Investors Shouldn’t Lose Sleep Over Semiannual Reporting

On May 5, 2026, the SEC proposed amendments to give public companies the option to file one semiannual report, on a new Form 10-S, rather than three quarterly reports on Form 10-Q. Companies would still be required to report annual results, but would have the choice of either one or three more reports filed during the year.

As a former plaintiff lawyer, my initial reaction was averse: it sounds like a shareholder rights setback proposed by the current SEC. This could keep me up at night.

Investor advocates like to repeat the metaphor popularized by Supreme Court Judge Louis Brandeis: “sunshine is the best disinfectant,” meaning public disclosure is the best way to expose and prevent fraud. However, we also know that staring at the sun can blind you, meaning too much of a good thing is often counterproductive.

SEC Chairman Paul Atkins likely had both in mind when drafting his remarks accompanying the proposed amendments. From the start of his term, the Chairman has grounded his “Make IPOs Great Again” initiative on core capital formation principles, including reducing burdensome regulations that deter companies from going or staying public and refocusing disclosures on materiality, i.e., what’s most useful to investors.

Since the late 1990s, the number of U.S. publicly traded companies has fallen by about 50%, from around 8,000 in 1997 to around 4,000 in 2024. [1] In part, this stems from fewer IPOs. Between 1996 and 2016, their number fell from 677 to 133 and, after a brief surge in 2020-21 (driven by SPACs), have remained low. [2]

Semiannual reporting is neither new nor strange. Quarterly reporting was only added to U.S. securities laws in 1970. Before then, publicly traded companies did not have a fixed, mandatory schedule for reporting earnings but did so voluntarily, many on a semiannual basis. In 2013, the European Union changed from mandatory quarterly reporting to optional semiannual reporting.  While many companies there still report quarterly, they do so voluntarily.

Shareholder Recovery Implications

Maybe less is more, and the investor in me could benefit from fewer disclosures focused on what’s most important. I think this while staring at a pile of thick company statements from my brokerage firm that grows daily – and that I will never read.

But the securities lawyer in me pushes back: what about enforcement? Will fewer interim reports mean fewer securities class action filings and settlements? Probably not. Each year, around 15% of U.S. securities class actions involve foreign issuers, which only report on an annual basis.

In securities class actions, plaintiffs allege false and misleading statements in company disclosures. Fewer interim reports offer a smaller pool of statements to potentially attack. Will three instead of one report reduce activity? While I haven’t done a systematic review, I have read and drafted many Section 10(b) complaints in my career and can’t recall any where the alleged misrepresentations were solely in a company’s quarterly reports, and not also in its annual reports, registration statements, proxy statements, earnings reports and calls – none of which will be impacted by these proposed amendments.

More likely, with fewer interim statements, companies will make greater use of these other outlets to disclose information, and the frequency of suits will not be diminished. With less frequent disclosures, it may be harder to show management scienter or state of mind, i.e., to pinpoint when company executives knew or should have known about adverse facts that show their earlier statements were false or misleading. But most securities complaints rely on confidential employee witnesses to allege what was known internally, rather than admissions in quarterly reports. These informants will still be available.

Loss causation and damage could be harder to prove. Fewer statements may reduce the number of dates on which share prices fall following adverse news. But fewer disclosures could increase share price movements by capturing in a single drop the impact that is now spread across several. Bigger price drops make it easier for shareholders to show materiality and causation, and to quantify loss.

With their own words, criminals are more frequently condemned than acquitted. While the plaintiff lawyer in me prefers that wrongdoers have more words on which to potentially hang themselves, with fewer and better disclosures, the investor in me will sleep better at night.

If passed, semiannual reporting is unlikely to materially change the level of private enforcement. Strong securities cases will remain strong with one interim report instead of three, and the plaintiff bar will make greater use of other company disclosures not impacted by these proposed amendments. So, the plaintiff lawyer in me can also sleep well.

The State of Securities Class Actions

The shareholder recovery landscape is dynamic. Staying ahead of the latest developments means understanding how the plaintiff bar, regulators, and claims administrators operate – and how their work impacts investment firms. Read FRT’s proprietary Securities Class Action Intelligence Report to learn more.

[1] Wes Moss, The Decline In U.S. Stocks to Choose From: What It Means for Investors (Forbes, 2/3/2025)

[2] Id.