October 2, 2015

8-K Trading Gap: Are Insiders Abusing Their Positions?

Here’s the intro to this Cooley blog:

A new study, reported in the WSJ, showed that corporate insiders consistently beat the market in their companies’ shares in the four days preceding 8-K filings, the period that the researchers called the “8-K trading gap.” The study also showed that, when insiders engage in open market purchases –relatively unusual transactions for insiders—during that trading gap, insiders “are correct about the directional impact of the 8-K filing more often than not — and that the probability that this finding is the product of random chance is virtually zero.”

EDGAR Filer Support’s New Publication: “The Filer Report”

I was excited to see how the SEC’s EDGAR Filer Support Teams have begun to put out a new periodic publication – entitled “The Filer Report.” You will receive it by email if you sign up for “Email Updates” in the bottom right side of the SEC’s home page – and then you can customize your preferences to receive only those types of updates that you want from the SEC. If you’re only interested in “The Filer Report,” select only that box – the last one – under the “Industry Guidance and Information” section.

The inaugural issue of “The Filer Support” is not online. But it included all sorts of nuggets for those that deal with EDGAR regularly. For example, there was a link to this list of peak volumes for Edgar filings. There were reminders about including your CIK on filing fee payments – and how to send a single FedWire for multiple CIKs.

There also was a note that the “Information for EDGAR Filers” page is in the process of being redesigned – I’m crossing my fingers that it will include a blog that would notify us when EDGAR is down – or hiccups are occurring for certain types of filings – as well as notify us when those problems have been resolved…

EDGAR Modernization: Some Near-Term Suggestions

Following up on the news about the SEC’s EDGAR modernization project that I previously blogged about, a 9-page letter was jointly submitted to the SEC by the Business Roundtable, CAQ, FEI and CCMC in response to the SEC’s disclosure effectiveness project. The letter focuses specifically on EDGAR modernization – and includes suggestions to improve EDGAR in the near-term. A detailed two-phase approach is suggested that could be achieved before other EDGAR enhancements and SEC rulemaking. Here’s an excerpt from the letter:

We developed a two-phase approach to our recommendations for near-term improvement to the filings area of the SEC website. The first phase focuses on consolidating and updating current search features by improving their visibility and organization. The second phase focuses on additional enhancements to EDGAR, which include improvements to the company search page, filings detail screen, output functionality, and interactive data functionality.

While the letter suggests a number of changes to EDGAR’s search function, my favorite suggestion relates to finding previously-filed exhibits. Here’s the suggestion:

Registrants usually include a list of previously filed exhibits in periodic reports. However, it is challenging to find the exhibit that is referenced. The enhanced functionality should allow users to access all exhibits from one screen rather than have to go into individual filings. Also, a greater ability to use a search engine across the exhibits would be helpful.

– Broc Romanek