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 3rd 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.
  • 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.
  • Legal language and technology - Bill Lutz

    1. 1. Legal Language and Interactive Technology William Lutz Clarity 2010 Lisbon, 14 October 2010
    2. 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. 3. 10-K filings by one company 1996 263 pages 1999 265 pages 2009 1,376 pages
    4. 4. “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.
    5. 5. Removal of Accounts Subject to the conditions set forth in the next succeeding sentence, the Transferor may, but shall not be obligated to, designate from time to time (which may be restricted to certain periods if so specified in the related Prospectus Supplement) certain Accounts to be Removed Accounts, all Receivables in which shall be subject to deletion and removal from the related Trust. This feature is intended to permit the Transferor to obtain unencumbered ownership of Receivables not needed to support any Series of Certificates. Certificateholderswill not incur any cost, direct or indirect, as a result of the exercise of this feature. The Transferor will be permitted to designate and require reassignment to it of the Receivables from Removed Accounts only upon satisfaction of the following conditions: (i) the removal of any Receivables of any Removed Accounts shall not, in the reasonable belief of the Transferor, cause a Pay Out Event to occur; (ii) the Transferor shall have delivered to the related Trustee for execution awritten assignment and a computer file or microfiche list containing a true and complete list of all Removed Accounts identified by account number and the aggregate amount of the Receivables in such Removed Accounts; (iii) none of (a) the Receivables are more than [ ]% delinquent by [estimated] principal amount and weighted average delinquency of such Receivables does not exceed [ ] days, (b) he Receivables are more than [ ]% delinquent by estimated principal balance and the weighted average delinquency of such Receivables does not exceed [ ] days or (c) the Receivables are more than the specified percentage delinquent by estimated principal amount and theweighted average delinquency of such Receivables does not exceed the number of days specified in the related Prospectus Supplement; (iv) the Transferor shall represent andwarrant that no selection procedures believed by the Transferor to be materially adverse to the interests of the holders of any Series of Certificates outstanding under such Trust were utilized in selecting the Removed Accounts to be removed from such Trust; (v) each Rating Agency then rating each Series of Certificates outstanding under such Trust shall have received notice of such proposed removal of Accounts and the Transferor shall have received notice from each such Rating Agency that such proposed removalwill not result in a downgrade of its then-current rating for any such Series; (vi) the aggregate amount of Principal Receivables of the Accounts then existing less the aggregate amount of Principles Receivables of the Removed Accounts shall not be less than the amount, if any, specified for any period specified; (vii) the Principal Receivables of the Removed Accounts shall not equal or exceed [ ]% (or such other percentage specified in the related Prospectus Supplement) of the aggregate amount of the Principal Receivables in such Trust at such time; provided, however, that if any Series has been paid in full, the Principal Receivables in such Removed Accounts may equal or approximately equal the Investor Interest as of the last day of the Revolving Period or Full Investor Interest, as applicable, of such Series; (viii) such other conditions as are specified in the related Prospectus Supplement; and (ix) the Transferor shall have delivered to the related Trustee an officer's certificate confirming the items set forth in clauses (i) through (viii) above. Notwithstanding the above, the Transferor will be permitted to designate as a Removed Account without the consent of the related Trustee, Certificateholders or Rating Agencies anyAccount that has a zero balance and which the Transferorwill remove from its computer file. Removal of Accounts Subject to the conditions set forth in the next succeeding sentence, the Transferor may, but shall not be obligated to, designate from time to time (which may be restricted to certain periods if so specified in the related Prospectus Supplement) certain Accounts to be Removed Accounts, all Receivables in which shall be subject to deletion and removal from the related Trust. This feature is intended to permit the Transferor to obtain unencumbered ownership of Receivables not needed to support any Series of Certificates. Certificateholderswill not incur any cost, direct or indirect, as a result of the exercise of this feature. The Transferor will be permitted to designate and require reassignment to it of the Receivables from Removed Accounts only upon satisfaction of the following conditions: (i) the removal of any Receivables of any Removed Accounts shall not, in the reasonable belief of the Transferor, cause a Pay Out Event to occur; (ii) the Transferor shall have delivered to the related Trustee for execution awritten assignment and a computer file or microfiche list containing a true and complete list of all Removed Accounts identified by account number and the aggregate amount of the Receivables in such Removed Accounts; (iii) none of (a) the Receivables are more than [ ]% delinquent by [estimated] principal amount and weighted average delinquency of such Receivables does not exceed [ ] days, (b) he Receivables are more than [ ]% delinquent by estimated principal balance and the weighted average delinquency of such Receivables does not exceed [ ] days or (c) the Receivables are more than the specified percentage delinquent by estimated principal amount and theweighted average delinquency of such Receivables does not exceed the number of days specified in the related Prospectus Supplement; (iv) the Transferor shall represent andwarrant that no selection procedures believed by the Transferor to be materially adverse to the interests of the holders of any Series of Certificates outstanding under such Trust were utilized in selecting the Removed Accounts to be removed from such Trust; (v) each Rating Agency then rating each Series of Certificates outstanding under such Trust shall have received notice of such proposed removal of Accounts and the Transferor shall have received notice from each such Rating Agency that such proposed removalwill not result in a downgrade of its then-current rating for any such Series; (vi) the aggregate amount of Principal Receivables of the Accounts then existing less the aggregate amount of Principles Receivables of the Removed Accounts shall not be less than the amount, if any, specified for any period specified; (vii) the Principal Receivables of the Removed Accounts shall not equal or exceed [ ]% (or such other percentage specified in the related Prospectus Supplement) of the aggregate amount of the Principal Receivables in such Trust at such time; provided, however, that if any Series has been paid in full, the Principal Receivables in such Removed Accounts may equal or approximately equal the Investor Interest as of the last day of the Revolving Period or Full Investor Interest, as applicable, of such Series; (viii) such other conditions as are specified in the related Prospectus Supplement; and (ix) the Transferor shall have delivered to the related Trustee an officer's certificate confirming the items set forth in clauses (i) through (viii) above. Notwithstanding the above, the Transferor will be permitted to designate as a Removed Account without the consent of the related Trustee, Certificateholders or Rating Agencies anyAccount that has a zero balance and which the Transferorwill remove from its computer file.
    6. 6. 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 Info- Mediaries 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
    7. 7. Investor’s Access to Information Today… How does XYZ company’s EPS compare to others in the same industry for Q3?
    8. 8. Find Company in EDGAR
    9. 9. What form type do I use?
    10. 10. What form types are there? 61 Page Document
    11. 11. I think I need a 10-Q
    12. 12. EDGAR Results
    13. 13. Got It!
    14. 14. Where’s the EPS information?
    15. 15. I have to repeat this process for other companies in the industry?
    16. 16. If we want to give investors easy access to the data they want, we have to change the way we collect and provide it.
    17. 17. 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
    18. 18. A Company File promises to deliver easy access to high quality data Company File SEC Contains 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 Structured Accessible
    19. 19. 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 softwareRetail Investor • Looking for specific information • Complex queries, mash-ups • Requires accurate data ready for analysisSophisticated User
    20. 20. Company/Registrants Company File SEC Reinventing the SEC’s system for collecting and storing disclosure will give investors easy access to high quality data Subscriber Data Stream Sophisticated User Retail Investor
    21. 21. Main Page
    22. 22. Slide 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.
    23. 23. “Disclosure isn’t disclosure if it doesn’t communicate.” Arthur Levitt, Chairman U.S. Securities and Exchange Commission 1993-2001
    24. 24. 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

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