resistance

SEC’s Proposed Semiannual Reporting Rule Meets Resistance

Receiving less frequent finanical information worries investors of all stripes.

Investors do not like the U.S. Securities and Exchange Commission’s (SEC) week-old proposed rule on semiannual financial reporting. They really don’t like it.

A vast majority, 92%, of comment letters received by the SEC regarding the proposed rule opposed it. Only 6% favored the rule’s adoption, while 2% simply wanted additional details regarding how the rule would operate.

The proposed rule, a pet project of the Trump administration, is likely to be implemented, according to experts.

“There is a strong indication it will happen,” David Bartz, partner and co-head of capital markets and securities regulation at law firm K&L Gates, told Global Finance. “The administration has been looking into this. It’s something that SEC Chairman[Paul] Atkins has been a big proponent of. I think that it’s highly unlikely that it will become an official rule.”

Pros and Cons

The current proposal would permit public companies to elect semiannual reporting instead of the standard quarterly reporting. The SEC estimates that companies incur an average of $330,000 in compliance costs for three Form 10-Q quarterly reports. Alternatively, submitting one Form 10-S semiannual filing costs around $198,000. Savings could come from external professional fees, auditor reviews, data tagging costs, and investor engagement costs, according to a K&L Gates blog post.

The most common concern cited by the rule commentators, however, is a decrease in the amount of available financial information investors receive. This would lead to greater reliance on interim guidance, reduce the chance of finding corporate malfeasance, increase market volatility, and require the revamping of investment and trading strategies.

Material Disclosures

In markets that already have semiannual financial reporting, like the EU and Australia, companies must release material information promptly unless there is a specific business case not to, such as entering merger negotiations or procuring a contract that has not been finalized, said Marc Steinberg, the Radford Professor of Law at Southern Methodist University’s Dedman School of Law.

In the U.S. market, there is no duty to disclose unless it is required under Form 8-K, which must be filed within four business days, or if the company has already spoken about the matter, he added. Information that does not rise to the level of an 8-K disclosure, like the loss of a major contract, can be held until the next quarterly report.

“With some companies going to a semiannual report, it means a company could keep the news of a loss of a major contract embargoed for over six months, which is clearly material to investors,” said Steinberg.

The chance that the SEC will change the rule is slim, according to Bartz. “It’s been floated for several months now, so I think it has probably been pretty well vetted. There will probably be minimal changes to the rule once it’s officially approved.”

Next Step

Once the rule’s comment period ends on July 6, the staff of the SEC’s Division of Corporate Finance will review the comments before drafting a proposal, which will work its way up through various offices before it is presented to the Commission for review and a vote, said Steinberg.

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Republican resistance to Iran war grows in the Senate as Murkowski flips

Senate Republicans on Wednesday again blocked Democratic legislation that would halt President Trump’s war with Iran, but the number of GOP senators voting against the war grew.

Republican Sen. Lisa Murkowski of Alaska voted against the war for the first time since it began at the end of February. Two other Republicans, Sens. Susan Collins of Maine and Rand Paul of Kentucky, also voted against the war, as they had done previously.

The war powers legislation ultimately failed to advance 49-50, with Sen. John Fetterman of Pennsylvania the only Democrat to oppose it, yet the close tally reflected growing unease with Trump’s war. Several other Republican senators have signaled they want Congress to weigh in on the direction of the conflict.

“There will be a day — and it might be soon, I believe — where this Senate will say to the president, ‘Stop this war,’” Democratic Sen. Tim Kaine of Virginia, who has spearheaded his party’s tactic of forcing repeated votes on the war, said before the vote.

Even if it passes the Senate, a war powers resolution would have a slim chance of passing the House and would also certainly be vetoed by Trump. But Democrats say the votes are about building political pressure on the president either to withdraw from the conflict or seek congressional authorization to wage the war.

Trump officials downplay role for Congress

The White House, meanwhile, has asserted that it does not need congressional authorization for the war and has circumvented legal requirements to gain approval from Congress to continue the military campaign. It claims that it has “terminated” hostilities with Iran because the U.S. has entered a ceasefire.

That posture has created tension between the Republican-controlled Congress and the White House because presidents under the War Powers Resolution of 1973 are required to obtain authorization from Congress after 60 days of engaging in a conflict.

Defense Secretary Pete Hegseth told lawmakers this week that the U.S. could start attacking Iran again without the White House seeking congressional approval. He told Murkowski during a hearing on Tuesday that the Trump administration believes it has “all the authorities necessary.”

Murkowski voiced skepticism about that argument. She pointed to the troops and war ships deployed to the region, saying, “It doesn’t appear that hostilities have ended.”

GOP leaders back the war, but unease grows

Republican leadership has continued to back the war with Iran, arguing that the stalemate in the Strait of Hormuz that has blocked most commercial shipping puts more economic pressure on Iran than it does on the U.S.

“Iran’s economy is on life support. Its leadership is eliminated,” said Sen. John Barrasso, the No. 2 Republican in leadership, during a floor speech Wednesday.

He also argued that the Democratic effort on the war is all about undermining Trump. Forcing the issue just as he arrived in China for a summit would “pull out the rug from under him,” Barrasso said.

Still, Republicans are also growing uneasy about the high gas prices, especially as the November elections draw near.

Sen. Mike Rounds, a Republican from South Dakota, said Wednesday he’d prefer that the two branches of government work out the constitutional issues instead of a congressional war powers vote or a potential challenge in court.

The two sides should sit down together and say “we have shared constitutional responsibilities,” Rounds said.

Democrats plan to keep forcing weekly votes on war powers resolutions and are looking ahead to put limitations on Trump during the debate over annual legislation that authorizes and funds the military.

Sen. Jeff Merkley, an Oregon Democrat who sponsored Wednesday’s resolution, told reporters that he believes there is an “erosion of support, erosion of enthusiasm, an increase in skepticism” about the war from Republicans.

Groves writes for the Associated Press.

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Hezbollah lawmaker says resistance will eliminate the “yellow line”  – Middle East Monitor

Hezbollah MP, Hassan Fadlallah said that Hezbollah will eliminate the “yellow line” declared by Israel in southern Lebanon, stressing that “no one will be able to disarm the party.”

In an interview with Agence France-Presse, Fadlallah said: “We will topple this yellow line through resistance, through our insistence on our legitimate right to defend ourselves and our country.”

He added: “The Israeli army’s attempt to establish a buffer zone, under the guise of a front line, a yellow line, and a green line—we will break all these lines. We will not accept any of them, and we will reach our villages on the internationally recognized borders, no matter the sacrifices, no matter the cost.”

“There will be no disarmament of the resistance, and no one in Lebanon or abroad will be able to disarm it”, he added.

He said that “it is in the interest of the President of the Republic to withdraw from the path of direct negotiations with Israel,” adding that Hezbollah wants the ceasefire to continue.

“It is in the interest of Lebanon, the President of the Republic, and the government to withdraw from the path of direct negotiations and return to a national consensus on the best option for Lebanon,” he said, describing the move toward direct negotiations as “a unilateral decision on a fateful matter related to Lebanon’s future.”

He added: “We will reject and confront any attempt to impose political prices on Lebanon through concessions offered to this Israeli enemy.”

Fadlallah added he wants the ceasefire to continue, alongside efforts to ensure the withdrawal of the occupation army, the return of displaced persons to their villages, the release of prisoners, and the launch of a reconstruction program.

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