I led an effort with 27 members of Congress to send a letter to the Securities and Exchange Commission (SEC) Chairman Jay Clayton, asking the commission to ease regulatory burdens on job creators across the country.
Our letter advocates for reform of corporate disclosure frequency to align with our global competitors and to incentivize more companies to invest and expand. There are several potential alternatives to the outdated quarterly disclosure model, such as semi-annual or tri-annual reporting. While we have plenty of options, one thing is clear: we must find a more appropriate balance between informational benefits to investors and the associated compliance burdens for companies.
Recently, the SEC issued a Request for Comment in order to solicit feedback from market participants on ways to reduce the financial reporting burden on companies, improve efficiency and effectiveness of quarterly reporting, and continue to preserve or enhance investor protection. In response, there has been a flood of comment letters from notable companies on the subject. Interest in this issue comes at the heels of an American economy that is experiencing significant growth. Through legislative proposals introduced in previous years, Congress also recognizes that revising disclosure requirements is an important step toward continuing and enhancing this growth and maintaining American competitiveness across the Atlantic.
While the European Union, the United Kingdom, and Australia have moved away from a quarterly reporting requirement, the United States has been reluctant to move in a similar direction and that is a contributing factor to companies seeking out alternatives for raising capital, like private markets. A move to semi-annual or tri-annual reporting would help level the playing field globally for our public equity market. One such business with over 100 employees in North Carolina has estimated that such reforms would save them in excess of 6,000 employee hours every year, and over a 10-year period, over $50 million dollars. These are savings that every business can use to hire more workers, raise wages, or pass on to the consumer in the form of lower costs.
President Trump expressed his interest in the issue last year when he tweeted, “In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. ‘Stop quarterly reporting & go to a six month system,’ said one. That would allow greater flexibility & save money. I have asked the SEC to study!”
The SEC has a perfect window to work with us and enact these much-needed reforms that will spur the acceleration of the economy throughout the whole country.
Congressman Ted Budd is a Republican who represents the 13th District of North Carolina and sits on the House Financial Services Committee.