5 tips for mining news from the SEC every business journalist should know

February 4, 2016

By Bill Hankes
The Big Search

Here are five tips every business journalist should know when dealing with SEC records.


1. Enforcement actions tell you who’s in trouble. We all know about the SEC’s company filings section, called EDGAR, which contains nearly 200 different document types that reflect various disclosures required for public companies, mutual funds, banks and more. Services like Bloomberg, Morningstar and Sqoop aggregate parts of this database and provide alerts to subscribers.


But the SEC has much more to offer than these company filings. One of the more interesting sections is Enforcement Actions, which includes Litigation Releases and Administrative Proceedings, each of which detail rulings against companies and individuals investigated by the SEC. Apparently, few reporters check these sections regularly.

2. Find hidden gems with full-text search. Similarly, the SEC provides a far more robust, full-text search than EDGAR offers. Not only does the full-text search include the SEC filings, but the exhibits, too.

Why is this useful? There are many cases where one company may not have a duty to disclose information, but another party to the transaction does. One example is Airbnb, which is a large, privately held company. When it raised money, it did not issue a Form D, so journalists really have no way of discovering this news. Another, you can sometimes find acquisition figures for earlier announcements for “undisclosed” amounts.

3. Insider Stock Trading: What’s news and what’s not? One of the most common forms companies issue is associated with executive stock compensation. When an insider or corporate officer receives, sells, gifts or otherwise transacts in public company stock, the issuing company is required to file a Form 4.


Many of these turn into news, but the trick is understanding what’s news and what isn’t. Here, Dick Costollo, former chief executive officer of Twitter, is written about for selling $25 million in stock. So why isn’t it news that Sergey Brin sells more than twice that amount every week? The answer resides in the footnotes of the Form 4 where Twitter says that Brin’s sales are part of a 10b5-1 trading plan.

4. Reading the fine print after the news cycle has died can pay off. When companies report earnings, the first disclosure is an 8-k, which is quickly followed by the official press release and then about an hour later, the analyst call, which reporters often listen in on. A couple of hours later, the news cycle is over. Or is it?
Sharp reporters will read the 10-Q, which isn’t filed until the next day, long after the news cycle. Comparing the risk factors section with the preceding quarter can yield insight into changes in business strategy, competition or other factors not material enough to be disclosed in earlier filings.


Similarly, the 10-Q and 10-K are many times the only public records where significant business transactions are discussion at all. In this case.

5. Pay attention to the exhibits! SEC filings are written by lawyers who oftentimes don’t appreciate brevity the same way journalists do. But the exhibits associated with most SEC filings are generally written in English by PR executives or other business people.


More importantly, you can get to the meat of the news faster by popping open an exhibit than going to the original filing. The problem is that it is impossible to get to the exhibits from the filing itself. You need to navigate the arcane EDGAR detail page and try to interpret exhibit information from sometimes randomly named files.

For more information and examples, go to http://sqoop.com/blog/ and click on the this article’s headline. © Bill Hankes 2016

bill@sqoop.com

 

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