The document discusses the role and functions of the Securities and Exchange Commission (SEC). The SEC was created in the 1930s to restore investor confidence following the stock market crash and regulates companies that issue securities. It requires these companies to disclose important information so investors have access to basic facts. Key SEC filings include annual 10-K reports, quarterly 10-Q reports, and current 8-K reports of material events. The SEC faces challenges in overseeing thousands of public companies with limited resources and staff turnover.

1. Securities and Exchange
Commission Filings
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Jan. 2, 2014
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2. 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
jgentry@ku.edu
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4. Securities and Exchange
Commission
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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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5. SEC Role
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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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6. SEC Philosophy
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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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7. Who Files
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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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8. Accessing SEC Documents
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Finance.yahoo, other financial sites
Company websites
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SEC: www.sec.gov
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SEC Filings and Forms (EDGAR)
n www.sec.gov/edgar.shtml
EDGAR: Electronic Data Gathering, Analysis
and Retrieval System
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9. Key SEC Documents
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10-K
8-K
10-Q
Proxy statement
Prospectus
Form 13-D
Form 4
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10. Form 10-K or Annual Report
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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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11. Form 10-K (cont.)
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Extensive company information
MD&A or Management Discussion and
Analysis
Auditor’s report
Financial statements
Extensive footnotes
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12. Form 8-K or Current Update
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“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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13. Form 8-K (cont.)
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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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14. Form 8-K (cont.)
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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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15. Form 10-Q or
Quarterly Update
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Activities for the quarter (1, 2, 3)
Legal proceedings
Defaults
Labor negotiations
Discussion of “seasonality”
MD&A
Site of incorporation
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16. Form 10-Q (cont.)
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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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17. Form 14 or Proxy Statement
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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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18. Form S-1 or Registration
Statement
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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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19. Form S-1 (cont.)
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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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20. Form13-D
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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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21. Form 4
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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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22. Comment Letters
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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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23. Why A Private Company
Files With SEC
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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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24. Why A Private Company
Files With SEC
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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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25. Why A Private Company
Files With SEC
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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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26. SEC Commissioners
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Mary Jo White, D, Chairman
Daniel M. Gallagher, R, Commissioner
Michael S. Piwowar, R, Commissioner
Luis A. Aguilar, D, Commissioner
Kara M. Stein, D, Commissioner
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27. SEC Commissioners (cont.)
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Serve five-year terms
Appointed by the president
No more than three from the same
political party
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28. SEC Commissioners (cont.)
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Interpret federal securities laws
Amend existing rules
Propose new rules to address changing
market conditions
Enforce rules and laws
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29. SEC Challenges
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Approximately 15,000+ public companies
Before 2004, SEC had about 3,100
employees, small by federal standards
Went through a period of flat budgets, with a
10 percent reduction of employees and cut of
more than 50 percent in new technology
investments
Requested $1.67 for fiscal 2014, roughly a 26
percent increase
Has approximately 4,100 employees
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30. SEC Challenges (cont.)
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Republicans generally oppose increases
although SEC is “deficit neutral,” meaning
that costs are offset by fees it levies
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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31. SEC Challenges (cont.)
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For three years before Enron’s
bankruptcy, the SEC did not review its
filings
Market meltdown of 2008
Bernard Madoff
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32. SEC Revolving Door
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Old but telling: 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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33. SEC Uncertain Future
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XBRL – eXtensible Business Reporting
Language
Frustration with its performance
Legislative self-righteousness
Various proposals for restructuring
oversight
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