The SEC’s proposal to allow public companies to file a semiannual report in lieu of three quarterly reports could have consequences that extend beyond a reduction of compliance burdens.
CRA’s Swati Kanoria has co-authored a new article with Douglas Miller and Val Bianchi-Demicheli of Boies Schiller Flexner LLP, in which they assess how the proposed change could make it more difficult to prove materiality in insider-trading cases by complicating the use of “event studies.”
An event study is a financial analysis commonly used in securities litigation and enforcement matters to evaluate whether a public disclosure had a statistically significant effect on a company’s stock price.
The article, published in Bloomberg Law, discusses how:
- Allowing semiannual reporting could hinder the SEC’s use of event studies in insider-trading cases.
- Semiannual reporting could help defendants argue that event studies didn’t account for confounding information.
- The SEC can still rely on internal emails and testimony from analysts and accountants to prove materiality.
Click here to read the full article on Bloomberg Law.
