americans protect their privacy is critically important as it enables people to choose when and with whom to share sensitive data about themselves so they can be protected from bad actors,” said Commissioner Hester M. Peirce. “Understanding recent developments in privacy-protecting tools will assist the SEC and other financial regulators as we work on policy solutions in the crypto space.”
The SEC notes that the roundtable will be open to the public, and registration is required for in-person attendance only. The roundtable will be streamed live on SEC.gov, and a recording will be posted at a later date. The agenda and roundtable speakers will be posted on the Crypto Task Force webpage.
Good morning. As our securities laws were being considered during the Great Depression and years after, corporate governance policymakers sought to ensure that stockholders had an active voice over any entrenched management, inattentive directors, or a controlling group.
The intent was that all stockholders could assert their ownership rights around key components of running the business and capital allocation.
Thus, while our proxy access process was originally designed to empower shareholders and provide them with a voice in company oversight, in recent years it has increasingly been co-opted by activist investors whose primary focus often lies, not in maximizing shareholder value, but in pushing narrow political, social, or personal agendas.
We have seen the shareholder proposal process diverted away from the critical business strategy and instead become a tool for advancing proposals that distract from companies’ missions, leading to an erosion of shareholder value and additionally costly burdens on companies that are working to navigate today’s complex business conditions and global competition.
As we examine the shareholder proposal process, we must also consider the role of proxy advisory firms on capital markets as a whole.
While these firms can offer some valuable perspective, over the past two decades, their influence on corporate governance and voting on particular shareholder proposals has grown significantly.
We must ask ourselves if these firms are fulfilling their intended purpose of serving in the best interests of shareholders or if they are distracting from the primary goal of enhancing long-term shareholder value.
Chairman Hill’s remarks went on to mention the SEC’s Staff Legal Bulletins 14L and 14M, noting how Staff Legal Bulletin 14L “shifted the focus of shareholder proposal review from the proposal’s relevance to a specific company to whether the proposed issue had broad societal impact.” The Committee issued a statement highlighting quotes from members of the Committee, as well as the witnesses that appeared before the Committee, which included: James Copland, Senior Fellow & Director of Legal Policy at the Manhattan Institute; Ferrell Keel, Partner, Jones Day; and Ron Mueller, Partner, Gibson Dunn & Crutcher LLP. Ron’s highlighted quote was as follows:
U.S. public companies of all sizes take shareholder relations seriously and welcome the opportunity to engage productively with their investors. But public companies also recognize that not all shareholders have the same priorities, and board of directors and company management have fiduciary responsibilities to act in the best interests of shareholders at large. Thus, one has to question why a single shareholder owning shares with a value of just $2,000 can initiate a process that imposes significant costs and, more importantly, diverts key company personnel, executives, and directors from other business activities, which costs and consequences are borne by all of the company’s shareholders. Moreover, the nature of shareholder proposals being submitted to companies in recent years have changed significantly from the proposals submitted in prior decades. Shareholder proposals no longer are primarily focused on corporate governance issues or on providing information or input on important business activities, but instead increasingly are crafted by special interest groups focused on narrow policy issues or specific outcomes, without regard to whether or how companies may already be addressing the issue, or to other considerations that may be more significant and consequential.
As John shared over a week ago, the SEC’s Spring 2025 Reg Flex Agenda includes a proposed rulemaking called “Shareholder Proposal Modernization.” It is unclear at this point what role Congress might play in Rule 14a-8 reforms or the SEC’s regulation of proxy advisory firms.
Speaking of shareholder proposals, as we make the transition from Summer to Autumn, you can count on proxy seasons summaries emerging like pumpkin spice lattes and early Halloween decorations. As your attention now shifts to the 2026 proxy season, we have posted several new summaries of the 2025 proxy season here on TheCorporateCounsel.net. Over the course of the past month, we have posted Gibson Dunn’s “Shareholder Proposal Developments During The 2025 Proxy Season;” Cooley’s “Proxy Season Highlights” (Part 1 and Part 2); and Sullivan & Cromwell’s “2025 Proxy Season Review” (Part 1 and Part 2). You can find all of these summaries (and more) in our “Shareholder Proposals” Practice Area here on TheCorporateCounsel.net. If you do not have access to all of the practical guidance here on TheCorporateCounsel.net, I encourage you to email info@ccrcorp.com to sign up today, or sign up online.
The SEC’s Investor Advisory Committee will hold a public meeting next Thursday, September 18, at 10 a.m. ET. (also to be webcast on the SEC website). The agenda includes two panels prompted by the SEC’s June 4 Concept Release on the definition of Foreign Private Issuer (FPI). The panels include speakers from UK regulators, CII, academia and law firms and will:
– Explore the evolving landscape of foreign private issuers in U.S. capital markets
– Evaluate potential regulatory responses to address emerging risks to investors and market integrity
The IAC will also consider the regulatory framework governing retail investors’ access to private market assets and vote on the recommendations of the Investor as Owner and Market Structure Subcommittees. Those recommendations conclude:
[I]n the Committee’s view, the optimal way for retail investors to access private market assets is through registered funds, which allow retail investors to invest in broadly diversified funds that benefit from Commission review, audited financials, professional fund management, various levels of liquidity, and the protections of the Investment Company Act.
The subcommittees also address ways to improve the suitability of these investments and suggestions for basic investor protection guardrails that could accompany any expansion of direct access to private market assets.
Earlier this week, the non-profit public interest law firm Investor Choice Advocates Network (ICAN) announced that it has filed a lawsuit challenging the SEC’s accredited investor test on behalf of two plaintiffs — one individual investor and one venture capital fund. This is the latest of ICAN’s many efforts to reform the accredited investor definition.
The lawsuit argues that the accredited investor standard is “unconstitutional and unlawful” on the basis that it:
– Divides Americans into two classes — the wealthy, who get access to opportunity, and everyone else, who are shut out.
– Silences free speech and association — by blocking entrepreneurs from sharing opportunities and preventing investors from supporting causes they believe in.
– Violates federal law — by imposing wealth barriers Congress never authorized, based on arbitrary thresholds the SEC has never justified.
Perhaps a better title for this blog could be “accredited investor ROMO,” if I could use that to mean “Risk Of Missing Out.” As many have pointed out, the fact that more companies are staying private for longer means that more Americans miss out on investing during those high-growth years.
But change may already be in the works. The SEC’s Spring Reg Flex Agenda contemplates “Updating the Exempt Offering Pathways,” which includes simplifying “investor access to private businesses.” And the recommendations the Investor Advisory Committee will vote on next week support an “expanded focus on investor sophistication (rather than income or wealth) when determining accredited investor status.”
State-level securities laws — AKA “blue sky” laws — have been adopted by all 50 states plus Washington DC, Guam, Puerto Rico and the US Virgin Islands. As noted in this Wilmer Hale alert, these laws both regulate securities “left unregulated” by federal authorities (e.g., “securities only offered and sold within one state or offered by state or local governments”) and give states overlapping enforcement authority to prevent and punish securities fraud. The alert describes how state enforcement activity has — and is likely to continue to — “respond to perceived federal enforcement gaps” — i.e., possibly to act on crypto in ways the federal government is not.
Not surprising, perhaps, but here’s the key. Several states (the alert has a map) have adopted the more expansive “risk capital” test as either an alternative or complement to the Howey and Reves tests used to determine whether federal securities laws apply to a given financial instrument.
One of the most prominent applications of this test comes from the 1961 case Silver Hills Country Club v. Sobieski, decided by the Supreme Court of California. In Silver Hills, Justice Roger Traynor applied the risk capital test to conclude that memberships sold to develop a country club constituted securities—the memberships involved an investment of money in an enterprise for profit, which subjects the investor’s money to the risks of the enterprise, and the investor has no managerial control over the enterprise.
Some states have adopted this test by common law, and others by statute/regulation. For example:
The Supreme Court of Oregon has also adopted the risk capital test [and] a federal district court in Oregon has applied Oregon law to determine that a security exists under Oregon state law—but not federal law—where an individual bought into a franchising scheme.
Oregon is notable because it “provides a modern example of state attorneys general applying the broader risk capital test to treat newer instruments as securities” – i.e., its enforcement action against Coinbase. Oregon’s attorney general has shared his position in no uncertain terms: “[S]tates must fill the enforcement vacuum being left by federal regulators who are giving up under the new administration and abandoning these important cases.”
What does this mean for crypto and corporate issuers? That this may not be a one-off, and “the current polarized political environment” may “exacerbate the impact of the Howey/risk capital distinction.”
Given the Trump Administration’s pro-crypto and wider deregulatory policy agenda, Democratic state attorneys general and securities regulators may use state securities enforcement powers to act as a counterweight and/or to advance their own political priorities. Financial industry firms, exchanges, issuers and others should consider the potential impact of the Howey/risk capital distinction as they face what may be a more fractured securities regulatory environment in coming years.
Yesterday, the SEC announced that current Gibson Dunn partner Jim Moloney has been named the new Director of the Division of Corporation Finance.
Mr. Moloney previously served at the SEC for six years prior to joining Gibson Dunn & Crutcher, where he has worked the past 25 years, ascending from corporate associate to equity partner. He has served as a longstanding co-chair of the firm’s securities regulation and corporate governance practice. He has advised a wide base of clients on corporate governance matters, disclosure rules, mergers & acquisitions, tender offers, proxy contests, and going-private transactions among other areas.
During his tenure at the SEC from 1994 to 2000, Mr. Moloney was an attorney-advisor and later a special counsel in the Office of Mergers & Acquisitions in the Division of Corporation Finance. Notably, Mr. Moloney was the primary author of the proposing and adopting releases for Regulation M-A, a comprehensive set of rules governing mergers & acquisitions, tender offers and proxy solicitations.
I would note a lesser-appreciated accomplishment from Jim’s biography — that he got his J.D. cum laude from Pepperdine University. I’m convinced this is another reason he is well-suited to tackle the Commission’s ambitious agenda. If you can study amidst those Malibu ocean views, you can do anything.
His appointment will be effective next month, and Acting Director Cicely LaMothe will return to her role as a Deputy Director of Corp Fin. We’re updating our “List of Corp Fin Directors” for the news! Unfortunately, it also looks like we’ll need to update our list of advisory board members for TheCorporateCounsel.net and DealLawyers.com. Jim’s been a valued member of both for many years, but we’re guessing that his new position with the SEC won’t allow him to continue in that capacity. We’re grateful for all the contributions Jim’s made to our sites over the years and wish him every success in his new role!
