r/WallStreetBets really hates the SEC’s proposal to weaken quarterly reporting

The Securities and Exchange Commission officially proposed past week to weaken the quarterly reporting standards for publically traded companies. So far, nationalist comments submitted to the fiscal regulator astir the thought are overwhelmingly negative. But the champion objection was filed yesterday by the fashionable subreddit, WallStreetBets.

The assemblage of “approximately 18 cardinal retail investors connected Reddit” argued successful the unsigned missive that quarterly fiscal filings — known arsenic 10-Q filings — are “the azygous astir important leveling mechanics betwixt retail and organization investors successful U.S. equity markets.”

“Institutional investors person adept networks, transmission checks, alternate data, outer imagery of retailer parking lots, recognition paper sheet data, and nonstop absorption entree done conferences and one-on-one meetings that outgo much than astir of our portfolios. We person the 10-Q,” the missive reads.

While the SEC isn’t doing distant with 10-Qs, the regulator’s connection suggests that companies volition beryllium capable to elite each twelvemonth whether they privation to record an yearly study and 3 quarterly reports (as is the lawsuit now) oregon simply 1 yearly study and 1 semi-annual one. The regularisation alteration is peculiarly applicable arsenic SpaceX — which is expected to allocate unprecedented IPO stock to retail investors — on with a drawstring of different buzzy and high-profile AI and tech startups statesman queuing up for IPOs.

WallStreetBets argues this volition not lone alteration the level of real-time visibility into the fiscal wellness of a publically traded institution — besides referred to by the Commission and successful this missive arsenic “issuers” — but that it volition actively wounded the wallets of retail investors:

The Commission’s merchandise talks astir reducing costs for issuers. We would similar to cognize what the Commission thinks the outgo is to a retail capitalist of holding a presumption for six months without a azygous mandatory disclosure from the company. The reply is not zero. The reply is the dispersed betwixt what insiders cognize and what we know, multiplied by each stock we ain during the gap. Someone is going to seizure that spread. We person a conjecture astir who it volition not be.

The SEC has justified its connection by claiming semi-annual reporting would trim outgo and clip burdens associated with creating a 10-Q each quarter. It besides says this determination volition assistance companies absorption much connected semipermanent maturation versus hitting Wall Street analysts’ quarterly estimates.

WallStreetBets thinks these ideas are bunk:

We besides privation to register, respectfully, our objection to the proposition that quarterly reporting is simply a load the Commission tin assistance to assistance companies absorption connected the agelong term. The companies we commercialized are not being held backmost from greatness by the work to record 4 reports a year. Apple files a 10-Q each 4th and has 9 100 cardinal dollars successful currency equivalents. Nvidia files a 10-Q each 4th and is worthy much than the GDP of astir G20 countries. The full S&P 500 files a 10-Q each quarter, and the S&P 500 is astatine an all-time high. If quarterly reporting is crushing American capitalism, American capitalism is hiding it well. We person looked.

The retail trading subreddit is not alone. The SEC's arguments person been soundly rejected by much than 120 radical successful the archetypal week of the 60-day nationalist remark period. That radical includes a fig of retail investors, immoderate of whom submitted anonymously, but besides certified fiscal planners, hedge money managers, and adjacent 1 former SEC attorney (who, to beryllium fair, besides utilized the accidental to beforehand his book).

The projected regularisation alteration has adjacent riled up some sides of the governmental aisle. One anonymous fiscal planner wrote that, "[a]fter years of warring against ideologically driven rules that politicized firm disclosures, I ne'er expected to spot a Republican-led Commission present a gift-wrapped exemption that truthful intelligibly undermines marketplace transparency and tilts the tract against mundane retail investors."

Even the (very) fewer radical who've submitted comments successful enactment of the regularisation thin to person attached caveats, similar suggesting companies merchandise monthly gross and equilibrium expanse statements successful lieu of much elaborate quarterly reports.

The nationalist remark play is unfastened until aboriginal July, and arsenic instrumentality prof Ann Lipton (who archetypal highlighted WallStreetBets' remark connected BlueSky) recently pointed out, larger organization concern firms person yet to measurement in.

But for now, nary 1 has voiced their absorption arsenic sharply arsenic the WallStreetBets crew, which has been humming on since the GameStop craze 5 years ago. It adjacent drew connected that past successful its letter, successful an unsurprisingly sardonic tone:

Some of america are precise bully astatine this and immoderate of america are, successful the method securities instrumentality sense, unspeakable astatine it. Many of america learned what a 10-Q was the hard way, which is to accidental we bought a stock, watched it autumn 40% connected an net release, and past work the filing to find retired why. That is simply a anserine bid of operations and we admit it. But it is besides the full mechanics by which a procreation of retail investors taught itself to work fiscal statements, and the Commission is present proposing to chopped that mechanics successful half.