October 24, 2012
The Day the Earth Shook: Google’s Premature Earnings Release
Who would have thunk that the process by which companies Edgarize and file their documents with the SEC would make headline news? But here’s what the mass media ran on Friday:
– WSJ’s ‘Human Error’ Rattles Markets With Early Release” featuring quotes from yours truly
– NY Times’ “An SEC Filer’s Nightmare: Making It Public Too Soon”
– Reuters’ “Google results miss; shares dive after premature report”
– DealBook’s “Google’s Earnings Incident Shines Light on a Stealth Industry”
Some of these articles are better than others – and there were others written that were not worth linking to. Personally, I don’t think bringing the process in-house will necessarily reduce the risk of human error. In that case, you are taking the process away from someone who files documents with the SEC all day long on a daily basis – and giving it to someone who might be doing it just a few times per quarter. That is safer? I think the upshot of this incident is that it’s amazing this type of error doesn’t happen more often. Note it happens several times per year, just never this highly publicized.
Financial printers haven’t gotten this much press since the release of the “The Financial Printer Diaries” (a new installment coming soon).
Can a Financial Printer Be Liable for Filing Your Document Early?
One paragraph in this NY Times article states:
It is not clear how much liability R. R. Donnelley might bear for any losses Google incurred because of the early release of the report. Some have suggested that it will not be much because the earnings reported were accurate. But James Plumb, a longtime filing agent in Massachusetts, said he knew of at least one case in which an agent had to pay for its error, though it was two decades ago. “Could you get sued? Sure,” he said. “The way I look at it, yes, if I make a mistake, I’m responsible.”
My personal take is that your filing agent isn’t liable if it accidentally jumps the gun and files your document before you wished. Particularly if the agent was smart enough to say so in it’s contract when it was hired…
Transcript: “Evolution of M&A Executive Pay Arrangements”
We have posted the transcript for the recent DealLawyers.com webcast: “Evolution of M&A Executive Pay Arrangements.”
– Broc Romanek