SEC Plans to Loosen Disclosure Requirements as 97% of Public Comments Oppose the Move
nashnova research
The SEC has proposed scrapping mandatory quarterly reporting and loosening independent audit requirements. Over 97% of public comments came back opposed — turning this deregulation push into a head-on clash between lighter-touch governance and investor protection.
What exactly is the SEC trying to change?
Proposal one: let public companies report financials every six months instead of every quarter, ending a system that has been in place for over half a century.
Proposal two: exempt most companies from the requirement to have external auditors independently review internal books and processes. This means → if enacted, the share of public companies under lighter oversight jumps from roughly 50% to about 80%.
The second proposal cuts deeper. The current audit mandate traces back to the 2002 Sarbanes-Oxley Act — legislation Congress passed after Enron's collapse to force independent audits and prevent accounting fraud. In plain terms = the SEC wants to dismantle the firewall built in the wake of the Enron scandal.
97% opposed — who, and why?
The comment period for the semi-annual reporting proposal closed last month. Out of hundreds of thousands of submissions, over 97% were opposed.
The Managed Funds Association, representing hedge funds and private credit funds, warned that less frequent disclosure could increase volatility, hurt transparency, and raise insider-trading risk.
Institutional asset managers at banks and pension funds added that standardised quarterly reports are essential for accurately valuing their holdings. This means → from the buy side to the sell side, professional investors are nearly unanimous: less information makes markets harder to price.
Does the case for deregulation hold up?
SEC Chair Paul Atkins framed the reforms as part of a "Make IPOs Great Again" agenda — cutting friction and boosting certainty.
The Business Roundtable backs the changes, arguing that independent audits and extra legal counsel cost too much.
Trump administration officials contend that heavy compliance burdens make going public less attractive, pushing capital into lightly regulated private markets and locking smaller investors out of early-stage growth.
But Rebecca Patterson, former CIO of Bridgewater, pushed back: "What is the big problem we need to solve?" — U.S. companies are broadly profitable and perfectly capable of balancing long-term strategy with quarterly disclosure.
Can looser disclosure actually revive IPOs?
Over the past thirty years, the number of U.S.-listed companies has fallen by roughly half, and IPO volumes have shrunk sharply.
Whether relaxing disclosure rules can reverse that trend remains fundamentally contested. In plain terms = fewer listed companies is a fact, but the cause may not be too much disclosure — easier private-market capital and active M&A could matter more. Less reporting does not necessarily fix the right problem.
What does a Nobel laureate's warning really signal?
Nobel economist Simon Johnson, co-chair of the CFA Institute's systemic risk council, warned: "If you reduce the quality of disclosure in the financial system, you will absolutely get the kind of financial risks we have seen before."
He explicitly cited the 2008 financial crisis as a reference point. This reflects a concern that goes beyond cost: the core fear is systemic risk — less information does not just hurt individual investors; it could destabilise the entire market.
Several current and former executives have also criticised these still-draft proposals. This means → even within the corporate world, support for deregulation is far from unanimous.
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