SEC Filings by Jimmy Gentry

Securities and Exchange Commission Filings
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Jan. 3, 2012
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Donald W. Reynolds National Center
For Business Journalism
At Arizona State University
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James K. Gentry, Ph.D.
Clyde M. Reed Teaching Professor
School of Journalism and Mass Communications
University of Kansas
[email_address]
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Securities and Exchange Commission
Created in wake of Crash of 1929 to restore faith in markets
Securities Act of 1933
Securities Exchange Act of 1934
Justice Brandeis’ role
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SEC Role
Protect investors through disclosure of certain information
Maintain a fair, orderly and efficient trading market, i.e. prevent misrepresentation
Maintain investor confidence
Facilitate capital formation
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SEC Philosophy
All investors should have access to certain basic information about an investment before buying it and as long as they hold it.
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Who Files
Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports.
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Accessing SEC Documents
Finance.yahoo, other financial sites
Company websites
SEC: www.sec.gov
SEC Filings and Forms (EDGAR)
www.sec.gov/edgar.shtml
EDGAR: Electronic Data Gathering, Analysis and Retrieval System
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Key SEC Documents
10-K
8-K
10-Q
Proxy statement
Prospectus
Form 13-D
Form 4
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Form 10-K or Annual Report
Historically, had been filed within 90 days after end of company fiscal year
Today, 60, 75 or 90 days after fiscal year ends, depending on company’s public float
Extensive financial data, including income statement, balance sheet and statement of cash flows
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Form 10-K (cont.)
Extensive company information
Auditor’s report
MD&A or Management Discussion and Analysis
Extensive footnotes
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Form 8-K or Current Update
“ Material events”
Since August 2004, companies have four business days to file
SEC posts them almost instantly upon receipt
Number of filings more than doubled since rule change but has slowed
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Form 8-K (cont.)
Change in company auditor and why
Bankruptcy-protection filing
Expanded disclosure involving director or officer resignation or appointments
Restatement of financial results
Key litigation
Termination of material agreements
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Form 8-K (cont.)
Notice of de-listing by a stock exchange
Significant costs of leaving a biz
New off-books deals involving significant debt
Changes in company bylaws
Changes in company fiscal year
www.sec.gov/answers/form8k.htm
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Form 10-Q or Quarterly Update
Activities for the quarter (1, 2, 3)
Legal proceedings
Defaults
Labor negotiations
Discussion of “seasonality”
MD&A
Site of incorporation
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Form 10-Q (cont.)
Many companies file 8-K with earnings release
“ Material facts” must be in the 10-Q that might not be included in the 10-K
Key point: Unaudited
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Form 14 or Proxy Statement
Information regarding upcoming annual meeting
Matters to be voted on at meeting
Executive compensation
Information on board members
Shareholder proposals
Major shareholders
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Form S-1 or Registration Statement
Also called prospectus
Going public or selling new shares
Financing, use of proceeds
“ Risk factors”
Part I and Part II
“ Red herring”
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Form S-1 (cont.)
Look at exhibits, which may include the CEO’s employment contract or a list of the company’s real estate around the world
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Form13-D
Must be filed by any outside investor who buys 5 percent or more of a public company’s stock
Information on investors, even if are private partnerships of individuals
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Form 4
Announces changes in holdings of directors and officers (even if hold no stock), and shareholders owning 10 percent or more of the company’s stock
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Comment Letters
SEC posting online comment letters that it sends to public companies and mutual funds about their annual reports, public offerings and other filings
Makes it easier for investors and company rivals to understand the weaknesses of the disclosures and what financial issues are of concern to regulators
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Why A Private Company Files With SEC
If a private company has any debt that trades on an exchange . Even if a public company is bought by a private equity group and taken private, the obligation to file with the SEC continues if the debt remains under previous conditions.
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If the debt was issued on a registration statement and is held by more than 500 holders of record, even if it is not traded on an exchange. Obligation continues until the number of shareholders of record falls below 300.
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If a company sold bonds or notes as part of a contract sale and the buyer said the company must file with the SEC until the bonds are retired . Most common reason.
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SEC Commissioners
Mary Schapiro, D, Chairman
Daniel Gallagher, R, Commissioner
Troy Paredes, R, Commissioner
Luis Aguilar, D, Commissioner
Elisse Walter, D, Commissioner
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SEC Commissioners (cont.)
Serve five-year terms
Appointed by the president
No more than three from the same political party
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SEC Commissioners (cont.)
Interpret federal securities laws
Amend existing rules
Propose new rules to address changing market conditions
Enforce rules and laws
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SEC Challenges
Approximately 15,000+ public companies
Before 2004, SEC had about 3,100 employees, small by federal agency standards
Over last four years has had 3,500 – 3,600 employees and a budget of approximately $900 million
Because of flat budgets, been 10 percent reduction of employees and cut of more than 50 percent in new technology investments
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SEC Challenges (cont.)
Requested $1.03 billion for FY 2010 and $1.2 billion for FY 2011
Discussion of making it self-funded with control of its own budget
Has twice the turnover of the average government agency
2 1/2 years is average employment of an SEC attorney
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SEC Challenges (cont.)
For three years before Enron’s bankruptcy, the SEC did not review its filings
Market meltdown of 2008
Bernard Madoff
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SEC Revolving Door
In summer 2004:
Enforcement division manager to partner in major law firm (white-collar defense)
Regional director to partner in major law firm (white-collar defense)
Deputy director, investment management, to major bank (compliance)
Associate director to major law firm (securities practice)
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SEC Uncertain Future
XBRL – eXtensible Business Reporting Language
Frustration with its performance
Legislative self-righteousness
Various proposals for restructuring oversight
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SEC Filings by Jimmy Gentry

by Reynolds Center for Business Journalism on Jan 03, 2012

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SEC Filings by Jimmy Gentry — Presentation Transcript