Hedge fund majors Two Sigma Investments and DE Shaw have joined a a growing Wall Street effort opposing a US Securities and Exchange Commission (SEC) proposal that could make quarterly corporate earnings reporting optional, according to a report by Reuters.
The report cites unnamed sources familiar with the discussions as highlighting that the investors are concerned that reducing the frequency of mandatory disclosures would weaken the steady flow of financial information available to market participants and ultimately reduce transparency in public markets.
Their position places them alongside other large asset managers and hedge funds, including Ken Griffin’s Citadel, which have also raised objections as the SEC prepares to formally advance the proposal and open it up for public comment.
According to Bloomberg’s sources, a number of these firms have been engaging in private discussions with industry groups such as the Managed Funds Association (MFA) to coordinate feedback and highlight potential risks. However, the effort remains informal at this stage, with no fully organised lobbying campaign yet in place.
Market participants involved in the discussions are seeking to either significantly scale back the proposal or halt it entirely, though they acknowledge that the regulatory process is still in its early phases.
Citadel and Fidelity are also understood to have raised concerns during a recent SEC investor advisory committee meeting held in March, attended by SEC Chair Paul Atkins. At that meeting, participants warned that moving away from quarterly reporting could increase volatility, widen stock price fluctuations, and raise the cost of capital for listed companies. They also argued that frequent disclosures help anchor market valuations and improve price discovery.
The Managed Funds Association has separately warned that a shift to voluntary or semi-annual reporting could lead to inconsistent disclosure practices across issuers. In a recent comment letter, the group noted that companies might adopt divergent reporting schedules—some continuing quarterly updates, others reducing frequency or stopping altogether – potentially making it harder for investors to compare performance across firms.
The MFA reportedly declined to comment on specific conversations with member firms, while Two Sigma and DE Shaw also declined to provide comment.
On the other side of the debate, some large financial institutions, including JPMorgan, have expressed support for the SEC’s direction, arguing it could reduce compliance burdens and encourage longer-term decision-making.
The SEC is expected in the coming weeks to formally invite feedback on the proposal, which would give companies the option to report earnings on a semi-annual rather than quarterly basis. The idea revisits a policy discussion first raised during President Donald Trump’s earlier term in office.
SEC officials have indicated that any change would be designed to give companies greater flexibility in how often they report, rather than mandate a uniform reduction in disclosure frequency. A spokesperson said the Commission intends to let market forces and investor expectations help determine optimal reporting cycles, with a public consultation process to follow.
The White House has also reiterated support for the broader objective of encouraging longer-term corporate planning, framing the initiative as part of a wider effort to reduce short-term pressures on US companies.
At present, US-listed companies have been required to report quarterly earnings since 1970, in contrast to markets in parts of Europe and Asia where semi-annual reporting is more common. Canada has recently experimented with voluntary semi-annual reporting for smaller issuers through a pilot programme.
The debate comes amid broader efforts by US regulators to reassess post-financial crisis market rules, with some arguing that regulatory complexity has discouraged companies from remaining public. Data from Nasdaq and PitchBook suggest the number of listed US companies has fallen significantly over the past two decades.
Supporters of quarterly reporting counter that frequent disclosure improves market efficiency, enhances analyst coverage, and reduces information asymmetry. However, some also acknowledge that smaller companies may face disproportionate costs in meeting reporting obligations.
When a similar proposal was floated during Trump’s first term, it drew widespread resistance from parts of the investment industry, including major asset managers such as BlackRock and T. Rowe Price, with a large majority of public comments at the time opposing the change.
