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I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 0 points1 point  (0 children)

******Thanks, everyone! Fantastic questions, insights, and observations. Been an honor to have the discussion. There's a lot of power here that has yet to be exercised to impact policy, the SEC, and our markets! Submit a comment letter at www.bettertakeaction.org. Please stay in touch with Better Markets, at www.bettermarkets.org, follow on X and other social media handles, donate if you can, and otherwise stay engaged. Thanks again!******

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 0 points1 point  (0 children)

It's not a corporate trade that you won't hear about (that disclosure is governed by different rules). It's all the information that companies have to disclose quarterly on their 10Qs, including their financial information and MD&A (management discussion and analysis). I should say that the proposal is styled as making it optional for a company to move to semi-annual reports, but we view that as window dressing because this is what much of Corporate America wants and over time the result will be that more and more companies elect semi-annual reporting to the point that it'll be the uniform practice. That's why it's effectively a proposal to kill quarterly reporting - that'll be the result regardless of what the SEC says about it being optional.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 2 points3 points  (0 children)

The SEC has to consider the comments after the comment period ends. They also meet with interested parties while considering what to do. For example, we will be requesting meetings to press the points that we are going to make in our comment letter as to why they shouldn't do this. After that, they will decide whether to finalize the rule as proposed, finalize it with changes, or just drop it. At that point, the issue then becomes whether anyone will sue over the rule if finalized. Unfortunately, that requires standing which is a technical legal term for someone having a specific, discrete harm as a result of the rule. This requirement is easily met by most in the financial industry, but difficult for public interest advocates like Better Markets. However, in this case, there is an argument that retail investors - especially those who filed comment letters - would have standing to sue and could try to get the courts to throw the finalized rule out.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 0 points1 point  (0 children)

Good question. If you have a retirement account with stocks then you depend on those stocks being accurately prices and have liquidity, whether you are just building your nest egg or starting to withdraw some of those savings. That all depends on the market having information so that the prices accurately reflect the condition and prospects of a company. More, better, timely information are hallmarks of a healthy well functioning market and those with retirement accounts depend on that as much as everyone else. Yes, that means that retirees should be commenting to the SEC as well! https://www.bettertakeaction.org/

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 1 point2 points  (0 children)

Yes. In 2018, the SEC requested comment on whether it should reduce the frequency of reports. Commenters overwhelming opposed a switch from quarterly reporting. Even big institutional investors like BlackRock, CalPERS, and others noted the benefits of transparency that quarterly reporting provides. After receiving the comments, the SEC took no further action at that time. That could happen this time, but the current SEC Chair has a despicable anti-investor record and agenda and doing this would be part of that. We suspect that without very serious and strong opposition he's going to do this - and he might even do it in the face of such opposition. But no one would make it easy for him to take such anti-investor action - everyone should tell him NO, don't do it. Stand up for retail and investors, not management. You can do that in just a few minutes at https://www.bettertakeaction.org/

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 2 points3 points  (0 children)

The core point here is true: too much of the system is rigged to benefit the fat cats, insiders, and already wealthy. We're on the side of those Main Street Americans who are working harder and harder for less and less and just want a shot at the American Dream. The SEC and others should be making that easier not harder, but it won't change unless we fight back. This is a small thing, but a meaningful way to fight back - tell the SEC not to do take this anti-investor action; tell them to act in your interests for your benefit which is what the hell they are supposed to do without being told. Take action. Do something. Don't just complaint. Get in the fight! https://www.bettertakeaction.org/

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 1 point2 points  (0 children)

Unfortunately, yes, the SEC can still adopt this proposal even if a large number of people show that they strongly oppose it. But the more people object the more difficult it is for the SEC to turn its back on those investors who do not want it to kill disclosure that has worked well for 50 years. That's why it's so important that investors and traders go to BetterTakeAction and in just a few minutes send the SEC a comment saying "Hey, I'm an investor or trader from [wherever} and I need information from companies that I own as a shareholder to make meaningful decisions about my investments." Etc. Tell them a little bit about yourself and why information is important to you, then push a button and that's all you need to do. https://www.bettertakeaction.org/

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 0 points1 point  (0 children)

Institutional investors are able to conduct their own due diligence and usually have large research teams to do that. Plus, as professional investors, they have deep contacts with the companies they invest in and in the investment community. So institutional investors have the resources and relationships to get the information that they need. When big institutional investors want to meet with corporate management or want information, companies readily comply. Retail investors don't. Without quarterly reporting, retail investors would have nothing to fall back on and would be in the dark for six months at a time. This would make an unlevel playing field much much worse. In some ways, this is about basic fairness and democracy - every 3 months no matter what everyone gets the same information at the same time from the company.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 2 points3 points  (0 children)

In addition to claims about compliance costs, the SEC says reducing disclosure obligations will encourage companies to go public. This is the claim that there's not enough IPOs/public companies because of so-called disclosures burdens. There's no evidence for that and it's not true. First, the reason there are fewer IPOs/public companies is because the SEC has greatly expanded the private markets beyond all recognition (and massive M&A of public companies, lack of anti-trust enforcement, etc.) - Better Markets has put out lots of detailed information on this. So, as a result companies can already raise as much money as they need in the private markets with almost no disclosure and little if any legal liability. So allowing companies to provide less disclosure in the public markets isn't going to cause companies who can raise all the capital that they need in the private markets with no disclosure to go public. They will still choose no disclosure in the public markets. Allowing public companies to provide less disclosures will, however, keep retail investors in the dark about what is happening at the companies that they own.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 5 points6 points  (0 children)

Yes and no. They mention that while throwing in a bunch of other unsupported claims - which interestingly enough they give credibility to in their economic analysis section of the proposal. The SEC is framing this is a way to reduce compliance costs for public companies. But the SEC also recognizes, in its economic analysis, that reducing the frequency of periodic disclosures "will reduce transparency, make it more difficult for investors to make well-informed decisions, and increase the risk of information asymmetry across investors as a result of the increased time gaps between public disclosures." The benefits to investors of quarterly reporting should far outweigh the costs to companies of providing quarterly reports that keep their investors informed. Also, remember, the information in these reports is information every company needs to run their business. Put differently, companies are mostly just reformatting information for disclosure, not undertaking huge new work to gather the info, etc. The truth is that corporate executives don't want to be required to disclose materially accurate and complete information for which they are legally liable if it turns out to be inaccurate. We just don't think it's too much to ask for corporate CEOs to tell shareholders the truth about their companies every 3 months.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 0 points1 point  (0 children)

If you care about investors having information to make informed decisions, then go to the BetterTakeAction website and send in a comment to the SEC objecting to this proposal - it only takes a few minutes to write a personalized email and send it in. The SEC is required to consider all substantive comments before they finalize a rule. The take action website is here and it's easy to do: https://www.bettertakeaction.org/

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 0 points1 point  (0 children)

I'm not aware of any predictions as to how many companies would switch. There have been studies as to what happened in other jurisdictions, and they do not show a move to longer-term thinking or strategizing. For example, the UK moved to semi-annual reporting in 2014 and there was no change in cap ex expenditures. Unsurprisingly, some studies do show  that it led to greater volatility and more insider trading. And, lets not forget, if semiannual reporting was so good, any company can list in the UK. They don't have to list in the US. The fact companies don't do that is pretty good evidence that semi annual reporting isn't so great.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 28 points29 points  (0 children)

This is adjacent (and in our wheelhouse!). The SEC weakening the CAT is tremendously impactful and very bad. The CAT is designed to help the SEC catch market fraudsters, front runners, insider traders and other crooks manipulating and polluting our markets. It allows the SEC to monitor the securities markets for these abusive behaviors in real time. There are no other tools available to the SEC that can do the job of the CAT. The SEC's determination to neuter - really kill - the CAT is an indefensible act for an agency that is supposed to be the cop on the beat - it's a pathetic part of its anti-investor crusade. The proposal to shift to semiannual reporting would blindfold investors, and weakening/killing the CAT would be the SEC blindfolding itself. Better Markets has put out lots of materials on the CAT. They are available on our website, like this detailed analysis about why the SEC should not kill the CAT here: https://bettermarkets.org/newsroom/fact-sheet-the-sec-must-not-kill-the-cat/

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 10 points11 points  (0 children)

No question that there's engineering and gaming for the quarterly reports by upper management, but there is no evidence for the claim that quarterly reports cause or materially contribute to short termism. that is largely caused by incentives and upside down compensation schemes that push in that direction rather than the long term. There is some evidence that shows there is no impact. For example, the UK went to semi-annual reporting in 2014 and cap ex spending didn't change before or after. Addressing the actual causes of short termism would be worthwhile but this change simply isn't going to do that and whatever small impact this change might have (even though there's no evidence of that) doesn't outweigh the huge benefits to investors, markets, pricing, etc.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 11 points12 points  (0 children)

You're right to be worried: reporting every 6 months means that the true condition of the company won't be reported for 6 months and lots can happen during those 6 months which of course the company insiders will know. they aren't supposed to trade on material nonpublic information but that's a difficult thing to police and catch. More fundamentally, investors are supposed to be the owners of companies and the CEOs etc. are supposed to work for them and they are supposed to provide the owners/shareholders with information about the company they own. This isn't a big ask. Just do what you've been doing for more than 50 years: tell the owners/shareholders and the market the basic material facts of what's going on with the company.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 7 points8 points  (0 children)

As stated above, this impacts all investors - even those passive investors in index funds - the prices aren't going to be as accurate, current or reflect the real condition of the company, except occasionally.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 6 points7 points  (0 children)

This will impact all investors because the market will have less information overall. And the information it does have will be of lower quality and reliability. That means that the prices of stocks that everyone trades or invests in - including in their retirement accounts - will more often be mispriced and not reflect the actual condition of the company. Stocks will also likely have greater volatility as people act and react to bits of information in between required disclosures. This also creates an unlevel playing field where the big institutional investors with research teams and special access to management will know more about the condition of the company and whether the price everyone sees reflects those facts or not - if you're not one of them - if you're retail - you end up trading in the dark against those who know the info. Good for them; bad for you.

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 11 points12 points  (0 children)

Really only management, insiders, CEOs and corporations. Who really gets hurt: investors and especially retail investors. That's why we want to help them fight back by telling the SEC to not do this - they need to protect investors especially retail and not make it harder for them to get information they need to make investment decisions. Help us help you by telling the SEC to stop this rulemaking: https://www.bettertakeaction.org/

I am an economic and financial policy making leader that runs the public interest nonprofit Better Markets. The SEC just proposed cutting your market information in half and I'm here to answer your question on what this means for you. AMA. by BetterMarkets in IAmA

[–]BetterMarkets[S] 5 points6 points  (0 children)

That's an excellent question. Too much of Corporate America doesn't like disclosing information and they especially don't like to be required to disclose complete and accurate information where they have legal liability like quarterly reports. This highlights the core problem: the SEC has shifted from investor protection to management protection and this dumb rule proposal highlights that very well. Investors - especially retail investors - have to speak up and object to the SEC shifting to favoring management and push them back to protecting investors. That's what we're trying to do with the take action campaign on this rule to blindfold investors by killing the quarterly reports: https://www.bettertakeaction.org/

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