What smart people in markets are saying about the potential for the SEC to scrap quarterly reporting requirements for companies

• The Journal reported that the SEC could soon scrap quarterly reporting requirements for public firms.
• It would mark a huge change in how information flows through markets.
• Veteran market pros, including Danny Moses and Louis Navellier, shared their view with Business Insider.

Wall Street could be on the verge of a major change that could have implications for publicly traded companies and their investors.

The Wall Street Journal reported on Monday that the US Securities and Exchange Commission is considering eliminating the quarterly reporting requirement for publicly traded companies. According to the Journal, the agency is preparing a proposal to give firms the option to report earnings twice a year.

This plan was originally floated by President Donald Trump last September. He said at the time that such a move would allow companies to save money and focus on management rather than compiling statements for investors.

As the plan now appears to be gaining traction, market pros are mixed on the idea.

Here's what finance sector pros told Business Insider about how the move could affect markets.

Danny Moses, Moses Ventures

Moses is one of the handful of traders made famous by "The Big Short." He told Business Insider he sees both pros and cons from the move.

"I am always for more transparency than less, but the good corporate actors who tend to underpromise and overdeliver will be fine," he said. "What does concern me is that this is happening at the same time that the SEC/DOJ/CFTC is becoming more hands-off as it relates to enforcement and that might allow some bad actors to use less frequent reporting to their advantage at the expense of shareholders."

Moses also predicted that as AI accelerates, wealth managers and analysts will come to rely more on their own research and less on earnings reports.

Greg Halter, Carnegie Investment Counsel

Halter, who serves as director of research at Carnegie Investment Counsel, said that it is common for European companies to report earnings only twice a year, and that the move could remove a burden for some firms.

"Corporate costs will go down, given the burden that reporting entails. Company management teams spend a lot of time managing the messaging on a quarterly basis when they could be focused on business fundamentals, he said.

He added that a move to a lower reporting cadence could also dispel some of the volatility around earnings.

"US investors have come to expect and anticipate quarterly results. However, it has also resulted in a game of trying to manage and beat expectations, which has resulted in volatility as traders 'bet' on which way the reported results and future guidance are received."

Melissa Otto, S&P Global

Otto, the director of research at financial intelligence provider S&P Global, highlighted several issue that the proposed rule change could pose for investors.

In particular, she said a move toward a twice-yearly reporting schedule would lessen transparency, but she also agreed with the idea that it could allow for more focus by management on running their companies.

"The removal of quarterly earnings may align more to longer term investors," she said. "However, there would likely be less transparency around a company's fundamentals and outlook. It may also remove some of the quarterly volatility and enable management to focus on managing and growing the business."

Bret Kenwell, eToro

A US investment and options analyst at trading platform eToro, Kenwell thinks that ultimately, eliminating quarterly earnings requirements would benefit investors in proven, high-performing companies but increase risk for more speculative stocks.

"This proposal has mixed implications," he said. "More time between reports gives management added runway to focus on long-term execution instead of managing to quarterly expectations. From a long-term investing standpoint, that is positive."

However, he said that on the other hand, less frequent earnings data will diminish transparency between reports and raise the potential for "questionable behavior" by companies.

Chris Versace, Tematica Research

Versace is the chief investment officer and strategist at Tematica, a market research firm. He noted that his team is divided over the proposal.

"First, it would remove the focus by more than a few companies about 'managing for the quarter,' which would, in our view, not be a bad thing," he said. "Second, the argument that less reporting would help boost the number of public companies in the US is questionable, but odds are that investors would want to see even more investor conferences and management presentations than we have today."

Louis Navellier, Navellier & Associates

Wall Street veteran and CIO of investment firm Navellier & Associates, Navellier told Business Insider that he isn't worried about what the SEC is proposing, in part because he doesn't see any major changes coming and that companies will stick to the current schedule.

"I suspect most US companies will keep reporting quarterly," he noted. "I have no problem with the SEC proposal. It will just help many companies conform to 6-month reporting that is common in Europe and elsewhere."