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The deadline has passed to comment on the SEC’s proposal to permit semi-annual reporting (though the website seems to be still slowly updating with additional letters).

Professor Tzachi Zach at Ohio State has set up a useful, searchable tracker, and he clocks a total of over 80,000 submissions (of which 66,000 were form letters, identified by the SEC as templates A through K). All of the form letters oppose; of the non-form letters, 99% oppose.

Some rough takeaways and highlights (I didn’t use LLMs or machine-reading or anything; I just used my actual web browser to click on actual links I thought were interesting and read the results, so this is a very rough overview; Professor Zach’s searchable database is more granular.)

The comments overwhelmingly come from retail investors – not just the form letters, but even the individualized ones. Which isn’t to say there isn’t industry interest; just that retail interest is big. I’m sure we all saw the letter from r/wallstreetbets (still trying to figure out the governance structure that allows one person or persons to speak for WSB) but have you seen the one from Dave, the truck driver? Or Gilbert Rodriguez, the grocery store worker?

Also catching my attention: Many commenters highlighted that the proposal for semi-annual reporting is only one huge change on the SEC’s docket. The SEC is also proposing to dramatically limit the number of companies subject to the full set of reporting requirements (which means, fewer companies that make compensation disclosures and risk disclosures, fewer with auditor attestation, say on pay, etc), and to make S-3 registration available to more issuers. Also, Chair Atkins has made clear he plans to reduce the number of disclosure items, not to mention opening private markets up to more retail investors (including through 401(k)s). Point being, this is a huge number of changes that will dramatically reshape (read: reduce) reporting obligations, and several commenters are concerned that the SEC has not adequately considered the effects individually, let alone collectively. Here’s MFA, ICI, Ernst & Young, and also the “Shadow SEC,” John Coates, John C. Coffee, Jr., James D. Cox, Merritt B. Fox and Joel Seligman.

Apart from that, several commenters have noted this is an awful lot for them to weigh in on in a very short time, and could the SEC please extend the comment period? (SIFMA AMG, MFA, AIMA and SIFMA, SIFMA AMG and Better Markets and Wharton professors).

Beyond that, broadly speaking, commenters that come from the corporate side – corporations, corporate counsel, inhouse accountants, etc – favor the proposal, although Eli Lilly is the only corporation that I have seen explicitly announce they plan to go semi-annual. (In another letter, a group of pharma companies, including Lilly, supported the proposal and said some of their number would switch). I point this out because these are blue chip names and I seem to recall some skepticism that anyone but the smallest issuers would opt-in to semi-annual. It seems pretty clear that if the choice is given, it will be a popular one.

Meanwhile, broadly speaking, investors are opposed: here’s Vanguard, ICI, and SIFMA AMG, though there are outliers.

ICI’s letter in particular is interesting; its opinion was formed via discussions with members, including an anonymous survey. Fourteen members responded to the survey (which isn’t, um, a lot), but the results are still worth looking at. In particular, when it comes to 10-Qs, most respondents considered the earnings results and the MD&A to be most important, which matters because the SEC’s expectation – semi-annual reporters would still release earnings voluntarily on a quarterly basis – wouldn’t cover the loss of MD&A.

Sigma Two is especially angry at the proposal, pointing out, “Throughout the Proposal, the Commission refers to companies selecting the reporting cadence most appropriate for their investors, but leaves all the decision making with the management of publicly listed companies with no need to justify their decision.”

Compare Sullivan & Cromwell, which says “We agree with the Commission’s view that boards of directors and management are better positioned than a uniform federal rule to determine whether quarterly or annual reporting best serves a particular company and its investors.” (though to be fair, a few sentences later, S&C makes reference to a “company and its investors” determining that there is little incremental value to quarterly reporting).

Some letters – SIFMA is a good example – have warnings about how deeply embedded...