Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 65601 

1See 17 CFR 240.13a–13 and 17 CFR 240.15d–13. 

2 17 CFR 249.308a. 

3See 17 CFR 210.8–03 (‘‘Rule 8–03’’) and 17 CFR 

210.10–01 (‘‘Rule 10–01’’). 

4Form 10–Q also requires a management’s 

discussion and analysis of financial condition and 

results of operations (‘‘Management’s Discussion 

and Analysis’’), along with disclosures on 

quantitative and qualitative market risk, company 

disclosure controls and procedures, legal 

proceedings, material changes to previously 

disclosed risk factors, unregistered sales of equity 

securities and the use of proceeds from such sales, 

defaults upon senior securities, mine safety 

disclosures, and any information required to be 

disclosed in a report on Form 8–K during the period 

covered by the relevant 10–Q that was not reported. 

5See 17 CFR 230.415 (‘‘Rule 415’’), Item 12(a) of 

Part I of Form S–1 [17 CFR 239.11], and Item 12(a) 

of Part I of Form S–3 [17 CFR 239.13]. All 

documents, not just a Form 10–Q, subsequently 

filed pursuant to Sections 13(a), 13(c), 14 or 15(d) 

of the Exchange Act may be forward incorporated 

by reference on Form S–3. Smaller reporting 

companies may forward incorporate by reference on 

Form S–1 all documents subsequently filed 

pursuant to Sections 13(a), 13(c), 14, or 15(d) of the 

Exchange Act. 

6 15 U.S.C. 78m; 15 U.S.C. 78o; 15 U.S.C. 78r; 15 

U.S.C. 78j(b); and 17 CFR 240.10b–5. General 

Instruction F.1. of Form 10–Q states that pursuant 

to Rule 13a–13(d) [17 CFR 240.13a–13(d)] and Rule 

15d–13(d) [17 CFR 240.15d–13(d)], the information 

presented to satisfy the requirements of Part I Items 

1, 2 and 3 shall not be deemed filed for purposes 

of Section 18 of the Exchange Act or otherwise 

subject to the liability of that section, but shall be 

subject to other provisions of the Exchange Act. 

Further, companies must submit their Form 10–Q 

financial statement disclosures in the eXtensible 

Business Reporting Language (‘‘XBRL’’) format, and 

these XBRL structured financial statement 

disclosures are subject to the same disclosure 

liability. See 17 CFR 229.601(b)(101) (‘‘Item 

601(b)(101) of Regulation S–K’’). The Commission 

recently adopted amendments requiring Inline 

XBRL, a newer XBRL technology, with phased 

compliance dates depending on filer status: Large 

accelerated filers and accelerated filers that prepare 

their financial statements in accordance with U.S. 

GAAP must comply with the requirements for fiscal 

periods ending on or after June 15, 2019 and June 

15, 2020, respectively; all other filers must comply 

with the requirements for fiscal periods ending on 

or after June 15, 2021. See SEC Release No. 33– 

10514 (Sept. 17, 2018). 

BILLING CODE 4910–13–P 

Issued in Kansas City, Missouri, on 

December 7, 2018. 

Melvin J. Johnson, 

Aircraft Certification Service, Deputy 

Director, Policy and Innovation Division, 

AIR–601. 

[FR Doc. 2018–27577 Filed 12–20–18; 8:45 am] 

BILLING CODE 4910–13–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 210, 230, 239, 240, 243, 

and 249 

[Release No. 33–10588; 34–84842; File No. 

S7–26–18] 

Request for Comment on Earnings 

Releases and Quarterly Reports 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Request for comment. 

SUMMARY: The Commission is requesting 

public comment on how we can 

enhance, or at a minimum maintain, the 

investor protection attributes of periodic 

disclosures while reducing 

administrative and other burdens on 

reporting companies associated with 

quarterly reporting. We are specifically 

requesting public comment on the 

nature and timing of the disclosures that 

reporting companies are required to 

provide in their quarterly reports filed 

on Form 10–Q, including when the 

disclosure requirements overlap with 

disclosures these companies voluntarily 

provide to the public in the form of an 

earnings release furnished on Form 8– 

K. We are interested in exploring ways 

to promote efficiency in periodic 

reporting by reducing unnecessary 

duplication in the information that 

reporting companies disclose and how 

such changes could affect capital 

formation, while enhancing, or at a 

minimum maintaining, appropriate 

investor protection. We also are 

requesting public comment on whether 

our rules should provide reporting 

companies, or certain classes of 

reporting companies, with flexibility as 

to the frequency of their periodic 

reporting. In addition, we are seeking 

comment on how the existing periodic 

reporting system, earnings releases, and 

earnings guidance, standing alone or in 

combination with other factors, may 

affect corporate decision making and 

strategic thinking—positively or 

negatively—including whether these 

factors foster an inefficient outlook 

among registrants and market 

participants by focusing on short-term 

results, sometimes referred to as ‘‘shorttermism.’’ 

DATES: Comments should be received by 

March 21, 2019. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/other.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number S7– 

26–18 in the subject line. 

Paper Comments 

• Send paper comments to Brent J. 

Fields, Secretary, Securities and 

Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

All submissions should refer to File 

Number S7–26–18. This file number 

should be included in the subject line 

if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

website (http://www.sec.gov/rules/ 

other.shtml). Comments also are 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make publicly available. 

FOR FURTHER INFORMATION CONTACT: 

Courtney L. Lindsay, Attorney-Adviser, 

or Lilyanna L. Peyser, Special Counsel 

at (202) 551–3430, Division of 

Corporation Finance, 100 F Street 

NE, Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Overview of Quarterly Reporting 

In addition to annual and current 

reports, companies subject to the 

periodic reporting requirements under 

the Securities Exchange Act of 1934 

(‘‘Exchange Act’’), other than foreign 

private issuers, must file quarterly 

reports 1 on Form 10–Q,2 which include 

interim financial statements 3 and other 

disclosure items.4 Form 10–Q is often 

forward incorporated by reference into 

certain registration statements under the 

Securities Act of 1933 (‘‘Securities 

Act’’), thereby avoiding unnecessary 

duplication of information about an 

issuer’s recent financial results and 

material business developments that 

was previously filed and remains 

available electronically on EDGAR.5

This forward incorporation helps reduce 

the time and costs associated with 

frequent updating of a registration 

statement to reflect such developments. 

A company’s Form 10–Q must comply 

with the requirements of Sections 13(a) 

or 15(d) of the Exchange Act, as 

applicable, and is subject to liability 

under Sections 10(b) and 18 of the 

Exchange Act and Rule 10b–5 

thereunder.6 In addition, in certain 

circumstances, including in the offer 

and sale of securities, reporting 

companies, affiliates, and underwriters 

may be subject to liability for their 


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7 15 U.S.C. 77k; 15 U.S.C. 77l; and 15 U.S.C. 77q. 

Each of these provisions, which we reference 

throughout this Request for Comment, imposes 

liability on companies in certain instances for 

making any untrue statements of a material fact or 

omitting to state a material fact necessary in order 

to make the statements made, in the light of the 

circumstances under which they were made, not 

misleading. Liability under certain of these 

provisions, such as Sections 11 and 12 of the 

Securities Act and Section 18 of the Exchange Act, 

attaches only to documents that are filed with the 

Commission or incorporated by reference into a 

Securities Act registration statement. For example, 

Section 11 liability can result from disclosure in a 

Form 10–Q that is incorporated by reference into a 

Securities Act registration statement. There are 

instances, however, when liability may attach to 

documents that are not deemed to be filed. For 

example, liability under Section 10(b) and Rule 

10b–5 of the Exchange Act may attach to documents 

that are furnished to, in addition to documents that 

are filed with, the Commission. 

8A foreign private issuer is any foreign issuer 

other than a foreign government, except for an 

issuer that has more than 50% of its outstanding 

voting securities held of record by U.S. residents 

and any of the following: A majority of its officers 

or directors are citizens or residents of the United 

States; more than 50% of its assets are located in 

the United States; or its business is principally 

administered in the United States. See 17 CFR 

230.405 and 17 CFR 240.3b–4(c). Foreign private 

issuers with a class of securities listed on the NYSE 

or NASDAQ must submit semi-annual unaudited 

financial information under cover of Form 6–K 

within six months following the end of the second 

fiscal quarter. See NYSE Rule 203.03 and NASDAQ 

Rule 5250(c)(2). Similarly, Item 8.A.5 of Form 20– 

F requires a foreign private issuer to include interim 

financial statements when its registration statement 

is dated more than nine months after the end of the 

last audited financial year. In addition, foreign 

private issuers may have more frequent reporting 

requirements based on the laws of their home 

country. 

9 Issuers conducting Tier 2 offerings under 

Regulation A also are required to file annual and 

semi-annual reports, as well as current reports, with 

the Commission, but are not required to file 

quarterly reports. See 17 CFR 230.257(b). 

10 17 CFR 249.306. 

11Commission rules and forms use various terms 

to refer to the accountant that is independent and 

performs the audit and review of the registrant’s 

financial statements as required by Regulation S–X. 

For example, Rule 2–01 of Regulation S–X uses the 

term ‘‘auditor’’ interchangeably with ‘‘certified 

public accountant,’’ ‘‘public accounting firm,’’ or 

‘‘public accountant.’’ Form 6–K uses the term 

‘‘certifying accountants.’’ In this Request for 

Comment, we refer to these accountants as 

‘‘auditors.’’ 

12 17 CFR 249.306. 

13 15 U.S.C. 78j; 17 CFR 240.10b–5. 

14 15 U.S.C. 77k; 15 U.S.C. 77l; 15 U.S.C. 77q. 

15See Hong Kong Stock Exchange Listing Rule 

18.66, National Instrument 51–102 Continuous 

Disclosure Obligations (Canada), and Financial 

Instruments and Exchange Act (Act No. 25 of 1948) 

(Japan). 

16 Directive 2004/109/EC on the Harmonisation of 

Transparency Requirements in Relation to 

Information about Issuers Whose Securities Are 

Admitted to Trading on a Regulated Market and 

Amending Directive 2001/34/EC (Dec. 15, 2004) (OJ 

L 390, 31.12.2004, p.38–57) (‘‘Transparency 

Directive’’). 

17A key argument in favor of quarterly reports 

was to increase investor protection and investor 

confidence, as well as to ‘‘close the transparency 

gap between the USA and the EU.’’ See Thomas 

Schleicher & Martin Walker, Are Interim 

Management Statements Redundant? 233 (Mar. 

2015), available at http://dx.doi.org/10.1080/ 

00014788.2014.1002444 (‘‘Are Interim Management 

Statements Redundant?’’). Prior to the Transparency 

Directive, most European Union member states 

required only semi-annual and annual reports, 

although several countries required quarterly 

reports, specifically: Finland, Greece, Portugal, 

Sweden, Italy, and Spain. 18See Transparency Directive, supra note 16. 

Commentators observed that ‘‘IMSs are lightly 

regulated trading statements with management 

retaining considerable control over form and 

content’’ and that ‘‘the issuer can choose which 

financial statement line item, if any, to comment on 

. . . .’’ See Are Interim Management Statements 

Redundant?, supra note 17. 

19 Directive 2013/50/EU Amending Directive 

2004/109/EC on the Harmonisation of Transparency 

Requirements in Relation to Information About 

Issuers Whose Securities are Admitted to Trading 

on a Regulated Market, Directive 2003/71/EC on the 

Prospectus to be Published When Securities are 

Offered to the Public or Admitted to Trading and 

Commission Directive 2007/14/EC Laying Down 

Detailed Rules for the Implementation of Certain 

Provisions of Directive 2004/109/EC of the 

European Parliament and of the Council of 22 

October 2013 Amending Directive 2004/109/EC, 

(Oct. 22, 2013) (OJ L 294, 6.11.2013, p. 13–27). This 

followed the 2010 European Commission report 

reviewing the operation of the Transparency 

Directive, which considered whether quarterly 

disclosures contributed to undue focus on nearterm results. The report noted that abolishing the 

quarterly information requirement would alleviate 

pressure on issuers and establish incentives for a 

longer-term vision. See Report from the 

Commission to the Council, the European 

Parliament, the European Economic and Social 

Committee and the Committee of the Regions— 

Operation of Directive 2004/109/EC on the 

Harmonisation of Transparency Requirements in 

Relation to Information About Issuers Whose 

Securities are Admitted to Trading on a Regulated 

Market (May 27, 2010) (SEC 611) (‘‘EU Commission 

Report’’). 20See EU Commission Report, supra note 19. 

21See Commission Recommendation of 6 May 

2003 Concerning the Definition of Micro, Small and 

Medium-Sized Enterprises, (May 5, 2003) (OJ L 124 

20.5.2003, p. 36–41) (defining ‘‘micro,’’ ‘‘small’’ and 

‘‘medium-sized’’ enterprises as ‘‘enterprises which 

employ fewer than 250 persons and which have an 

annual turnover not exceeding EUR 50 million, 

and/or an annual balance sheet total not exceeding 

EUR 43 million’’ and further clarifying that ‘‘small’’ 

enterprises as those that ‘‘[employ] fewer than 50 

persons and whose annual turnover and/or annual 

balance sheet total does not exceed EUR 10 

million.’’). 

disclosure in Form 10–Q under Sections 

11, 12, and 17 of the Securities Act.7

By contrast, foreign private issuers 8

subject to the periodic reporting 

requirements of the Exchange Act are 

required to file annual reports, but are 

not required to file quarterly reports.9

Foreign private issuers are required to 

furnish reports on Form 6–K to the 

extent that the ‘‘issuer (i) makes or is 

required to make public pursuant to the 

law of the jurisdiction of its domicile or 

in which it is incorporated or organized, 

or (ii) files or is required to file with a 

stock exchange on which its securities 

are traded and which was made public 

by that exchange, or (iii) distributes or 

is required to distribute to its security 

holders.’’ 10 Among other information 

required to be furnished in this context, 

foreign private issuers must disclose 

material information about changes in 

business, changes in management or 

control, changes in the registrant’s 

auditors,11 the financial condition and 

results of operations, material legal 

proceedings, and related party 

transactions.12 Foreign private issuers 

are subject to liability for the disclosures 

they make in Form 6–K under Section 

10(b) of the Exchange Act and Rule 10b– 

5 thereunder.13 In addition, foreign 

private issuers, affiliates and 

underwriters are subject to liability for 

the disclosures they make in Form 6–K 

under Sections 11, 12, and 17 of the 

Securities Act 14 to the extent the Form 

6–K is incorporated by reference into a 

Securities Act registration statement. 

There are many jurisdictions and 

foreign exchanges that have quarterly 

reporting requirements similar to the 

United States, including Canada, Hong 

Kong and Japan.15 The European Union 

and other jurisdictions, by contrast, 

recently developed requirements that 

differ from those in the United States to 

address concerns about the frequency of 

reporting. The evolution of reporting 

requirements in these jurisdictions may 

inform the policy considerations 

presented by potential changes to the 

United States reporting system. In 2004, 

the European Union adopted the 

Transparency Directive (2004/109/EC), 

which governs the ongoing disclosure 

requirements for companies whose 

securities are listed on a European 

Economic Area (‘‘EEA’’)-regulated 

market.16 The Transparency Directive 

required listed companies to publish a 

quarterly report, known as the interim 

management statement (‘‘IMS’’).17

Unlike a quarterly report on Form 10– 

Q, an IMS did not require financial 

statements, but rather, needed to 

include only a ‘‘general description of 

the [company’s] financial position and 

performance since the last half-yearly or 

annual report and [explain] any material 

events and transactions that have since 

taken place.’’ 18

In 2013, the EU adopted the Revised 

Directive on transparency requirements 

(2013/50/EU), or the Revised 

Transparency Directive, which 

abolished the requirement to publish 

IMSs.19 Although a report that preceded 

the Revised Transparency Directive 

noted that IMSs were generally wellperceived by market participants,20 the 

Revised Transparency Directive noted 

that the IMSs were a burden for small 

and medium-sized issuers 21 without 

being necessary for investor 


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22See Revised Transparency Directive, supra note 

19 at 13 (‘‘The obligations to publish interim 

management statements or quarterly financial 

reports represent an important burden for many 

small and medium-sized issuers whose securities 

are admitted to trading on regulated markets, 

without being necessary for investor protection.’’). 23See the Revised Transparency Directive at 13 

(‘‘Those obligations also encourage short-term 

performance and discourage long-term investment. 

In order to encourage sustainable value creation and 

long-term oriented investment strategy, it is 

essential to reduce short-term pressure on issuers 

and give investors an incentive to adopt a longer 

term vision. The requirement to publish interim 

management statements should therefore be 

abolished.’’). 

24Specifically, more frequent reporting may be 

instituted if, after an assessment of the impacts, it 

is shown that such additional requirement does not 

lead to (a) an excessive focus on short-term results 

and performance of the issuers and (b) to a negative 

impact on the access of small and medium sized 

issuers to regulated markets. 

25The FCA is the conduct regulator for financial 

services firms and financial markets in the United 

Kingdom and the prudential regulator for many of 

those firms. 

26See Removing the Transparency Directive’s 

Requirement to Publish Interim Management 

Statements, Financial Conduct Authority (Nov. 

2014), available at https://www.fca.org.uk/ 

publication/policy/ps14-15.pdf. 

27See Suresh Nallareddy, Robert Pozen & 

Shivaram Rajgopal, Consequences of Mandatory 

Quarterly Reporting: The U.K. Experience, 

Columbia Business School Research Paper No. 17– 

33 (Mar. 1, 2017), available at https://ssrn.com/ 

abstract=2817120 (the survey also found evidence 

that the companies that ceased issuing quarterly 

reports were smaller than average, were less likely 

to provide marginal guidance in mandatory 

reporting, and were more likely to be in the energy 

industry). See also PricewaterhouseCoopers’ survey 

on quarterly reporting for listed companies and 

transition to IFRS 16 (Nov. 9, 2017), available at 

https://www.pwc.no/no/publikasjoner/ 

kapitalmarkedstjenester/PwC-survey-quarterlyreporting-listed-companies-and-transition-ifrs16.pdf (finding that 5% of surveyed companies 

stated that they would not continue to report 

quarterly or had not yet made a decision). 

28Owen Walker, The Long and Short of the 

Quarterly Reports Controversy, Financial Times 

(July 1, 2018), available at https://www.ft.com/ 

content/e61046bc-7a2e-11e8-8e67-1e1a0846c475. 

29See Robert Pozen, Suresh Nallareddy & 

Shivaram Rajgopal, Impact of Reporting Frequency 

on UK Companies, CFA Institute Research 

Foundation (Mar. 2017). 

30 Id. 

31Among all Form 10-Qs filed with the 

Commission in calendar year 2017, we estimate that 

63% were accompanied by prior or concurrent 

earnings releases furnished on Form 8–K. For Form 

10-Qs filed by S&P 500 and S&P 1500 Super 

Composite companies in calendar year 2017, we 

estimate that 97% and 98%, respectively were 

accompanied by prior or concurrent earnings 

releases furnished on Form 8–K. 

32The term ‘‘earnings release’’ as used in this 

Request for Comment means a public 

announcement or release by a company, or person 

acting on its behalf, of material non-public 

information regarding a company’s results of 

operations or financial condition for a completed 

quarterly or annual financial period. The 

requirements of Item 2.02 of Form 8–K are triggered 

by the disclosure of this information. Forwardlooking information provided by a company to its 

investors on a quarterly basis in a method other 

than Form 8–K or Form 10–Q is referred to as 

‘‘forward-looking earnings guidance’’ or ‘‘earnings 

guidance.’’ 

33See 17 CFR 244.100 and 17 CFR 229.10. In 

addition, earnings releases and related 

communications are subject to the antifraud 

provisions of the federal securities laws. 

34 Generally, a company publishes an earnings 

release prior to the occurrence of any associated 

conference call with investors and analysts. 

35See Item 2.02 of Form 8–K [17 CFR 249.308]. 

Forms 8–K that are furnished to, as opposed to filed 

with, the Commission are not automatically 

incorporated into Securities Act registration 

statements or subject to liability under Section 18 

of the Exchange Act; however, they are subject to 

liability under Section 10(b) and Rule 10b–5 of the 

Exchange Act. An issuer also may choose to file, 

rather than furnish, earnings release information on 

Form 8–K, for example, in order to ensure that a 

registration statement currently in use does not 

contain a material omission of the information 

contained in an earnings release. 

36See Arif, Salman et. al. A Growing Disparity in 

Earnings Disclosure Mechanisms: The Rise of 

Concurrently Released Earnings Announcements 

and 10–Ks (June 6, 2018), Kelley School of Business 

Research Paper No. 16–50, available at https://

ssrn.com/abstract=2801701 (stating that ‘‘the 

fraction of concurrent [earnings releases and Form 

10–Q filings] has increased from 20% in 2002 to 

more than 60% by 2015’’) (‘‘A Growing Disparity 

in Earnings Disclosure Mechanisms’’). 

37See The Promise of Market Reform, Nasdaq, 

(May 2017), available at https://

business.nasdaq.com/media/Nasdaq_Blueprint_to_

Revitalize_Capital_Markets_April_2018_tcm5044- 

43175.pdf (stating that ‘‘companies provide key 

data via an earnings press release each quarter’’ and 

that ‘‘[f]or virtually all investors, the press release 

is the quarterly report. Yet companies are then 

required to file a formal Form 10–Q . . . which is 

complex, time-consuming, and provides little 

additional actionable information that cannot be 

found in the press release’’) (‘‘The Promise of 

Market Reform’’). See, also, Diamond, Colin J. and 

Irina Yevmenenko, Earnings Releases and Earnings 

Calls, White & Case LLP (2015), available at https:// 

www.whitecase.com/sites/whitecase/files/files/ 

download/publications/article-earnings-releasesand-earnings-calls.pdf (stating that ‘‘earnings 

releases and calls are among the most material 

announcements that reporting companies make’’ 

and ‘‘often result in significant movements in a 

reporting company’s stock price,’’ and that ‘‘a 

company’s stock price usually is not affected by the 

filing of its Form 10–K or Form 10–Q following a 

corresponding earnings release, because all material 

information has already been disclosed in the 

earnings release’’). 

protection.22 Furthermore, the IMSs 

were thought to encourage a focus on 

short-term performance and discourage 

long-term investment.23

Under the Revised Transparency 

Directive, a European Union member 

state may require issuers to publish 

additional periodic financial 

information on a more frequent basis 

than the annual or half-yearly reports 

only under specific conditions.24

Companies may nonetheless publish 

quarterly information on a voluntary 

basis. 

In addition, effective November 7, 

2014, the Financial Conduct Authority 

(‘‘FCA’’) of the United Kingdom 25

eliminated IMS requirements. Issuers 

are permitted to continue to publish 

IMSs on a voluntary basis, but the FCA 

does not treat them as regulated 

information.26 A 2017 market survey 

found that, in a sample of 516 U.K. 

companies, 471 (91.3%) continued 

issuing quarterly reports in 2015.27 A 

more recent analysis found that 

‘‘between October 2016 and [August 

2017], the number of [Financial Times 

Stock Exchange (‘‘FTSE’’)] 100 

companies issuing quarterly reports fell 

by nearly a fifth, from 70 to 57. Among 

the FTSE 250, the figure fell by a 

quarter, from 111 to 83.’’ 28

We also note that a 2017 study found 

that when quarterly reporting was no 

longer required of U.K. companies in 

2014, there was no significant difference 

between the levels of corporate 

investment of the U.K. companies that 

stopped quarterly reporting and those 

that continued quarterly reporting.29

There was, however, a general decline 

in the analyst coverage of those 

companies that reduced the frequency 

of reporting.30

Observations on Quarterly Reporting 

and Earnings Release Practices 

Many companies required to file Form 

10–Q also voluntarily communicate 

certain quarterly financial results 

through earnings releases.31 Federal 

securities laws do not require reporting 

companies to publish earnings releases, 

conduct earnings calls with investors 

and analysts, or issue forward-looking 

earnings guidance.32 To the extent that 

a company makes such 

communications, neither the disclosure 

of specific information, nor the structure 

of that information, is regulated by the 

Commission. The Commission does, 

however, regulate the presentation of 

certain financial measures by reporting 

companies, including in their earnings 

releases.33 To the extent that a company 

elects to make a public announcement 

or release of earnings information,34 it 

must furnish the earnings release on 

Form 8–K.35

While some companies provide 

earnings releases in advance of the 

corresponding Form 10–Q filings, many 

companies now issue earnings releases 

concurrently with their Form 10–Q 

filings.36 Given the potential overlap 

between the financial information 

provided in the earnings release and the 

Form 10–Q, some market participants 

view the Form 10–Q primarily as a 

compliance document that subsequently 

(or concurrently) confirms the material 

information about the quarterly period 

included in an earnings release issued 

before (or at the same time as) the Form 

10–Q.37 Other market participants, 

however, view the Form 10–Q as 

distinct from earnings releases and as an 


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38See, e.g., Jamie Dimon & Warren E. Buffett, 

Short-Termism Is Harming the Economy: Public 

companies should reduce or eliminate the practice 

of estimating quarterly earnings, Wall St. J. (Jun. 6, 

2018) (‘‘Dimon and Buffet WSJ Article’’), available 

at https://www.wsj.com/articles/short-termism-isharming-the-economy-1528336801 (stating that the 

authors’ misgivings about quarterly earnings 

forecasts should not be misconstrued as opposition 

to quarterly and annual reporting that offers a 

retrospective look at actual reporting); Michael 

Posner, Why Quarterly Reporting Makes Business 

Sense, Forbes (Aug. 17, 2018), available at https:// 

www.forbes.com/sites/michaelposner/2018/08/17/ 

why-quarterly-reporting-from-business-makessense/#1416b5c67ed8 (discussing information that 

is contained in the Form 10–Q that is distinct from 

what is providing in an earnings release); Robert C. 

Pozen & Mark Roe, Keep Quarterly Reporting, 

Brookings Institution (Sept. 5, 2018), available at 

https://www.brookings.edu/opinions/keepquarterly-reporting/ (opposing quarterly earnings 

guidance and expressing a belief that a semi-annual 

reporting would not be beneficial). 

39Rules 8–03 and 10–01(d). 

40The Public Company Accounting Oversight 

Board (‘‘PCAOB’’) is generally the standard-setter 

for audit and review procedures in the United 

States. The PCAOB’s AS 4105, Reviews of Interim 

Financial Information, addresses the auditor 

requirements for reviews of interim financial 

information. 

41Financial Accounting Standards Board 

(‘‘FASB’’) Accounting Standards Codification 

(‘‘ASC’’) 270: Interim Reporting also provides 

recognition and measurement guidance for interim 

periods. The Commission has designated the FASB 

as the private-sector accounting standard setter for 

United States financial reporting purposes. Section 

108 of the Sarbanes-Oxley Act amended Section 19 

of the Securities Act to provide that the 

Commission ‘‘may recognize, as ‘generally 

accepted’ for purposes of the securities laws, any 

accounting principles established by a standard 

setting body that met certain criteria.’’ The 

Commission has determined that the FASB satisfies 

the criteria in Section 19 and, accordingly, the 

FASB’s financial accounting and reporting 

standards are recognized as ‘‘generally accepted’’ 

for purposes of the federal securities laws. See 

Policy Statement: Reaffirming the Status of the 

FASB as a Designated Private-Sector Standard 

Setter, Release No. 33–8221 (Apr. 25, 2003) [68 FR 

23333 May 1, 2003]. 

42 17 CFR 240.13a–14 (‘‘Rule 13a–14’’) and 17 

CFR 240.15d–14 (‘‘Rule 15d–14’’). These rules 

require the certifying officers to certify, among other 

things, that they have reviewed the Form 10–Q and 

that based on their knowledge: (i) The 10–Q does 

not contain any untrue statement of material fact or 

omit to state a material fact necessary to make any 

statements made, in light of the circumstances 

under which such statements were made, not 

misleading with respect to the period covered by 

the 10–Q; and (ii) the financial statements, and 

other financial information included in the 10–Q, 

fairly present in all material respects the financial 

condition, results of operations and cash flows of 

the company as of, and for, the periods presented 

in the 10–Q. 

43See The Promise of Market Reform, supra note 

37. 

44Matt Turner, Here is the Letter the World’s 

Largest Investor, BlackRock CEO Larry Fink, Just 

Sent to CEOs Everywhere, Business Insider (Feb. 2, 

2016) (‘‘2016 Fink Letter to CEOs’’), available at 

https://www.businessinsider.com/blackrock-ceolarry-fink-letter-to-sp-500-ceos-2016-2 (affirming 

support of quarterly reports and stating that 

companies should stop publishing earnings per 

share guidance to encourage a focus on a company’s 

long-term plans for value creation). See also Dimon 

and Buffet WSJ Article, supra note 38. 

45See, e.g., Final Report of the Advisory 

Committee on Improvements to Financial Reporting 

to the United States Securities and Exchange 

Commission, Advisory Committee on 

Improvements to Financial Reporting, (Aug. 1, 

2008), available at https://www.sec.gov/about/ 

offices/oca/acifr/acifr-finalreport.pdf. See also, e.g., 

Final Rule: Conditions for Use of Non-GAAP 

Financial Measures, Release No. 33–8176; 34–47226 

(Jan. 22, 2003), available at https://www.sec.gov/ 

rules/final/33-8176.htm. 

46See Business and Financial Disclosure 

Required by Regulation S–K, Release No. 33–10064; 

34–77599 (Apr. 13, 2016) [81 FR 23916 (Apr. 22, 

2016)], available at https://www.sec.gov/rules/ 

concept/2016/33-10064.pdf. Comment letters 

related to the Concept Release are available at 

https://www.sec.gov/comments/s7-06-16/ 

s70616.htm. 

essential component of market 

transparency.38

Form 10–Q typically contains most, if 

not all, of the historical information 

presented in an earnings release along 

with additional information, such as the 

financial disclosures required by U.S. 

GAAP. The information in Form 10–Q 

is typically provided in greater detail 

than in an earnings release and is easier 

to machine process and analyze, 

through the aggregation of results and 

comparison across filers, because it is 

required to be structured in interactive 

data format. While financial statements 

in Form 10–Q are unaudited, Regulation 

S–X 39 specifies that the interim 

financial statements included in Form 

10–Q must be reviewed by an auditor 40

and U.S. GAAP prescribes the form and 

content of interim financial 

statements.41 In addition, the Form 10– 

Q requires certification by the principal 

executive and financial officers of the 

reporting company.42 A Form 8–K, 

however, is not subject to such 

requirements. Some of the potential 

changes and flexibility described in this 

Request for Comment, therefore, may 

require coordination with standardsetters, such as the FASB, PCAOB, as 

well as the stock exchanges and 

appropriate quoting venues. 

II. Purpose of Request for Comment 

The purpose of this Request for 

Comment is to solicit public input on 

the nature, timing, format and frequency 

of periodic reporting, as well as the 

relationship between the periodic 

reports that Exchange Act reporting 

companies must provide and the 

earnings releases that they must furnish 

on Form 8–K, to the extent they choose 

to issue such releases. We seek to 

understand how we might simplify the 

process by which investors access, 

process, and evaluate information, for 

example, by relieving any burdens 

associated with investors’ efforts to 

compare an earnings release and Form 

10–Q to identify information that is new 

or different. We also are interested in 

exploring how we might enhance, or at 

a minimum maintain, the investor 

protection benefits of disclosure, while 

reducing the costs (including time) 43

that companies spend complying with 

quarterly reporting requirements. For 

example, we seek comment on the 

potential benefits and drawbacks of 

providing an option for companies that 

issue earnings releases to use the 

releases to satisfy the core disclosure 

requirements of Form 10–Q. 

In addition, we are seeking comment 

on how the periodic reporting system, 

earnings releases, and earnings guidance 

may affect corporate decision making 

and strategic thinking—positively and 

negatively—including whether it fosters 

an inefficient outlook among registrants 

and market participants by focusing on 

short-term results. For example, some 

market participants have urged 

companies to ‘‘move away from 

providing’’ earnings per share guidance 

that companies give and instead put 

more focus in Form 10-Qs on 

demonstrating progress made against 

the company’s long-term strategic 

plan.44

In the past, the Commission has 

received input related to some of the 

issues discussed in this Request for 

Comment.45 Most recently, we 

requested comment on issues related to 

the frequency of reporting in our 

Concept Release on business and 

financial disclosure requirements in 

Regulation S–K (‘‘Concept Release’’).46

As we continue to evaluate this topic, 

we are soliciting additional input from 

the public on issues related to the 

nature, timing, format, and frequency of 

reporting in the context of the more 

narrow scope of this Request for 

Comment. The Commission encourages 

commenters to provide any data and 

information that could help us quantify 

the effects of the approaches discussed 

herein on capital formation and investor 

protection. 

III. Issues for Consideration 

A. Information Content Resulting From 

the Quarterly Reporting Process 

Certain material information required 

by Form 10–Q is frequently provided in 

earnings releases. However, in our 

observation, there is variation in the 

items and methods of presentation in 

earnings releases. Companies often 

report certain financial (and statistical) 

information such as net income, 

earnings per share, and net sales, and 

some may include condensed income 

statements, balance sheets, and cash 

flow statements along with segment 

information. This financial information 


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47Pursuant to Rule 13a–13(d) and Rule 15d– 

13(d), the information presented to satisfy the 

requirements of Part I Items 1, 2 and 3 shall not be 

deemed filed for purposes of Section 18 of the 

Exchange Act or otherwise subject to the liability 

of that section, but shall be subject to other 

provisions of the Exchange Act. 

48 In our observation, the financial information 

contained in earnings releases is not ordinarily 

presented in a manner that constitutes interim 

financial statements pursuant to Rules 8–03 and 

10–01. We also note that Rule 10–01(a)(5) includes 

a presumption that users of the interim financial 

information have read or have access to the audited 

financial statements for the preceding fiscal year. 

Further, it permits the omission of certain footnote 

disclosures that substantially duplicates the 

disclosure contained in the most recent annual 

report to shareholders or audited financial 

statements. 49See General Instruction F of Form 10–Q. 

50See, e.g., Dimon and Buffet WSJ Article, supra 

note 38 (stating that public companies should move 

‘‘away from providing quarterly earnings-per-share 

guidance’’ because it ‘‘often leads to an unhealthy 

focus on short-term profits at the expense of longterm strategy, growth and sustainability’’); 2016 

Fink Letter to CEOs, supra note 44 (noting that 

‘‘CEOs should be more focused in these reports on 

demonstrating progress against their strategic plans 

than a one-penny deviation from their EPS targets 

or analyst consensus estimates’’). See also, e.g., 

Darr, Rebecca and Tim Killer, How to Build an 

Alliance Against Corporate Short-Termism, 

McKinsey & Company (Jan. 2017), available at 

https://www.mckinsey.com/business-functions/ 

strategy-and-corporate-finance/our-insights/how-tobuild-an-alliance-against-corporate-short-termism 

(stating that longer-term investors, who have ‘‘an 

outsize influence on a company’s share price over 

time’’ due to their ownership of seven in ten shares 

of U.S. companies, ‘‘generally oppose earnings 

guidance, especially quarterly guidance’’ and ‘‘don’t 

like quarterly calls and find them a waste of time’’ 

due to the quality of the calls). 

51See Item 601(b)(101) of Regulation S–K. See 

also Ken Tysiac, Driving Faster Decisions, Journal 

Continued 

is often accompanied by a narrative 

discussion of the financial information 

provided. However, more detailed 

information that is generally reported on 

Form 10–Q, such as the notes to the 

financial statements, a detailed and 

comprehensive Management’s 

Discussion and Analysis, disclosure 

relating to contractual obligations and 

market risk, and a description of 

material changes to previously disclosed 

risk factors,47 typically does not appear 

in an earnings release.48 Information 

included in earnings releases sometimes 

does not appear in a Form 10–Q. For 

example, management may provide its 

expectations of the company’s future 

financial performance or ‘‘forwardlooking earnings guidance’’ in the 

earnings release or on the quarterly 

earnings call. 

Request for Comment 

1. Why do reporting companies 

choose to issue earnings releases, most 

typically quarterly? What are the costs 

to such companies in preparing earnings 

releases? Would companies choose to 

stop issuing these releases if disclosure 

of quarterly results was not required on 

Form 10–Q, or would this provide a 

greater incentive to issue them? Why do 

some companies choose to file only a 

Form 10–Q report and not to issue a 

separate earnings release? 

2. Do quarterly earnings releases 

provide benefits to investors, 

companies, or the marketplace separate 

and apart from the Form 10–Q report? 

If so, please describe the primary 

benefits. How do investors use earnings 

guidance to inform their investment 

decisions? To the extent there are 

benefits, do they stem largely from the 

content of the releases, their timing, or 

other reasons? Do they have any 

negative effects on investors, 

companies, or the marketplace? If so, 

please describe such effects. 

3. How do companies determine the 

information to present in the earnings 

release? Is there a market standard, or 

are companies otherwise generally 

consistent in the type and amount of 

information they present in earnings 

releases? To what extent is the content 

of earnings releases provided in 

response to investor and analyst needs 

or demands? Are such releases 

satisfying those needs? How would the 

content of earning releases change if 

they were required to be filed with the 

Commission and become subject to 

applicable liability provisions? 

4. Is the Form 10–Q or the earnings 

release the primary document upon 

which investors rely when a company 

provides both? What are the factors or 

circumstances that an investor considers 

when determining which document to 

rely on? Are there any benefits to 

investors and other market participants 

from having two sources of historical 

quarterly financial information, when 

only one is required? How do investors 

use quarterly financial information, and 

how does it inform, if at all, their 

investments decisions made throughout 

the year? Are there specific pieces of 

quarterly information that are important 

to long-term investors? 

5. Are there meaningful differences 

between the financial information 

typically provided in an earnings 

release and the financial information 

required by Form 10–Q? What accounts 

for the differences? 

6. When a company issues an 

earnings release that includes much of 

the information required by Form 10–Q 

before the form is filed, is the Form 10– 

Q still useful? Why or why not? How 

important to investors is the 

confirmation or interpretation by the 

Form 10–Q of the information in the 

earnings release? If investors rely on 

Form 10–Q as the primary document, is 

the historical financial information 

about the quarterly period included in 

the earnings release useful? Why or why 

not? Does the fact that Form 10–Qs are 

filed as opposed to furnished, and 

include certifications, impact the extent 

to which investors rely on them? 49 Are 

there any instances when information 

disclosed in earnings releases may be 

useful to investors for purposes of 

interpreting the content of Form 10–Q? 

If so, when and how? 

7. Does confusion arise from 

overlapping disclosures in the earnings 

release and Form 10–Q? If so, are there 

changes we could make to our rules that 

would discourage the practice of 

providing earnings releases that contain 

information that is different than what 

is contained in Form 10–Q? Are there 

unnecessary burdens to investors or 

other market participants associated 

with reviewing, comparing, and 

digesting two presentations of similar 

financial information? 

8. Some have suggested that the 

practice of providing quarterly forwardlooking earnings guidance creates an 

undue focus on short-term financial 

results and thereby negatively affects 

the ability of companies to focus on 

long-term results.50 Is this the case and, 

if so, are there changes we could make 

to our rules that would discourage this 

practice or address this concern? For 

example, should we require that 

earnings guidance be filed with or 

furnished to the Commission? Are there 

other factors that promote a focus on 

short-term results? If so, what are they 

and what is their impact on investors 

and companies? 

9. What are the specific benefits of the 

required Form 10–Q disclosures to 

investors and the marketplace separate 

and apart from the earnings releases? Do 

they stem largely from the incremental 

financial statement disclosures, 

incremental management discussion 

and analysis, auditor review, officer 

certificates or other items? Are there 

sections of the Form 10–Q that are 

particularly informative for investors? 

Are there any quarterly disclosure 

requirements that we should eliminate 

because they elicit disclosures that are 

not material to investors to make it 

easier for investors to focus on the 

disclosures that are material? If so, 

which requirements should be 

eliminated? 

10. Do the XBRL requirements of 

Form 10–Q enhance accessibility and/or 

usability of quarterly information 

relative to what is available from 

earnings releases, which are not 

required to be structured for machine 

readability or processing? 51 If so, how is 


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of Accountancy (Apr. 13, 2015), available at https:// 

www.journalofaccountancy.com/issues/2015/apr/ 

data-driven-auditing.html. 

52See A Growing Disparity in Earnings Disclosure 

Mechanisms. 

53See Concept Release at 280. 

54See letter from R.G. Associates, Inc. (July 6, 

2016). 

55See letters from Council of Institutional 

Investors (July 8, 2016), Railpen Investments (July 

21, 2016), and California State Teachers’ Retirement 

System (July 21, 2016). 

56See letter from CFA Institute (Oct. 6, 2016). 

57How Long Does It Take to Announce Earnings? 

Calcbench, Inc. (Oct. 20, 2016), available at https:// 

www.calcbench.com/home/pdf?name=CBEarningsDays-Advisory-20161027.pdf. 

58 Id. 

59 Item 1 of Form 10–Q requires interim financial 

statements in accordance with Rule 8–03 or 10–01. 

These rules require disclosures either on the face 

of the financial statements or in accompanying 

footnotes sufficient so as to make the interim 

information presented not misleading. ASC 270– 

10–50–1 also requires certain disclosures that must 

be provided at a minimum when reporting 

companies report summarized financial information 

at interim dates. 

that information used and by whom? 

Would similar benefits be achieved if 

companies structured earnings releases 

using XBRL? Why or why not? How 

would the costs of structuring earnings 

releases in XBRL compare to the costs 

of complying with the XBRL 

requirements for Form 10–Q? 

11. What is the impact of the auditor 

review requirement of quarterly 

financial information on investors, 

companies, and other market 

participants? Do investors value the 

independent auditor review of quarterly 

financial information? Why or why not? 

Does the auditor review requirement 

have a relationship to the cost of capital 

for companies? If so, how? 

12. What are the cost burdens 

associated with the preparation of a 

Form 10–Q? Are these cost burdens 

borne solely from the preparation of the 

Form 10–Q? How do the costs of 

preparation vary among different 

sections of the report? Would there be 

costs to a company to the extent it does 

not file a Form 10–Q? Would additional 

cost burdens be associated with the 

preparation of a registration statement 

in which a company would otherwise 

incorporate by reference a previously 

filed Form 10–Q? 

13. Are there other sources of 

information investors use to supplement 

information from earnings releases or 

quarterly reports? If so, please describe 

these sources. 

14. Are there approaches the 

Commission should consider to help 

alleviate any burden associated with the 

preparation of a Form 10–Q without 

adversely affecting the total mix of 

information provided to investors? For 

example, should we permit companies 

to omit certain disclosures currently 

furnished on Form 10–Q, such as 

unregistered sales of securities, so long 

as the information is provided 

elsewhere, such as on their websites? If 

so, should the information provided 

elsewhere be expressly incorporated by 

reference into the Form 10–Q, such that 

the same liability attaches to the 

disclosure of that information? What 

would be the benefits and drawbacks to 

investors and other market participants 

of such additional flexibility? 

B. Timing of the Quarterly Reporting 

Process 

Some companies issue an earnings 

release prior to filing the associated 

Form 10–Q,52 though, as noted above, 

many companies now issue earnings 

releases concurrently with the filing of 

these forms. While we did not 

specifically solicit comment in the 

Concept Release on issues related to 

earnings releases, some commenters 

nonetheless provided input on this 

topic.53 One commenter suggested 

requiring registrants to file Form 10–Q 

simultaneously with any earnings 

release filed or furnished on Form 8–K, 

on the ground that this would help 

investors to be more informed and better 

able to address issues with management 

on earnings calls.54 Other commenters 

suggested requiring the Form 10–Q to be 

filed prior to earnings releases and 

earnings calls to allow analysts to digest 

U.S. GAAP disclosures before receiving 

earnings release information, which 

may include non-U.S. GAAP 

disclosures.55 Finally, one commenter 

suggested that structured reporting in 

XBRL format is most effective when it 

is applied broadly to all aspects of 

reporting, including earnings releases.56

Request for Comment 

15. One study indicates that the 

‘‘average public company needed 31.7 

days to announce its earnings . . . and 

another four days after that to file its 

formal quarterly report.’’ 57 The study 

finds that companies that release both 

documents on the same day tend to 

‘‘take more time to deliver those 

pronouncements,’’ while companies 

that publish an earnings release ‘‘soon 

after the end of the quarter take more 

time to file their quarterly report.’’ 58

Why do some companies publish an 

earnings release before filing Form 10– 

Q while other companies publish an 

earnings report and file Form 10–Q on 

the same day or near the same time? 

Should the Commission take any action 

to address time lapses between an 

earnings release and Form 10–Q, and if 

so, what action? If the Commission 

should take action to facilitate a 

decrease in this delay, what is the best 

mechanism to facilitate such a decrease? 

Is it more or less burdensome to issue 

the two documents concurrently? 

16. What is the impact on investors 

and other market participants 

participating in earnings calls when a 

company publishes its earnings release 

before filing its Form 10–Q? Are 

investors or other market participants 

disadvantaged at the time of the 

earnings call by not having access to the 

more detailed information contained in 

the Form 10–Q? If so, what are those 

disadvantages? Do the same 

disadvantages exist for the fourth 

quarter earnings release in comparison 

to the filing of Form 10–K? 

17. To what extent are auditors 

involved with earnings releases? Does 

such involvement or the auditor review 

of the quarterly financial statements 

contribute to any delay between 

publication of an earnings release and 

the filing of a Form 10–Q? If so, how? 

What steps could or should be taken to 

help ameliorate this delay? Do auditors 

conduct their review of quarterly 

financial information in phases due to 

companies’ preparation of two reporting 

documents? If so, does this result in 

efficiencies or inefficiencies based upon 

the nature of the two disclosure 

documents? 

C. Earnings Release as Core Quarterly 

Disclosure 

The Commission is requesting 

comment on different ways to alleviate 

burdens related to Form 10–Q reporting 

while maintaining investor protection. 

Among other approaches, we are 

requesting comment on whether we 

should provide an option for companies 

that issue earnings releases to use the 

releases to satisfy the core financial 

disclosure requirements of Form 10–Q. 

Under this option, a company would 

use its Form 10–Q to supplement a 

Form 8–K earnings release with 

additional material information required 

by the Form 10–Q not already presented 

in the Form 8–K or alternatively 

incorporate by reference disclosure from 

the Form 8–K earnings release into its 

Form 10–Q (the ‘‘Supplemental 

Approach’’). For example, registrants 

that do not provide interim financial 

statements in accordance with 

Regulation S–X 59 in the earnings release 

would be required to include them in 

the Form 10–Q under the Supplemental 

Approach. 

Request for Comment 

18. To what extent do companies take 

advantage of General Instructions D.1 

and D.2 of Form 10–Q to satisfy the 


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60 General Instruction D.1 of Form 10–Q permits 

companies to incorporate information by reference 

from a document that meets some or all of the 

requirements of Part I of Form 10–Q and General 

Instruction D.2. directs registrants to Exchange Act 

Rule 12b–23 with respect to other information that 

may be incorporated by reference in response to all 

or some of Part II of Form 10–Q. 

61The information required by Items 1 (Financial 

Statements), 2 (Management’s Discussion and 

Analysis of Financial Condition and Results of 

Operations) and 3 (Quantitative and Qualitative 

Disclosures About Market Risk) of Part I of the Form 

10–Q is not deemed to be filed for purposes of 

Section 18 of the Exchange Act, but an issuer may 

choose to file, rather than furnish, earnings release 

information on Form 8–K, for example, to ensure 

that a registration statement currently in use does 

not contain a material omission of the information 

contained in an earnings release. 

62 17 CFR 240.13a–15; 17 CFR 240.15d–15. 

63Rules 13a–14 and 15d–14. 

64See SEC Release No. 34–9004 (Oct. 28, 1970). 

65Prior to the adoption of Form 9–K in 1955, 

reporting companies were only required to provide 

limited information related to quarterly results in 

response to requirements on Form 8–K. See SEC 

Release No. 34–5129 (Jan. 27, 1955). With the 

adoption of Form 9–K, companies were required to 

report certain financial information on a semiannual basis. See SEC Release No. 34–5189 (June 

23, 1955). In 1969, the Commission proposed to 

rescind Form 9–K and adopt Form 10–Q for the 

reporting of quarterly financial and other 

information based on the observation that ‘‘Current 

Reports on Form 8–K [were] not widely used by 

investors and their advisors. This may be because 

these reports [were] not filed at regular intervals 

and they [were] not truly current reports since they 

need not be filed until 10 days after the end of a 

month in which a reportable event occurred.’’ The 

Commission reasoned that mandated quarterly 

reports may ‘‘provide detailed information as a 

back-up to information released pursuant to timely 

disclosure policies.’’ See SEC Release 34–8683 

(Sept. 15, 1969). 

requirements of Form 10–Q? 60 What 

changes to our rules, if any, would 

increase the use of these Instructions? Is 

the required quarterly reporting process 

complex and burdensome for investors 

or companies? If so, how is it complex 

and burdensome? If so, what approaches 

should we consider apart from the 

Supplemental Approach (hereafter 

‘‘other suggested approach’’) to simplify 

the process by which investors collect 

and evaluate information and ease the 

burdens associated with the publication 

of earnings releases and the preparation 

and filing of Form 10–Q without 

adversely affecting the total mix of 

information provided to investors? 

19. Should Commission rules, 

accounting standards, and auditing 

standards allow for the interim financial 

statements to be separated so that 

certain parts could be presented only in 

the earnings release to satisfy the Form 

10–Q requirements under the 

Supplemental Approach or other 

suggested approach? For example, 

should a registrant be able to present 

condensed interim income statements 

only in the earnings release and the 

remaining Regulation S–X required 

interim statements and footnotes in the 

Form 10–Q? What changes would be 

needed to the current accounting and/or 

auditing standards to accomplish such 

separation? Would separation of the 

financial statements help, harm, or have 

no effect on an investor’s ability to 

evaluate a company’s performance? 

20. Should information in an earnings 

release that is submitted on Form 8–K 

be allowed to satisfy the Form 10–Q 

requirements? Why or why not, and if 

so to what extent? What are the 

potential benefits and drawbacks to 

investors, companies, and other market 

participants of the Supplemental 

Approach or other suggested approach? 

21. If companies were permitted to 

omit from Form 10–Q information 

already contained in a Form 8–K 

earnings release, what specific 

information should they be allowed to 

omit? Is there any earnings release 

information that should not be allowed 

to satisfy the requirements of Form 10– 

Q? Would companies be likely to rely 

on the Supplemental Approach or other 

suggested approach, if available? If so, 

would certain types of companies 

benefit more from the Supplemental 

Approach other suggested approach 

than others? 

22. If we adopt the Supplemental 

Approach or other suggested approach, 

should we require the relevant Form 8– 

K to be filed rather than furnished? 61

Should we further require the relevant 

Form 8–K to be incorporated by 

reference into the Form 10–Q, in whole 

or in part? Should we require a 

hyperlink from the Form 10–Q to the 

relevant Form 8–K? Should we require 

the relevant Form 8–K to include certain 

disclosures that are otherwise required 

in Form 10–Q? If so, which disclosures 

should be required and why? 

23. Are there issues or concerns with 

the above approaches in relation to a 

registration statement and the ability to 

incorporate by reference? If so, please 

describe. For example, should a 

company relying on the Supplemental 

Approach or other suggested approach 

have to incorporate by reference the 

historical financial information in its 

earnings release into a Securities Act 

registration statement so that Securities 

Act liability would apply to that 

information, just as such liability 

applies to Form 10–Q information that 

is incorporated by reference into a 

registration statement? 

24. Would the Supplemental 

Approach or other suggested approach 

affect the quantity, quality, or nature of 

the disclosure being made to the public? 

If so, how? Would the Supplemental 

Approach or other suggested approach 

simplify or complicate the process by 

which investors collect and evaluate 

information? How would the 

Supplemental Approach or other 

suggested approach affect investors’ 

evaluation of company performance? 

Overall, what impact would the 

Supplemental Approach or other 

suggested approach have on investors? 

25. Would the Supplemental 

Approach affect the timing of earnings 

releases? If so, how? If we implement 

the Supplemental Approach or other 

suggested approach, should we modify 

the due date of Form 10–Q? Why or why 

not, and if so, how? 

26. How should the Supplemental 

Approach or other suggested approach 

take into consideration the XBRL 

requirements of Form 10–Q? If 

information currently required to be 

structured using the XBRL format on 

Form 10–Q were instead only disclosed 

in an unstructured format on Form 8– 

K, would this adversely affect investors 

or other market participants? 

27. If an earnings release were used to 

satisfy the requirements of Form 10–Q, 

should any financial statements 

included in an earnings release be 

subject to auditor review procedures at 

the time the Form 8–K is filed? Why or 

why not? 

28. Would the Supplemental 

Approach or other suggested approach 

reduce or add to companies’ disclosure 

or auditor review burdens? How should 

the Supplemental Approach other 

suggested approach take into 

consideration the requirements 

regarding disclosure controls and 

procedures set forth in Rules 13a–15 

and 15d–15,62 as well as the related 

officer certification requirements, which 

apply to Forms 10–Q but not to earnings 

releases furnished on Form 8–K? 63

29. Does the Supplemental Approach 

or other suggested approach raise 

concerns regarding a company’s liability 

under the federal securities laws? If so, 

please explain. 

D. Reporting Frequency 

As noted above, we previously 

solicited public input on issues related 

to the frequency of interim reporting in 

connection with the Concept Release. 

Prior to adoption of Form 10–Q in 

1970,64 reporting companies were not 

required to provide specific information 

on a quarterly basis, other than to satisfy 

the requirements of Form 8–K.65

However, as noted in the Concept 

Release, prior to the adoption of Form 

10–Q, more than 70% of public 

companies produced quarterly reports, 


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66See Concept Release at 281. 

67See letters from Dylan Schweitzer (Apr. 20, 

2016); Legal & General Investment Management 

(July 20, 2016); National Association of Real Estate 

Investment Trusts (July 21, 2016); Eric Bormel (July 

27, 2016); Ball Corporation (July 19, 2016); 

Frederick D. Lipman (May 2, 2016); Ernst & Young 

LLP (July 21, 2016); American Council of Life 

Insurers (July 19, 2016); Insured Retirement 

Institute (July 21, 2016); and Committee of Annuity 

Insurers (July 21, 2016). 

68See letters from American Bankers Association 

(July 15, 2016) (‘‘American Bankers Association’’); 

U.S. Chamber of Commerce (July 20, 2016) 

(‘‘Chamber’’); FedEx Corporation (July 21, 2016) 

(‘‘FedEx’’); Business Roundtable (July 21, 2016) 

(‘‘BRT’’); Securities Industry and Financial Markets 

Association (July 21, 2016) (‘‘SIFMA’’); Allstate 

Insurance Company (July 21, 2016) (‘‘Allstate’’); 

General Motors Company (Sept. 30, 2016); and 

Financial Executives International (Oct. 3, 2016). 

69See letters from American Bankers Association; 

Chamber; FedEx; BRT; SIFMA; and Allstate. 

70See letters from Sat Parashar (Apr. 20, 2016); 

A. Whigman (May 4, 2016); SEC Investor Advisory 

Committee (June 15, 2016); R.G. Associates, Inc. 

(July 6, 2016); US SIF and US SIF Foundation (July 

14, 2016); New York State Society of Certified 

Public Accountants (July 19, 2016); Investment 

Program Association (July 21, 2016); Committee on 

Securities Law, Maryland State Bar Association 

(July 21, 2016) (‘‘Maryland Bar Securities 

Committee’’); AFL–CIO (July 21, 2016); Bloomberg 

LP (July 21, 2016); Stephen P. Percoco (July 24, 

2016); National Investor Relations Institute (Aug. 4, 

2016) (‘‘NIRI’’); Institute of Management 

Accountants (July 29, 2016) (‘‘IMA’’); Nasdaq Inc. 

(Sept. 16, 2016) (‘‘Nasdaq’’); and Northrop 

Grumman Corporation (Sept. 27, 2016). 

71See letters from Nasdaq and IMA. 

72See letters from NIRI and Maryland Bar 

Securities Committee. 

73See, e.g., Zweig, Jason, The End of Quarterly 

Reporting? Not Much to Cheer About, The Wall 

Street Journal (Aug. 17, 2018), available at https:// 

www.wsj.com/articles/the-end-of-quarterlyreporting-not-much-to-cheer-about-1534540127. 

See also, e.g., Whelan, Tensie, Trump is Right: 

Quarterly Earnings Reports Should Go, CNN Money 

(Aug. 23, 2018), available at https://

money.cnn.com/2018/08/23/news/trump-quarterlyreporting/index.html, and La Croix, Kevin, Is It 

Time to End Quarterly Reporting? The D&O Diary 

(Aug. 19, 2018), available at https://

www.dandodiary.com/2018/08/articles/corporategovernance/time-end-quarterly-reporting/. 

partly in response to exchange listing 

standards.66

Commenters’ responses to this issue 

as set forth in the Concept Release were 

mixed. Many commenters 

recommended a less-than-quarterly 

reporting requirement, such as a semiannual reporting requirement, either for 

all companies or a subset of 

companies.67 A number of commenters 

expressly opposed increasing the 

frequency of reporting,68 with many of 

these commenters noting the costs and 

burdens associated with the current 

quarterly reporting regime as one reason 

for opposition.69 Many other 

commenters, citing a wide variety of 

reasons, specifically supported retaining 

quarterly reporting.70 Some of these 

commenters recommended evaluating 

the content of quarterly reports, rather 

than changing the frequency.71 Other 

commenters suggested that semi-annual 

reporting may increase the risk of 

insider trading by lengthening the time 

insiders would be unable to trade in 

order to comply with the insider trading 

prohibitions of Section 10(b) and Rule 

10b–5.72

We recognize that there is ongoing 

debate regarding the adequacy and 

appropriateness of mandated quarterly 

reporting.73 As we continue to evaluate 

the existing reporting frequency, we are 

soliciting additional input on reporting 

frequency and what alternate 

approaches, if any, should be 

considered that would appropriately 

address the informational needs of 

investors while reducing the costs and 

other burdens on registrants who 

provide that information. 

Request for Comment 

30. What are the benefits and costs to 

investors, companies, and other market 

participants associated with the current 

reporting frequency model, which 

requires from domestic issuers quarterly 

reports on Form 10–Q, annual reports 

on Form 10–K, and current reports on 

Form 8–K? Does the frequency of 

reporting lead managers to focus on 

short-term results to the detriment of 

long-term performance? Why or why 

not? If so, does this negatively affect 

investors? If so, how? Would less 

frequent reporting change management 

decision-making or otherwise positively 

affect investors? Or does the practice of 

issuing earnings guidance, including the 

frequency with which companies issue 

earnings guidance, lead managers to 

focus on short-term results to the 

detriment of long-term performance? 

Why or why not? Would more frequent 

reporting change management decisionmaking? 

31. Should we move to a semi-annual 

reporting model for all or certain 

categories of reporting companies? Why 

or why not, and to which categories of 

reporting companies (e.g., smaller 

reporting companies, non-accelerated 

filers, emerging growth companies)? Are 

there other categories of reporting 

companies, such as by industry, that we 

should consider? For example, are there 

any unique considerations we should 

give to certain commodity trusts, 

business development companies, and 

other collective investment vehicles? 

Would any other frequency of reporting 

model be more appropriate for these or 

other types of companies? 

32. What would the costs and benefits 

be to investors, companies, and other 

market participants of a semi-annual 

reporting model for all or certain 

categories of reporting companies? Are 

there market practices in place, for 

example contractually mandated reports 

to lenders and indenture trustees, that 

rely on the current regulatory reporting 

regime? If so, how would these market 

practices be affected by changes to that 

regime and what are the downstream 

effects? 

33. Would a change in reporting 

frequency affect the cost of capital to 

companies? Why or why not, and if so, 

how? 

34. How would a semi-annual 

reporting model affect the general use of 

Form 8–K to report material 

information? Should we consider any 

particular additional Form 8–K 

requirements or triggers under a semiannual reporting model? If so, what 

type(s)? 

35. How would a semi-annual 

reporting model affect the use of 

earnings releases? If we were to allow 

semi-annual reporting, should we 

require voluntarily published earnings 

releases, either on a quarterly or semiannual basis, to be filed rather than 

furnished? Or, if we were to allow semiannual reporting, should we require 

companies to file earnings releases? 

36. Should we allow for additional 

flexibility by permitting companies to 

select an approach to periodic reporting 

that best suits their needs and the needs 

of their investors? For example, should 

we allow a company conducting an 

initial public offering to announce its 

approach to periodic reporting, such as 

semi-annual periodic reporting, during 

registration and implement the elected 

approach going forward? Should a 

company be permitted to change its 

approach to frequency of reporting once 

it selects a reporting frequency? Why or 

why not? If it is permitted to change the 

frequency of reporting after it has 

established an approach, how often 

should the company be permitted to 

change its reporting frequency? 

37. What are the downstream effects 

of changing the reporting frequency to 

investment companies, investment 

advisers, broker-dealers, data 

aggregators, and other users of the 

reports? 

38. Should an emerging growth 

company or smaller reporting company 

be permitted to elect a semi-annual 

reporting frequency? 

39. What would the costs and benefits 

be to investors, companies, and other 

market participants of moving to a 

flexible reporting frequency model 

(rather than a mandatory quarterly or 

mandatory semi-annual model)? How 

would a flexible reporting frequency 

model (rather than a mandatory 


amozie on DSK3GDR082PROD with PROPOSALS1
Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 65609 

74For example, would there be questions about 

how to apply PCAOB AS 4105 and AS 6101, Letters 

for Underwriters and Certain Other Requesting 

Parties. 

75See Rule 415, Item 12(a) of Part I of Form S– 

1 [17 CFR 239.11], and Item 12(a) of Part I of Form 

S–3 [17 CFR 239.13]. 

76See 17 CFR 230.3–12. 

quarterly or mandatory semi-annual 

model) affect the ability of investors, 

analysts, and other market participants 

to compare results among companies, 

especially if companies in the same 

industry report on different schedules? 

Would companies that choose to report 

more frequently suffer adverse 

competitive consequences if peer 

companies choose to report less 

frequently (e.g., because relative 

performance and/or estimates of 

expected future cash flows would be 

measured on a less frequent basis)? 

Alternatively, would companies that 

choose to report more frequently benefit 

from their provision to investors of more 

and more timely information about 

historical results? 

40. What are the accounting and 

auditing changes that would be 

necessary for a flexible reporting 

frequency model (rather than a 

mandatory quarterly or mandatory semiannual model)? For example, would 

there be concerns with how to apply 

ASC 270 Interim Reporting in U.S. 

GAAP or certain Regulation S–X 

disclosure requirements in a flexible 

reporting frequency model? Would there 

be concerns with how to apply auditing 

standards 74 in relation to interim 

financial information, including 

procedures performed in relation to 

letters for underwriters and certain 

other requesting parties, in a flexible 

reporting frequency model? 

41. What other topics may raise 

concerns or questions with application 

under a flexible reporting model, and 

what are those concerns or questions? 

Do these concerns and questions exist in 

the current quarterly reporting model 

and would they still exist with a 

mandatory semi-annual model? 

42. Are existing U.S. GAAP 

taxonomies used for XBRL reporting 

appropriate for a flexible reporting 

frequency model? 

43. Should we limit such flexibility in 

reporting frequency to a particular 

group of companies as an initial step 

before considering whether to provide 

such an option to all companies? If so, 

which group of companies and why? 

Should any potential election by a 

company be limited to a specific period 

of time? 

44. How would a move to either a 

mandatory or optional semi-annual 

reporting model affect the current rules 

of self-regulatory organizations and 

national securities exchanges? For 

example, would exchanges still require 

quarterly reporting as a requirement of 

listing, as they did prior to 1970 when 

Form 10–Q was adopted? 

45. How would a move to either a 

mandatory or optional semi-annual 

reporting model affect a company’s 

ability to comply with current rules 

relating to Securities Act offerings? For 

example, given that Form 10–Q is often 

incorporated by reference into certain 

registration statements under the 

Securities Act,75 how would a company 

that reports semi-annually ensure that a 

registration statement currently in use 

does not contain a material omission of 

information? For example, how would 

an issuer ensure that a shelf registration 

statement on Form S–3 remains current? 

Under a flexible approach, would 

companies nonetheless elect to maintain 

a quarterly reporting model to avoid 

concerns about keeping their Securities 

Act registration statements current? 

How would companies meet the 

requirements regarding the age of 

financial statements 76 under Regulation 

S–X with respect to new registration 

statements under such an approach? 

How would a change in reporting 

frequency impact the Commission’s 

integrated disclosure regime, including, 

for example, determining issuer 

eligibility and the speed by which a 

company may offer securities? How 

would a change in reporting frequency 

impact companies who use reports filed 

in the United States to satisfy state or 

international reporting requirements? 

46. Are there additional approaches 

that we should consider to better 

facilitate the dissemination of timely 

periodic information to investors and 

other market participants? 

IV. Closing 

This request for comment is not 

intended to limit the scope of 

comments, views, issues or approaches 

to be considered. In addition to 

investors and companies, the 

Commission welcomes comment from 

other market participants, in particular 

statistical, empirical and other data from 

commenters that may support their 

views and/or support or refute the views 

or issues raised. 

By the Commission. 

Dated: December 18, 2018. 

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27663 Filed 12–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 110 

[Docket Number USCG–2018–0388] 

RIN 1625–AA01 

Anchorage Ground; Sabine Pass, TX 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes to 

amend the anchorage regulations for the 

Sabine Pass Channel, Sabine Pass, TX 

anchorage ground for the navigational 

safety of vessels entering and exiting a 

new liquefied natural gas terminal 

mooring basin being constructed on the 

eastern waterfront of the Sabine Pass 

Channel. This proposed rulemaking 

would reduce the overall size of the 

existing anchorage. We invite your 

comments on this proposed rulemaking. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before January 22, 2019. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2018–0388 using the Federal 

eRulemaking Portal at https://

www.regulations.gov. See the ‘‘Public 

Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section for 

further instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions about this proposed 

rulemaking, call or email Mr. Scott K. 

Whalen, Marine Safety Unit Port Arthur, 

U.S. Coast Guard; telephone 409–719– 

5086, email: Scott.K.Whalen@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

I. Table of Abbreviations 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

FR Federal Register 

LNG Liquefied natural gas 

NPRM Notice of proposed rulemaking 

§ Section 

U.S.C. United States Code 

II. Background, Purpose, and Legal 

Basis 

In 1967, the Secretary of the Army 

transferred responsibility for certain 

functions, power, and duties to the 

Secretary of Transportation. Among the 

responsibilities transferred to the 

Secretary of Transportation was 

establishment and administration of 

water vessel anchorages. On December 

12, 1967, the regulations for the Sabine 

Pass Anchorage Ground were 


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