February 19, 2008

More on the 10-Q (and 10-K) Cover Page “Glitch”

A number of members e-mailed me after Friday’s blog about the parenthetical on the cover page of the 10-Q (which is also on the Form 10-K cover page). The parenthetical states: (Do not check if a smaller reporting company).

One member noted that if you look at the PDF version of the SEC’s adopting release – rather than the version published in the Federal Register – you will see that (on page 210) the parenthetical is located underneath the check box for “non-accelerated filer.” He inferred that, since smaller reporting companies are non-accelerated filers, the SEC wanted smaller reporting companies to check only the box for “smaller reporting company” and not both boxes.

I agree that this makes sense if the parenthetical is properly lined up with “non-accelerated filer” (one wonders why a similar instruction isn’t required to ensure a Large Accelerated Filer doesn’t also check the “Accelerated Filer” box). The same check box disclosure also appears on the cover page of other forms – and the location of the parenthetical is consistent across all of the them, so it wouldn’t appear that the parenthetical was an oversight, notwithstanding what was told by someone on the Staff to the members who fed me the information for Friday’s blog.

SEC Proposes Changes to Foreign Private Issuer Reporting and Registration Requirements

Last Wednesday, the SEC proposed a series of amendments to its filing, disclosure and registration requirements for foreign private issuers. Among other proposed changes, the SEC would require FPIs to file their reports electronically on EDGAR (ie. no more paper filings) – and shorten the existing 6-month filing deadline for FPIs to file annual reports on Form 20-F to 90 days for large accelerated and accelerated FPIs and 120 days for smaller reporting FPIs. Here is the SEC’s press release and Corp Fin’s opening statement. Here is some analysis of the SEC’s actions from Cleary Gottlieb:

Based on the description provided by the SEC staff, the proposed amendments would appear to have both positive and negative potential consequences for non-U.S. companies:

– On the positive side, the amendments would provide an automatic exemption from SEC registration for many non-U.S. companies that do not list or publicly offer securities in the United States, so long as they publish English versions of their home country annual reports and certain other documents on their websites. The current version of the exemption requires companies to submit an application to the SEC (which many companies do not do), and to submit paper copies of their home country documents to the SEC.

– On the other hand, the amendments would for the first time make eligibility for the exemption contingent on a company meeting substantive eligibility criteria: no more than 20% of its share trading volume can take place in the U.S. over-the-counter market, and it must maintaining a listing in its primary market. The current version of the exemption is available for all non-U.S. companies that do not list or publicly offer their securities in the United States.

– Additionally, the amendments would shorten the deadline for non-U.S. reporting companies to file their annual reports on Form 20-F, to 90 days after the end of a fiscal year for larger companies and 120 days for smaller companies. This proposal is likely to solicit significant comment, particularly in Europe where the home country reporting deadline is 120 days, as well as in other countries with home country reporting deadlines that are longer than the 90-day proposal.

The text of the proposed amendments is not yet publicly available, but should be published for public comment shortly. Once this occurs, it should be possible to assess more definitively the potential practical consequences of the amendments.

Impersonations on Earnings Calls

I found this WSJ article on Saturday fascinating about how someone has gained entry into a number of earnings calls recently to ask questions by impersonating well-known analysts. I caught up with Joe Herrick to ask him how – and why – he has done these impersonations in this podcast.

– Broc Romanek