Trump Asks SEC to Review Quarterly Earnings Reports

for the idea on Bloomberg Today. I think quotally reporting, and to Budda bluntly, I think it's s and I every third in weeks and by the way, quote has come around with alarming frequency. Right, They've been trying to get this thing to stop. But at least you know this is one thing the Brits definitely have figured out what the six months reporting. Joining me is Peggy Collins,

Bloomberg News US Investing team leader. So, Peggy, it seems natural that corporations would welcome getting rid of two reports a year. But what are the dangers? Well, A couple of the dangers are that investors have less transparency, right, So We've seen this in the news of late with

Elon Musk saying he might take Tesla private. And one of the reactions that we've had from shareholders or shareholder activists is that, well, you're not getting as much information then in terms of what the company's earnings might be, what their executive pay is to influence whether you buy yourself.

The other potential is that when companies are in the dark more, there's more potential for them to do nefarious things such as insider trading, for example, and for it to be harder for people to spot, or for companies to be more worried about doing it in the first place, and because they might get caught. So what are some of the less obvious advantages to corporations besides just not the extra work. Well, I think, as you said, the

extra work and all so costs for smaller companies. A number of the plates that we've heard is that with all the regulation today and the requirements from the SEC of reporting, that if you're a smaller company, that's a big burden. And therefore there's more and more smaller companies that say I'm not going to go public, I'm going to stay private because I don't want to have to do all those things. So that's one of the things I think. Another point is that we've talked to some

people today. You said it could make financial analysts more popular or valuable because they are supposed to be talking to companies regularly, and so if the public has information on a less frequent basis, they the financial analysts who put out reports could be become more important. So, Peggy, this was released by the White House to clarify President

Trump's tweet. It says the President is interested in examining this issue on whether short term earnings reporting requirements for public companies reduce incentives for them to engage in long term investing in the United States, a part of the administration's ongoing regulatory form efforts. So put in that context, does that give you more insight into what he's looking for.

So that's something definitely that I've been hearing over the last few years, covering a variety of investors and family offices that invest in companies in the US that aren't public, a lot of family owned businesses across the country, And one of the things that we've heard repeatedly is that companies are saying, you know, what if we're under this pressure every quarter to hit certain numbers in order for our shareholders and the stock price to be in the

limelight in a good way. That prevents us from sometimes putting money into research and development efforts that would actually benefit the company over the longer term. So I'm not going to go public. I'm going to take some private investment money so that way I can spend some more money in the shorter term on the long term value of building another plant or or doing some research on technology, for example. The SEC has been reticent to make changes.

Where does it stand well? The Trump tweet this morning would surprising for a lot of us, including me, um and so people have asked, you know, how quickly could they do something like this? My opinion is not very fast. Most regulatory items, and certainly something that would be such a sea change like this one take a long time to go through. There's a lot of public comments and studies and um and this might have to go through Congress, so I think it would take a while to have

to happen. The SEC also has a lot on its plate between Elon Musk and Tesla and all sorts of things. The SEC is always busy, but it would it be likely to initiate this kind of a fundamental change. I think it's possible. We've seen this happened in other places around the world. You played that clip from James Gorman, and essentially what happened in the UK of late in the last decade or so is that they switched to a more six month model of reporting. There's mixed results

on what that has actually mean. In some cases companies have actually continued to put out the same types of information on a more regular basis than six months anyway, But it is one of those things that it's possible. There's precedence for it. There's certainly a lot of corporate uh excitement around it, and we've seen President Trump say things and actually get them done in some cases faster than people expected and with less and less regulations. Who

knows what will happen. So just we have about a minute here. What's your what's your opinion of it? It's a good question. I think the first thing that came to my mind being a journalist is that more information

is usually better than less. Um So I think you know, I was a personal finance reporter for many years here at Bloomberg before leading our investing coverage, and that was the first thing that came to my mind that I I usually deferred to the fact that if you have more information and shareholders have more information on what a company is doing, that it keeps them more accountable to what It also helps you make a more informed decision

on whether to buy yourself. I think you'll have quite a while before we actually get to that point if we do. Thanks so much, Peggy. That's Peggy Collins for burg News US Investing team leader. At a cabinet meeting yesterday, President Trump addressed the continuing fight against opioid addiction in the US, asking Attorney General Jeff Sessions to take legal action. I'd also like to ask you to bring a major

lawsuit against the drug companies on opioid. Some states have done it, but I'd like a lawsuit to be brought against these companies that are really sending opioids at a level that it shouldn't be happening. Joining me is Richard Austin is a professor at the University of Kentucky Law School.

Richard drug makers are also already facing more than nine hundred lawsuits by more than twenty five cities, states, counties, and others over opioid addiction, most of those in federal court, and the Trump administration has filed a request to join settlement talks in the multi district litigation in Ohio. So

I have the Justice Department bring a separate suit. Well, I think the theories that they would use are somewhat different from, UH, the theories that the other plantiffs have been bringing in in the litigation that you spoke of. In particular, they are a variety of federal statutes that the drug companies and when I say drug companies, I mean manufacturers, distributors, and large scale retail sellers UH that they may have violated some of these federal statutes UH

and so UH. And indeed, the federal government has brought suits against most of these UH pharmaceutical companies and has either one or has reached settlements that were very favorable to them. So I'm guessing that they don't want to get caught up in a settlement process that the global settlement process, which is which is what would come out

of the multidistrict litigation. So if they're so, if there's a global settlement process going on in the multi district litigation and there's a federal separate federal lawsuit, would that affect the settlement process? Well, not directly, of course. Um, realistically, there's only so much money the drug companies have, so to the extent that they pay some of that to the federal government, there will be less left for the other plaintiffs, assuming that there is a settlement. Now, what

about criminal proceedings by the Justice Department. Well, that's a very real possibility because many of these federal statutes I spoke of our criminal as well as civil UH and UH and therefore there's the prospect there's some pretty substantial criminal liability, even jail time theoretically, although of course you can't put a corporation in jail, but you can put their officers in jail. And that almost happened about ten

years ago with Perdue Farm and Oxyconton. They were charged with uh mislabeling, which in that case meant that their sales reps were telling doctors that making statements to doctors that were um contradictory to what the labeling on the product approved by the FDA set And they were ultimately find about six d million dollars and there was serious talk about the sending some of the top executives to jail, and instead they were find very substantial amounts of money

as well on these criminal charges. What do you see and what has history shown us about the effectiveness of litigation as a tactic to fight drug abuse. Well, I don't think the track record is very good, at least not so far. Of course, they were the only things we have to to compare this with is the tobacco litigation of some fifteen years ago, if twenty years ago, and that certainly resulted in a very large settlement that went to the States, But I'm not sure people gave

up smoking UM. And indeed it was almost the devil's bargain because now the states, at least that were parties to that settlement, UM had a strong incentive not to put the tobacco companies out of business, because that would kill the goose that was laying the golden egg. UM. As far as the present UM litigation is concerned, I'm uh skeptical that it will have much of an effect.

It might, of course, drug companies might change their conduct in response to the prospect of even more UM damage awards. But in the past they've pretty much just taken it as a cost of doing business, then moved on. Even that very substantial uh fine that I've spoke of earlier, six million dollars perdue, just blew it off. They paid the money, and they went back to pretty much doing what they've been doing before. So I don't know that it would uh really address the problem very very much.

Only only a minute here on a topic that certainly deserves a lot of consideration. But so is the answer then in legislation, what's the best answer? Well, I think that's certainly part of it. I think in addition, um the federal government in particular is going to have to um uh finance some programs to try to deal with the addiction problem. Uh. You know, you've got perhaps as many as two million people who are addicted, and they're going to stay addicted, perhaps for the rest of their lives,

and so you can't just leave them out there. You have to do something to help them, and there isn't much available at the present time. And of course, giving the states a lot of money doesn't mean they're going to spend it on these kinds of programs. It's it's it's it's a really serious problem. Almost seventy thousand Americans died from opioid overdoses last year alone. Thanks so much for joining us this conversation. Richard. That's Richard Austinus, professor

at the University of Kentucky Law School. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple podcast, SoundCloud, and on Bloomberg dot com slash podcast. I'm June Brosso. This is Bloomberg