Wall Street regulator vows light touch and end to quarterly reporting
Paul Atkins says SEC will ‘remove its thumb from the scales’ while criticising European over-regulation
Wall Street’s top watchdog has pledged to pursue a minimum “dose” of regulation and fast-track President Donald Trump’s proposal to scrap quarterly corporate reporting, underlining an abrupt loosening of financial regulations by the Securities and Exchange Commission.
SEC chair Paul Atkins, appointed by Trump in the spring, said in an opinion article for the Financial Times on Monday that he would look at the option of semi-annual corporate reporting in place of the current requirement that listed companies report results every three months.
“The government should provide the minimum effective dose of regulation needed to protect investors while allowing businesses to flourish,” Atkins wrote.
The SEC chair, who also took a swipe at Europe’s “ideologue” climate rules, is scrapping the bold and broad regulatory agenda pursued by his predecessor Gary Gensler, as the Trump administration adopts a more business-friendly stance while seeking to exert greater control over independent federal agencies.
Among Atkins’ most notable course reversals has been the SEC’s embrace of the crypto sector — a stark contrast to Gensler’s aggressive approach. The planned relaxation of listed company rules confirms a more wholesale light touch.
In his op-ed Atkins warned against disclosure “driven by political fads or distorted objectives”, singling out Europe’s recently adopted Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive.
They require “the disclosure of matters that may be socially significant but are not generally financially material”, wrote Atkins. “These mandates risk imposing costs that fall on American investors and customers, while doing little to enhance the information that steers capital decisions.”
If “Europe wants to promote its capital markets by attracting more listings and investment, it should focus on reducing unnecessary reporting burdens”, he added. “For our part, I am committed to ensuring that in the US, the SEC prioritises the wellbeing of investors above the wishes of ideologues”.
The European Commission did not immediately respond to a request for comment.
This year, the SEC voted to end its defence of a rule that for the first time would have required company disclosures on climate risks, a central pillar of Gensler’s rulemaking agenda that was challenged in federal court.
“Rules written for shareholders who seek to effect social change or have motives unrelated to maximising the financial return on their investment . . . fail investors,” Atkins wrote.
The SEC in recent years “has drifted from the precedent and predictability that sustain [trust in capital markets] — and from the clear mandate that Congress set for the agency over 90 years ago”, Atkins wrote, his latest jab at the aggressive regulatory and enforcement stance that was adopted by Gensler under Joe Biden’s administration.
Atkins is heeding Trump’s calls for the SEC to drop rules that have been in place for decades that require most public US companies to disclose their financials once every three months.
“It is time for the SEC to remove its thumb from the scales and allow the market to dictate the optimal reporting frequency based on factors such as the company’s industry, size and investor expectations,” he wrote.
Investor advocacy groups have warned against the move, arguing it would dent transparency, harm smaller investors and risk undermining the efficiency that underpins the US capital markets.
But Atkins argued that abandoning quarterly reporting was not a novel idea and that this flexibility was already granted to some businesses. He pointed to the UK, where some large companies have still chosen to report quarterly despite the country’s return to semi-annual reporting in 2014.
He wrote: “Giving companies the option to report semi-annually is not a retreat from transparency.”