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Securities and Exchange Commission Filings - Reynolds Week 2011
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Securities and Exchange Commission Filings - Reynolds Week 2011


Jimmy Gentry on 'Securities and Exchange Commission Filings" at Reynolds Business Journalism Week, Feb. 4-7, 2011. …

Jimmy Gentry on 'Securities and Exchange Commission Filings" at Reynolds Business Journalism Week, Feb. 4-7, 2011.

Reynolds Center for Business Journalism, BusinessJournalism.org, Arizona State University's Walter Cronkite School of Journalism.

Published in Economy & Finance
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  • 1. Securities and Exchange Commission Filings
            • Strictly Financials
            • Jan. 4, 2011
  • 2.
    • Donald W. Reynolds National Center
    • For Business Journalism
    • At Arizona State University
    Strictly Financials
  • 3.
    • James K. Gentry, Ph.D.
    • Clyde M. Reed Teaching Professor
    • School of Journalism and Mass Communications
    • University of Kansas
    • [email_address]
    Strictly Financials
  • 4. 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
    Strictly Financials
  • 5. 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
    Strictly Financials
  • 6. SEC Philosophy
    • All investors should have access to certain basic information about an investment before buying it and as long as they hold it.
    Strictly Financials
  • 7. 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.
    Strictly Financials
  • 8. 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
    • 10-K Wizard (Morningstar)
    Strictly Financials
  • 9. Key SEC Documents
    • 10-K
    • 8-K
    • 10-Q
    • Proxy statement
    • Prospectus
    • Form 13-D
    • Form 4
    Strictly Financials
  • 10. 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
    Strictly Financials
  • 11. Form 10-K (cont.)
    • Extensive company information
    • Auditor’s report
    • MD&A or Management Discussion and Analysis
    • Extensive footnotes
    Strictly Financials
  • 12. 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
    Strictly Financials
  • 13. 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
    Strictly Financials
  • 14. 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
    Strictly Financials
  • 15. 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
    Strictly Financials
  • 16. 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
    Strictly Financials
  • 17. 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
    Strictly Financials
  • 18. Form S-1 or Registration Statement
    • Also called prospectus
    • Going public or selling new shares
    • Finances, use of proceeds
    • “ Risk factors”
    • Part I and Part II
    • “ Red herring”
    Strictly Financials
  • 19. 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
    Strictly Financials
  • 20. 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
    Strictly Financials
  • 21. 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
    Strictly Financials
  • 22. Comment Letters
    • SEC publishing 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
    Strictly Financials
  • 23. SEC Commissioners
    • Mary Schapiro, D, Chairman
    • Kathleen Casey, R, Commissioner
    • Troy Paredes, R, Commissioner
    • Luis Aguilar, D, Commissioner
    • Elisse Walter, D, Commissioner
    SEC filings
  • 24. SEC Commissioners (cont.)
    • Serve five-year terms
    • Appointed by the president
    • No more than three from the same political party
    SEC filings
  • 25. SEC Commissioners (cont.)
    • Interpret federal securities laws
    • Amend existing rules
    • Propose new rules to address changing market conditions
    • Enforce rules and laws
    SEC filings
  • 26. 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
    SEC filings
  • 27. 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
    SEC filings
  • 28. SEC Challenges (cont.)
    • For three years before Enron’s bankruptcy, the SEC did not review its filings
    • Market meltdown of 2008
    • Bernard Madoff
    SEC filings
  • 29. 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)
    SEC filings
  • 30. SEC Uncertain Future
    • XBRL – eXtensible Business Reporting Language
    • Frustration with its performance
    • Legislative self-righteousness
    • Various proposals for restructuring oversight
    SEC filings