SEC proposes semiannual reporting option
The SEC proposed letting companies replace quarterly Form 10-Q filings with a semiannual Form 10-S; crypto issuers like Coinbase and MicroStrategy could cut audit costs but face liquidity risks.
The Securities and Exchange Commission on Tuesday proposed a rule that would let public companies elect to file semiannual reports on a new Form 10-S instead of quarterly Form 10-Q filings. The agency opened a 60-day public comment period after publishing the proposing release in the Federal Register.
Under the proposal, companies subject to Exchange Act Section 13(a) or 15(d) could opt in to file Form 10-S within 40 to 45 days after the first half of the fiscal year ends. The exact filing deadline would vary by filer status.
Supporters of the change emphasize recurring cost savings. A petition from the Long-Term Stock Exchange cited by the SEC said quarterly report preparation can exceed 1,000 hours and $100,000 per cycle. Firms that hold significant digital assets, including Coinbase and MicroStrategy, incur repeated audit and review expenses tied to verifying on-balance-sheet Bitcoin and other holdings.
The petition also cited academic research that found mandatory quarterly reporting reduced small-firm value by about 5 percent, suggesting some companies could see valuation benefits from less frequent interim filings.
Critics say semiannual reporting could reduce analyst coverage and trading volume, creating wider bid-ask spreads and a potential liquidity discount. Investor advocates point to Europe’s earlier shift to semiannual reports and note an associated decline in mid-cap analyst coverage, wider spreads and increased insider-trading enforcement actions.
The debate centers on whether voluntary updates and Form 8-K disclosures will supply timely material information between semiannual filings. The SEC wrote that the proposed amendments, if adopted, “would allow these public companies to elect to file semiannual reports on new Form 10-S instead of quarterly reports on Form 10-Q.”
SEC Chair Paul Atkins framed the proposal around investor choice and flexibility, writing that public companies must provide material information but that existing rules limit companies and their investors from selecting an interim reporting frequency that best serves their needs.
The proposal will remain open for public comment for 60 days before the commission decides whether to adopt the amendments. Market participants will watch whether any firms commit to the new regime and whether voluntary disclosure practices change in ways that affect transparency and liquidity.
