Now imagine every company does this, but each in their own way with their own entirely orthogonal way of presenting their hallucinations. Does this make the mrketplace more efficient? More pragmatically, if any such company fails, does this increase or decrease investor trust in the exchange?
The SEC is ultimately responsible for building and maintaining trust in the process. A succession of IPOs where the proper GAAP numbed have been reduced to fine print and footnotes is contrary to their mandate.
Strongly disagree that the SEC or any government agency can be relied upon for anything related to "trust" in this space. Did Sarbanes-Oxley prevent the financial crisis? The SEC is just about building Maginot Lines. Caveat emptor has and remains the operative guidance for investors.
Private ratings agencies have had a poor track record of late, but they are at least somewhat more reliable in that they aren't completely under the thumb of the US government.
2. Even though it is an "investor-beware" system to some extent, typically the SEC doesn't support blatant misrepresentation of the company, which is what these metrics do, even if elsewhere they are reporting more accurate numbers.
3. A company trying to act this shady on their government filings does not instill confidence that they are any less shady elsewhere in their business.
It's a tough call. GAAP isn't going to adequately explain the nuance of every business, so notes are appropriate to explain things better.
But, bankers and accountants take advantage of this and twist the notes beyond sane bounds in an effort to make the earnings look good. Taken too far, this behavior can invalidate the accounting reports, making them totally opaque.
There isn't a right or wrong answer here. This example, I think, is pretty silly - as it's not a difficult thing to glean this info from the standard reports. But there are cases where strange accounting practices are good and helpful because underlying business is itself strange.