An investor coalition just fired a direct shot at the SEC. Fourteen pension funds, union funds, and asset managers totaling $1.5 trillion in AUM sent a letter demanding the agency keep mandatory quarterly reports for all public companies. No exemptions. No shift to semi-annual. No quiet death by rulemaking.
Their target is an old narrative: quarterly reporting breeds short-termism, burdens small caps, and drives capital away from US exchanges. The SEC has kicked this can for years — 2019 concept release, 2020 Accelerating Act hearings, 2023 staff roundtables. But the investor group sees the game. They know that once you start carving out exemptions for “emerging growth companies” or “smaller reporting companies,” the entire framework cracks.
I’ve spent two decades dissecting disclosure obligations — first as a quant auditor in 2017 finding integer overflows in ICO vesting contracts, later stress-testing Uniswap v2 liquidity pools. My due diligence work taught me one rule: the more optionality in disclosure, the more asymmetry in information. Quarterly reports are the last universal equalizer between retail and institutional investors in US markets.
Let me make this concrete for the crypto crowd. You think the SEC’s war on tokens is bad? Imagine a world where Coinbase, MicroStrategy, and Marathon Digital choose to report earnings twice a year instead of four times. The quarterly 10-Q is the only window where retail sees the actual cash burn from mining operations, the unrealized losses on BTC holdings, the revenue breakdown from staking vs. transaction fees. Remove that window and you hand the keys to the hedge funds that already trade on minute-by-minute order book data. The code compiles, but the reality bankrupts.
The Cost Calculus
Quarterly reports cost money. A typical mid-cap public company spends $500K to $2M per year on audit, legal, and internal controls preparation for the three 10-Qs and one 10-K. For a firm like Coinbase with $6B revenue, that’s a rounding error — 0.03% of revenue. For a small biotech with no revenue, it’s existential. The SEC’s 2019 concept release cited estimates that eliminating quarterly reports could save companies 15-20% of compliance costs. But those savings come with a hidden tax: higher cost of capital.
A 2021 academic study by Fu, Kraft, and Zhang looked at 2,000 firms that voluntarily dropped quarterly guidance but kept the reports. They found that information asymmetry widened by 12% as measured by bid-ask spreads. Retail investors faced worse execution prices. Analyst forecast dispersion increased. The market didn’t trust the silence. The transaction is permanent; the mistake is not.
The Cryptographic Analogy
Think of quarterly reports as a smart contract checkpoint. Every 90 days, the protocol (the company) publishes a state update — balance sheet, income statement, MD&A. Anyone can verify. The code is open (GAAP), the oracle (auditor) is licensed. Without those checkpoints, the market becomes a probabilistic execution environment. You're trading on stale data. I do not trust the audit; I trust the exploit.
In crypto, we know what happens when you remove frequent state commitment. The Terra/Luna collapse was a product of opaque seigniorage mechanics hidden behind weekly reward reports. The 2022 Solana outage cascade was exacerbated by validators operating with delayed block finality. Frequency is not the enemy — it’s the cure. The investor groups understand that quarterly reports are the proof-of-work for corporate transparency.
The Contrarian Blind Spot
Let me give the other side its due. There is a real case that quarterly reports incentivize myopic R&D cuts, buyback boosts, and sandbag guidance. Jamie Dimon, Warren Buffett, and Larry Fink have all called for moving to semi-annual reports. Europe does it. Hong Kong does it. Japan does it. Why does the US insist on being the strictest?
Here’s the answer that the academic models miss: in a market where HFT firms trade at microsecond latency and algos front-run every earnings whisper, the quarterly report is the only information equalizer that scales to 100 million retail accounts. Remove it, and the only disclosures that matter become the ones leaked to bulge-bracket analysts. The US market is uniquely intermediated through sell-side research. Quarterly reports are the raw material for that machine. Without them, the sell-side becomes a small club with exclusive access.
I stress-tested this thesis in my 2020 liquidity pool simulations for Uniswap v2. The constant product formula x*y=k created asymmetric risk for large depositors during volatility. The quarterly report plays the same role for equity markets — it’s the invariant that lets retail LPs price their positions. Remove it, and the bid-ask spreads blow out.
The Regulatory Game Theory
This isn’t a technical argument — it’s a political chess match. The investor groups are playing the long game by writing a public letter before the SEC even announces a formal rulemaking. They’re creating an administrative record. If the SEC eventually proposes a reduced reporting schedule, the letter becomes evidence that the agency ignored widespread investor opposition. That triggers APA judicial review under the arbitrary-and-capricious standard. The courts have slapped down SEC rulemakings before — the 2020 proxy advisor rule, the 2021 climate disclosure scope. The investor groups are building a case file now.
What This Means for Crypto Companies
The crypto-native firms that want to go public — Circle, Kraken, Fireblocks — are watching this fight. They’d love to avoid quarterly reporting because it forces them to reveal custodian bank relationships, reserve composition, and counterparty risk. The bull case for semi-annual reports is that it shields them from the dreaded “coin price” correlation question. But every market crash shows that opacity is a catalyst for runs. The 2023 Silicon Valley Bank run was accelerated by the fact that investors couldn’t see daily deposit flows. Quarterly reports would have caught the duration mismatch earlier.
Illusion has a price tag; truth has none. The SEC should listen to the investors — not because they’re right about short-termism, but because they’re right about who gets hurt when transparency is optional. Retail already loses to algos, insiders, and wallet watchers. Taking away quarterly reports is the final gut punch.
The Takeaway
The quarterly report debate is a proxy war for the soul of American capitalism. The crypto industry thinks it’s about freeing companies from old rules. It’s actually about whether the least sophisticated market participant deserves the same data as the most sophisticated. The investor groups just told the SEC: we know you want to deregulate. But if you open this door, you’re announcing that transparency is a burden, not a birthright. And once you say that, you can’t un-ring the bell.