On May 20, 2026, the Investor Advisory Committee (“IAC”) of the Securities and Exchange Commission (the “Commission”) released a draft recommendation (the “Recommendation”) addressing the Commission’s proposed rule that would replace quarterly periodic reporting required under Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with an option to comply with a semi-annual reporting regime (the “Proposal”).  The draft Recommendation articulates several policy rationales opposing the Proposal.

Among other things, the draft Recommendation argues quarterly reporting serves as a critical mechanism to maintain transparency and investor confidence.  Lengthening the reporting interval to six months, it contends, would materially weaken the informational foundation upon which investors – particularly retail investors – rely to make timely, informed investment and voting decisions.  Less frequent mandatory disclosure would widen the information gap between institutional investors, often able to access alternative data sources and direct management engagement, and retail investors, dependent on public filings.  Additionally, the draft Recommendation raises concerns that the proposed shift could erode the governance discipline that regular reporting imposes on corporate management by extending the window during which material developments may go undisclosed and diminishing accountability.  It rejects the notion that quarterly reporting promotes harmful short-termism, contending the empirical evidence does not support a causal link between reporting frequency and short-term corporate decision-making.  The draft Recommendation further argues the Proposal’s cost-benefit analysis is overstated, as compliance costs would not be significantly reduced and fails to account for the need to maintain accurate financial information as part of a company’s ordinary operations, and overlooks the significant costs investors would bear through reduced transparency and less timely access to financial information.

The IAC’s draft Recommendation reflects broader market concerns that moving away from quarterly reporting could undermine the transparency associated with the periodic disclosure regime.  Critics of the Proposal argue less frequent reporting may lead to greater stock price volatility around fewer disclosure events, reduced analyst coverage for smaller-cap issuers, and an environment more susceptible to insider trading and selective disclosure.  The draft Recommendation is subject to consideration and vote by the full IAC before it is submitted as a formal recommendation.  Public companies and market participants should monitor developments closely, as the IAC’s position may influence rulemaking.  Read the IAC’s full draft Recommendation here.

The IAC will hold a public meeting on June 4, 2026 to discuss, among other items, the draft Recommendation.  The full agenda also includes a discussion regarding:

  • retail confusion relating to private market assets, during which a panel will address confusion that may arise from redemption gating, fee structures, valuation methodologies, and other unique features of private market and alternative investment products;
  • passive index funds and shareholder voting, and the effects on corporate governance and investor protection of having greater voting power concentrated in passive investment vehicles; and
  • recommendations regarding fund proxy voting in connection with modernization of the fund proxy system for open‑end funds and ETFs.