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News this week

• SEC drops its civil case against Trevor Milton (Nikola’s former CEO)

  The Commission filed a joint stipulation to dismiss with prejudice its SDNY action against Milton. This closes the SEC’s civil matter; the agency noted the dismissal “does not necessarily reflect the Commission’s position on any other case.”

• SEC charges FibroGen’s former CMO over allegedly false trial claims
  The SEC sued Dr. Kin-Hung Peony Yu for allegedly making false and misleading statements about roxadustat’s cardiovascular safety, seeking injunctive relief, an officer-and-director bar, disgorgement, and penalties. This underscores disclosure risk around clinical data and investor communications.

• Cybersecurity Alert: Salesloft–Drift AI supply-chain breach (posted 9/10)
  Alert details theft of OAuth tokens used to access connected systems (e.g., Salesforce, Google Workspace, sometimes Slack), with risks of credential stuffing and targeted phishing. FINRA urges immediate steps (disconnect integrations, rotate keys/tokens, log forensics for Aug 8–18, monitor Salesloft trust portal). Material for any broker-dealer or vendor using these integrations.

• “Depoliticize banking” package + two bulletins (Sep 8)
  The OCC said it’s moving to end politicized or unlawful “de-banking,” and will factor banks’ policies and histories on this into licensing decisions and CRA ratings. It also reminded banks of limits on sharing customer data and proper use of voluntary SARs, and said it has sought information from the nine largest OCC-supervised institutions and updated its complaint portal. The agency added it will review BSA/AML supervision and continue stripping “reputation risk” from guidance, with a rule proposal coming.
  • Bulletin 2025-22 clarifies how alleged politicized/unlawful de-banking can affect licensing and CRA evaluations.

• OMB issues M-25-33: “Eliminating Funding of Unlawful Discrimination” (Sep 12)
  New government-wide memo directing agencies to withhold or revoke funding from recipients whose programs (including certain DEI/DEIA activities) violate federal anti-discrimination laws, and instructing agencies to apply DOJ’s July 29 guidance when overseeing grants and contracts. Expect tightened compliance checks on eligibility criteria, training, hiring/promotion policies, and third-party sub-awards.
  

A thought from our Author Norm Osumi 

Semiannual Reporting: A Potential Reset for U.S. Disclosure: What It Means and Who’s Lining Up For and Against It

A renewed initiative from Washington and the SEC would eliminate mandatory quarterly earnings releases in favor of semiannual reporting. While this debate has surfaced before, it now carries real momentum. The administration has explicitly called for the shift, and SEC leadership has acknowledged the idea as a rulemaking priority. If enacted, it would mark the most significant shift in U.S. reporting norms since the early 1970s. It would also bring the U.S. closer in line with the U.K. and EU, where twice-yearly reports are standard.

The proposal centers on eliminating the requirement to file Form 10-Q each quarter. Instead, companies would issue financial reports twice per year. Annual 10-K filings would remain unchanged. Companies would still be permitted to issue quarterly updates voluntarily, but the cadence of disclosure would no longer be mandated by regulation. Execution would involve the standard SEC rulemaking process, with exchanges like NYSE and Nasdaq adjusting their own rules to align. A transition period is expected, and the market would likely rely more heavily on Form 8-K and Regulation FD to maintain disclosure during off-periods.

Why Proponents Support the Change

Advocates for the change argue that quarterly reporting feeds short-termism and distracts management from long-range strategy. The pressure to "meet the quarter" can discourage R&D investment, create artificial cost cutting, or otherwise lead to suboptimal decisions. A six-month interval would provide executives with more space to focus on sustainable performance without the looming pressure of constant earnings season.

The change also promises real cost savings. Filing quarterly reports requires intensive effort from finance, audit, and legal teams. This is especially burdensome for smaller public companies. Cutting the reporting cycle in half could free up significant internal resources.

In addition, proponents believe this change could encourage more private companies to go public. The burden of frequent disclosures is often cited as a barrier to IPOs. By reducing friction, the new policy could help reinvigorate capital formation in the public markets.

Finally, aligning U.S. disclosure frequency with international standards could help create a level playing field for global capital markets. Countries like the U.K. and others in the EU have successfully operated under semiannual reporting regimes for years.

Why Opponents Are Raising Concerns

On the other side, institutional investors, governance advocates, and analysts are raising serious concerns. They argue that less frequent mandated reporting will reduce transparency, impair investor decision-making, and potentially increase volatility. Quarterly reports are the bedrock of modern market pricing. They allow investors to track company performance in real time, calibrate models, and react to emerging risks.

Reducing that cadence to two updates per year could lead to larger information gaps. Stock prices may become more reactive to rumors, speculation, or third-party data, especially as official numbers grow stale. When results are finally released, the market reaction could be sharper and more unpredictable. Analysts and investors would need to fill in the gaps with informal estimates or alternative data sources, which could disadvantage smaller investors.

Insider trading concerns are also at play. With fewer mandated releases, there is a risk that corporate insiders could act on material knowledge for longer periods before the public is informed. Companies would need to tighten trading windows and enhance internal controls to manage that risk.

Governance advocates emphasize that the discipline of quarterly reporting helps enforce accountability. Regular disclosures ensure that management cannot ignore negative developments for too long. Critics of the proposal argue that if the problem is short- termism, a better remedy would be to reform executive compensation plans or de-emphasize quarterly earnings guidance, rather than reduce disclosure frequency.

How the Shift Would Work in Practice

To enact the change, the SEC would amend Exchange Act rules such as Rule 13a-13. A new reporting form might be introduced, or existing forms could be modified to accommodate a semiannual structure. The SEC would define what needs to be included in a twice-yearly report, and exchanges would revise their listing requirements accordingly.

Form 8-K would likely take on greater importance. Material events between reports would need to be disclosed through 8-Ks or through public earnings updates to avoid selective disclosure under Regulation FD. Companies might still choose to issue quarterly press releases or hold earnings calls, particularly if investor expectations demand it.

Where Stakeholders Stand

Public Companies: Generally supportive. Many CEOs and board members appreciate the flexibility and potential for cost savings. CFOs are more divided. Some value the quarterly process as a useful management discipline, while others welcome the relief from a constant reporting treadmill.

Institutional Investors: Broadly opposed. Asset managers, pension funds, and index giants argue that less frequent reporting introduces more risk. They see quarterly updates as essential for monitoring performance and allocating capital effectively. Many of these groups are preparing to push back during the SEC’s public comment period.

Analysts and Research Professionals: Mixed. While analysts value frequent data, some point to the experience in the U.K., where companies continued to provide forward-looking guidance even without formal quarterly reports. The change could increase reliance on analyst forecasts and deepen the importance of earnings calls, management access, and alternative data.

Governance Advocates: Largely opposed. Groups like the Council of Institutional Investors and the International Corporate Governance Network believe quarterly reports promote accountability and market discipline. They argue the proposal benefits management at the expense of shareholder oversight.

Retail Investors: Less vocal but likely to align with institutional investors. Without access to private data or sophisticated tools, retail investors depend heavily on formal disclosures. Fewer mandated updates could widen the information gap between retail and institutional players.

Pros and Cons at a Glance

Pros:

• Reduces compliance and audit burden, especially for smaller companies

• Eases short-term pressure on management

• May encourage more IPOs or public listings

• Aligns U.S. disclosure practices with international standards

• Allows companies to choose their own reporting cadence

  Cons:

• Reduces transparency and timeliness of key information

• Could lead to higher volatility and less efficient pricing

• Increases the risk of insider trading or selective disclosure

• Disadvantages analysts and investors who rely on quarterly updates

• Weakens a key accountability tool for boards and shareholders

What to Watch Next:

The SEC is expected to issue a formal proposal for public comment. The rulemaking will define the structure, content, and timing of semiannual disclosures, along with expectations for ongoing material disclosures via 8-Ks. Exchanges like NYSE and Nasdaq will likely adjust their rules in tandem. In parallel, large companies will decide whether to continue offering quarterly earnings updates voluntarily.

For issuers, this presents an opportunity to modernize internal reporting norms. Even if quarterly 10-Qs are eliminated, companies that maintain a steady flow of relevant information will earn investor trust. This means clarifying communication strategies, reviewing disclosure controls, and ensuring Reg FD compliance remains strong.

Final Word for Zero Material Weaknesses Readers:

This potential reset in reporting cadence represents more than just a regulatory shift. It is a philosophical debate about the balance between transparency and flexibility. If semiannual reporting becomes the new standard, companies must be ready to reinforce trust in other ways. Investors and stakeholders will continue to demand clear, consistent, and timely information, even if the rules no longer require it every 90 days. As reporting norms evolve, the most trusted issuers will be those who communicate not just when required, but when needed.

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Ever wondered how changing the size of a golf course can impact your game? In our latest ReportingNorms.ai episode, Norm Osumi and Jeff Schwinkendorf dive into how playability evolves when golf experiences move away from tradition. From shifting player preferences to the surprising upsides of reinventing recreation, it’s a fresh take on the future of the sport!

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