I spoke to Law.com about the potential switch to semi-annual reporting, and one of the questions I was asked concerned securities fraud risk – more? less?

Answer: it’s complicated.

On the one hand, fewer statements means fewer potentially false statements, and so fewer opportunities for someone to bring a lawsuit over what you say.

On the other hand, probably a lot of companies will continue to speak to the market – and even voluntarily disclose quarterly earnings. Except, they may not include all of the details that a 10-Q would include. Depending on what they choose to disclose, and whether they change their practices over time, there might be some vulnerability to a charge of misleading half-truths/omissions.

Additionally, semi-annual reporting means the market will be receiving less information on the company, and the information it does receive may come as a surprise, resulting in more volatility. Surprise information, coupled with a big price movement, is the stuff securities fraud actions are made of. Fewer disclosures means fewer opportunities to telegraph changed expectations and slow walk the stock in a particular direction.

But on the other hand! Securities fraud actions live or die by the event study – proof that the market was efficient, and proof that the false statements (and revelations of the truth) impacted pricing. But price movements are much harder to detect when the stock price is volatile ordinarily; it takes an unusually large swing to identify the impact of a particular disclosure. That may make it hard for plaintiffs to assemble the proof they need, either for the merits or for class certification.

So. I guess we’ll see. Unless everything is shifted to arbitration, in which case, we won’t.

And another thing. On this week’s Shareholder Primacy podcast, Mike Levin and I talk about Duke Energy’s supermajority voting requirements and the attempts to change them. Here at Apple, here at Spotify, and here at Youtube.