Mar. 16, 2026
Dear Secretary of the Securities and Exchange Commission, I write in strong opposition to Petition No. 4-872 (filed September 30, 2025, by the Long-Term Stock Exchange), which seeks to amend Rules 13a-13, 15d-13, and Form 10-Q to make comprehensive quarterly financial reporting optional, defaulting to semi-annual filings while relying on Form 8-K for material events. Mandatory quarterly reporting on Form 10-Q is a cornerstone of investor protection in U.S. capital markets. It delivers timely, standardized, and comparable data—covering balance sheets, income statements, cash flows, and MD&A—that enables investors to promptly evaluate performance, risks, and emerging trends. Shifting to an optional regime would widen information asymmetries, delay detection of issues, amplify volatility from infrequent surprises, diminish deterrence of misconduct, and disproportionately harm retail investors who depend heavily on these accessible, uniform filings. The petition justifies this change by citing compliance burdens and short-termism pressures. While these concerns merit discussion, quarterly filings are not the primary cost driver. The far greater, ongoing burdens arise from Sarbanes-Oxley Act (SOX) requirements—particularly Section 302 CEO/CFO certifications (which apply to every quarterly and annual report), Section 404 internal control assessments, and related audit/attestation processes. The 2025 GAO report (GAO-25-107500) confirms that SOX compliance costs are higher in absolute terms for larger companies but proportionally more burdensome for smaller ones, with nonexempt firms incurring about 19% higher costs and many spending over $1 million annually (plus rising audit fees upon losing exemptions). Recent surveys, such as KPMG's 2025 SOX report, show average program budgets around $2.3 million and 15,581 hours of effort, driven largely by controls, audits, and resource inflation—not incremental quarterly filings. If the Commission truly aims to reduce reporting costs, the rational approach is to collaborate with Congress on targeted SOX reforms—such as further tailoring Section 404 auditor attestation thresholds for smaller issuers or refining implementation to ease disproportionate impacts—rather than eroding the quarterly transparency regime that has long supported U.S. market depth, liquidity, and integrity.The petition's core arguments for semi-annual defaults fall short upon scrutiny: • Short-termism claims rely heavily on outdated evidence, such as the 2005 Graham/Harvey/Rajgopal survey (nearly 20 years old and predating post-SOX and post-crisis governance enhancements). More recent post-2010 studies show mixed or limited causality between quarterly reporting and reduced long-term investment; many firms already balance priorities through voluntary guidance, investor relations, and board oversight. McKinsey's speculative "long-term firm" GDP estimates are not causally linked to reporting frequency alone—executive compensation, activist pressures, and market structure are far stronger drivers. Mandatory quarterly filings actually provide discipline against manipulation, and companies voluntarily drop quarterly guidance without rule changes. • Investor protection under semi-annual defaults would suffer from six-month gaps in comprehensive financials, increasing asymmetry and insider advantages. Form 8-K is narrower and event-driven, lacking routine metrics like quarterly revenue breakdowns or segment trends—leaving gradual deteriorations undetected and raising risks of volatility spikes and surprises. Retail and institutional investors rely on standardized 10-Q data for timely analysis; an "optional" approach invites a race to the bottom, eroding the uniform baseline essential for fair markets. • Claims of "more substantive, strategic disclosures" cherry-pick sources (e.g., Cato, FCLTGlobal, a 2025 UK study). Timely disclosure generally reduces volatility and improves price discovery; less frequent mandates could yield lumpier, more sensational releases and higher noise. International comparisons (EU/UK/Japan) ignore U.S.-specific differences: dispersed ownership and high retail participation make frequent, standardized transparency more vital here. • Cost burdens deterring IPOs/smaller firms overstate quarterly filings' incremental impact (many items roll forward from the 10-K with modern tools like ERP and XBRL reducing effort). The real drivers remain SOX-related controls and audits. Companies already enjoy flexibility for voluntary updates—making quarterly optional pressures cutbacks without assured savings. The "optional" framing is not neutral; it creates competitive incentives to opt out, signaling "long-term focus" or cost-cutting, resulting in de facto reduced disclosure market-wide. The petition underplays downsides like heightened fraud risk over longer intervals, retail disadvantages, and delayed bad-news volatility. True investor choice preserves the mandatory baseline while allowing more disclosure—not less. Weakening quarterly transparency risks eroding trust and efficiency in U.S. markets without proven long-term gains. I urge the Commission to reject Petition 4-872 outright or, if advancing a proposal, to retain mandatory quarterly reporting and pursue SOX relief through appropriate legislative channels.Thank you for considering these views. Sincerely, Matt Horvath Tarpon Springs, FL