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By Phyllis Diamond
Jan. 21 — The Securities and Exchange Commission staff is weighing the pros and cons of continuing to require quarterly financial reports, Keith Higgins, director of the agency's Division of Corporation Finance said Jan. 21.
The discussion hasn't resulted in a formal recommendation to the commission, and research and debate on the topic are likely to continue, he said.
Higgins, who spoke only his views, made his remarks in London in a keynote address at a PLI gathering on European securities regulation.
According to Higgins, commentators have asked the agency to re-think the need for quarterly reporting by U.S. issuers. They say this frequency leads to short-term thinking by both investors and corporate management, and that changing the rules could be “especially appropriate” for smaller issuers because of the burden of having to provide financial statements every three months.
However, Higgins continued, other commentators oppose the change. They argue that replacing quarterly with semi-annual reporting won't spur management to make longer-term business decisions but will increase the temptation for insider trading.
The SEC Advisory Committee on Small and Emerging Companies debated the pros and cons of discontinuing quarterly reporting at Sept. 23 meeting. It recommended that the SEC ease disclosure requirements on “smaller reporting companies” and expand the definition of those companies to include those with a public float of up to $250 million .
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