RPJ’s Gregory Feit Weighs In on the SEC’s Semiannual Reporting Proposal and Investor Litigation Risks in Bloomberg Law

A recent article from Bloomberg Law discusses the Securities and Exchange Commission’s proposal to allow companies to shift from quarterly to semiannual financial reporting, raising concerns and questions about the potential resulting impact on securities fraud and related investor lawsuits.

While fewer company reports may reduce the frequency of stock drops linked to negative disclosures, the change could also make litigation more challenging. A longer gap between reports could lead to larger stock price swings around reporting, but from a loss-causation perspective, it may be harder to distinguish between stock drops caused by fraud and those caused by other factors.

In addition, a shift to the longer reporting cycle could also increase the potential for insider trading. As RPJ’s Gregory Feit warns in the article, the longer reporting period would mean that “[c]orporate insiders may hold important, undisclosed information for longer,” which “could increase opportunities for insider trading, leading to more private litigation over insider trading issues.”

As explained in the article, the proposed shift could therefore, in some ways, complicate both the reporting process and the landscape of investor litigation.

Read the full article here.

This article is intended as a general discussion of these issues only and is not to be considered legal advice or relied upon. For more information, please contact RPJ Attorney Gregory Feit who counsels clients on employment law, litigation, arbitration, negotiation, and trial advocacy. Mr. Feit is admitted to practice in New York.