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Legal language and technology - Bill Lutz

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  • 52 results were returned
  • But I cant do a text search in the format its presented to me. So I paste the entire document into Microsoft Word…
  • And I find the EPS information in the MD&A
  • How did we get into this state of affairs? For one thing the filer doesn’t have it any easier…
  • Company info is relatively static.
  • Company info is relatively static. Structured - is a way of storing data in a computer so that it can be used efficiently. Valid – the data conforms to rules set by the SEC for that particular data element. Consistent – the data in one field means the same as data in the same field for another entity. Accessible – the data can be accessed by many different users, with minimal barriers for cost and distance. Standardized – the system conforms to uniform technical standards so it can be extended and integrated with 3 rd party products.
  • Company info is relatively static.
  • Task based information filing. The filer updates the information about itself that’s new. The SEC combines it with its own information about the company to complete its own investigation. SEC will guide companies in a new filing process to ensure the data is structured, contextual, consistent, comparable, and accessible to investors.
  • Date Understanding XBRL can be challenging. Consider what it might be like to try and understand algebra if you did not know how to count or if you did not understand the basic operators of mathematics; addition, subtraction, multiplication, and addition. This is the challenge we have to overcome in trying to explain XBRL. In order to truly understand XBRL, one needs to understand the meaning of and differences between terms such as “meta-data”, “business rules”, “semantic meaning” and “syntax”. This makes it quite challenging to explain XBRL in a two minute sound bite. Basically, XBRL is a global open standard which supports the expression of meaning required in business reporting in a form which a computer can effectively understand. One of the things you can do as a result of expressing this semantic meaning is effectively and automatically exchange information. But there are lots and lots of other things you can do. People tend to focus on the information exchange. This is a fundamental mistake though because you miss 99% of the value of XBRL. We will explain what things like semantic meaning and what that means to business reporting as we progress through this presentation.

Transcript

  • 1. Legal Language and Interactive Technology William Lutz Clarity 2010 Lisbon, 14 October 2010
  • 2. Form 10-K Preparation Process Company/Registrants Attorneys & Accountants Files for Conversion Proofing Cycles Final Approval Final HTML/ASCII Version Printed & Mailed to Investors Reverse Conversion for Company Filings SEC Final HTML & PDF Filing Agent Self-Filed Directly to SEC Multiple Services & File Exchanges
  • 3. 10-K filings by one company 1996 263 pages 1999 265 pages 2009 1,376 pages
  • 4.  
  • 5.
    • “ I read a few prospectuses for residential-mortgage-backed securities – mortgages, thousands of mortgages backing them, and then those all tranched into maybe 30 slices. You create a CDO by taking one of the lower tranches of that one and 50 others like it. Now if you’re going to understand that CDO, you’ve got 50-times-300 pages to read, it’s 15,000. If you take one of the lower tranches of the CDO and take 50 of those and create a CDO squared, you’re now up to 750,000 pages to read to understand one security.”
    • Warren Buffett, Fortune Magazine, April 8, 2008.
  • 6.  
  • 7. Post Filing / Data Usage
    • Holds Document of Record
    • Filing search/retrieval
      • By Company
      • By Form Type
    • Full Text Search
    Produces entire form with limited search capabilities Performs: SEC SEC.gov Dissemination Subsystem Users: Perform:
    • Financial Websites
    • Law Firms
    • Analysts
    • Exchanges & FINRA
    • Market Professionals
    • Government Subscribers
    Users:
    • Individual Investors
    • Press
    • Students
    • Professionals
    • Registrants
    • Complex Searches
    • Financial Data
      • Databases
      • Extracts
      • XBRL-marked
    • Watch Service/Alerts
    Info-Mediaries
  • 8. Investor’s Access to Information Today… How does XYZ company’s EPS compare to others in the same industry for Q3?
  • 9. Find Company in EDGAR
  • 10. What form type do I use?
  • 11. What form types are there? 61 Page Document
  • 12. I think I need a 10-Q
  • 13. EDGAR Results
  • 14. Got It!
  • 15. Where’s the EPS information?
  • 16. I have to repeat this process for other companies in the industry?
  • 17. If we want to give investors easy access to the data they want, we have to change the way we collect and provide it.
  • 18. A company file promises easy access to high quality data Company File SEC Contains
    • Company Information, e.g. :
    • Name, Address
    • Industry, SIC, State
    • Fiscal Year End
    • Periodic & Current Information, e.g. :
    • Annual reports
    • Material events
    • Proxy statements
    • Transaction Information, e.g. :
    • Merger
    • Sale of securities
  • 19. A Company File promises to deliver easy access to high quality data
    • Company Information, e.g. :
    • Name, Address
    • Industry, SIC, State
    • Fiscal Year End
    • Filing Information, e.g. :
    • Change in beneficial ownership
    • Proxy statement
    • Annual report
    • Transaction Information, e.g. :
    • Acquisition
    • Sale of securities
    Company File SEC Contains Structured Accessible
  • 20. The Company File user interface can meet the needs of all investors. Company File SEC Subscriber Data Stream
    • Constant, immediate flow of information
    • Data will be processed, aggregated, & modeled
    • “ More data is better, as granular as possible”
    • Looking for basic information about companies and industries
    • Ease-of-use is paramount
    • Data ready to plug into off-the-shelf software
    Retail Investor
    • Looking for specific information
    • Complex queries, mash-ups
    • Requires accurate data ready for analysis
    Sophisticated User
  • 21. Company/Registrants Reinventing the SEC’s system for collecting and storing disclosure will give investors easy access to high quality data Company File SEC Subscriber Data Stream Sophisticated User Retail Investor
  • 22. Main Page
  • 23.  
  • 24. What is XBRL? Semantic platform for standardizing business information concepts
    • XBRL (Extensible Business Reporting Language) is an open standard which supports information modeling and the expression of semantic meaning commonly required in business reporting.
    Slide
  • 25.  
  • 26.  
  • 27.
    • “ Disclosure isn’t disclosure if it doesn’t communicate.”
    • Arthur Levitt, Chairman
    • U.S. Securities and Exchange Commission
    • 1993-2001
  • 28.
    • The defendant says, and the SEC agrees, that the information was disclosed in public documents, yet the SEC maintains that this disclosure did not meet the legal requirements for disclosure. “ The SEC says those documents were too obscure and difficult to understand to qualify as adequate disclosure .”
    • The Wall Street Journal , September 3, 2010