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FAR > SEC Reporting > Flashcards

SEC Reporting Flashcards

1
Q

What are some of the less obvious purposes of the SEC?

A

Regulation of public utility holding companies

Bankruptcy protection

Overseeing proxy solicitations

Overseeing tender offers

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2
Q

What does the SEC do regarding proxy solicitations?

A

Information to solicit stockholder votes must be filed with the SEC and approved

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3
Q

What does the SEC do regarding tender offers?

A

Anyone wishing to buy >5% of a company’s stock (by direct purchase or tender offer) must disclose certain information

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4
Q

What is the Securities Act of 1933?

A

“Truth in securities” law

Issuers of securities in interstate commerce must file with the SEC – depended on “interstate commerce” clause of Constitution

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5
Q

What is the Securities Exchange Act of 1934?

A

Companies listed on exchanges have to file various reports with the SEC (also various companies who trade on OTC markets)

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6
Q

What is the Public Utility Holding Company Act of 1935?

A

SEC regulates gas and electric public-utility holding companies

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7
Q

What is the Trust Indenture Act of 1939?

A

Requires debt issuers to include certain protections in trust indentures

Also requires trustees for the debt issuers to avoid conflicts of interest

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8
Q

What is the Investment Company Act of 1940?

A

Makes regulatory framework for investment companies

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9
Q

What is the Investment Advisers Act of 1940?

A

Requires all investment advisers to register with SEC and regulates their activity

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10
Q

What is Chapter 11 of the Bankruptcy Code?

A

Permits SEC to participate in cases where bankrupt companies “reorganize” to get back in business

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11
Q

Who composes the SEC?

A

5 people, each appointed by the President (with Senate’s consent) for 5-year terms, one term ending each year

No more than 3 members can belong to same political party

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12
Q

What are the seven offices of the SEC?

A
  • Office of General Counsel
  • Office of Compliance, Inspections, and Examinations
  • Office of International Affairs
  • Office of Investor Education and Advocacy
  • Office of Economic Analysis
  • Office of Chief Accountant
  • Division of Corporation Finance
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13
Q

What is done by the Office of General Counsel?

A

It acts as the SEC’s “lawyer” before federal courts and provides legal advice

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14
Q

What is done by the Office of Economic Analysis?

A

Helps the SEC to estimate the economic benefits and costs of its rules

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15
Q

What is done by the Division of Corporation Finance?

A

It reviews documents filed by public companies

Provides interpretations of 1933, 1934, and 1939 Acts and recommends rules for them

Monitors the FASB (with help of Office of Chief Accountant)

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16
Q

What is pre-clearing?

A

If a company is unsure of how to deal with an accounting question, they can “pre-clear” the question by taking it to the SEC in advance

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17
Q

What is Regulation S-X?

A

Main accounting regulation of the SEC

Governs annual reports, requires stockholders’ report to have three-year comparative financials

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18
Q

What is Regulation S-K?

A

Details what public companies have to file with the SEC

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19
Q

What are Financial Reporting Releases (FRRs)?

A

Name is self-evident

SEC began issuing them in 1982, placed in Codification of Financial Reporting Policies (FRP), which is updated with new FRRs

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20
Q

What are Accounting and Auditing Enforcement Releases (AAERs)?

A

They list enforcement actions involving accountants

AAER 1 has a topical index for enforcement topics and a listing of related ASRs (Accounting Series Releases)

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21
Q

What are Staff Accounting Bulletins (SABs)?

A

Distribute interpretations from the Division of Corporation Finance and the Office of Chief Accountant

Not official rules or interpretations of the SEC

22
Q

What is Regulation S-B?

A

Gives disclosure requirements for “small business issuer” filings

23
Q

How does a business qualify as a small business issuer?

A

Revenues under $25,000,000

U.S. or Canadian issuer

Not an investment company or asset-backed issuer

If a subsidiary, the parent is also a small business issuer

24
Q

What are the three categories of companies required to file with the SEC?

A

(1) companies whose stock is traded on a national stock exchange
(2) companies with assets over $10 million and 500 or more shareholders
(3) companies that have sold shares to the public

That is, the SEC regulates public companies and big companies

25
Q

What are the relevant documents that the SEC may require to be disclosed?

A
  • registration statements for new securities
  • proxy materials to shareholders before an annual meeting
  • annual reports to shareholders
  • annual and quarterly filings (10-K and 10-Q)
  • tender offer documents
  • filings for mergers and acquisitions
26
Q

What are the four general things required in SEC registration forms?

A
  • description of company
  • description of security
  • info on company management
  • financial statements certified by independent accountants
27
Q

What offerings do not need to be registered?

A
  • private offerings to a limited # of investors
  • small offerings
  • intrastate offerings
  • municipal, state, and federal securities

Intention is to help capital growth for smaller companies

28
Q

With whom does the responsibility lie for accuracy and completeness in registration statements?

A

Management

29
Q

What does the SEC do if important information is lacking in a registration statement?

A

First requires correction with an amendment

Then uses “stop-order” or “refusal-order” powers to hinder registration statements and prevent (further) securities sales

30
Q

What is a no-action letter?

A

If an entity asks for guidance on some legal issue from the SEC staff, the staff can write a letter saying that it would recommend the SEC to take no action if the entity does the proposed action – hence “no action letter”

31
Q

What is the safe harbor rule?

A

Protects companies from incorrect projections of information as long as it was done in good faith

32
Q

Is the annual report the same as the annual report on Form 10-K?

A

No

The first is the annual report to shareholders, a general “state of the company” report, while the second is an overview of the company’s financial condition on Form 10-K

33
Q

What does Form 10-K include?

A

More detailed info than the annual report

Must be provided if shareholders request a copy

34
Q

What is included in Part I of Form 10-K?

A

Describes business, properties, litigation, security ownership of owners

35
Q

What is included in Part II of Form 10-K?

A

Market info for common stock, MD&A, and financial statements

36
Q

What is included in Part III of Form 10-K?

A

Covers directors, officers, and management

37
Q

What is included in Part IV of Form 10-K?

A

Shows exhibits, schedules, and Form 8-K reports (emergency filings)

38
Q

When must companies file Form 10-K?

A

Large accelerated filers – within 60 days after fiscal year-end

Accelerated filers – within 75 days after fiscal year-end

Nonaccelerated filers – within 90 days after fiscal year-end

39
Q

How do you determine what kind of filer a company is for Form 10-K?

A

Large accelerated filers – have avg. annual cash flow of $700 million or more

Accelerated filers – have avg. annual cash flow of $75 million or more

40
Q

What is Form 10-Q?

A

Quarterly report – must be provided for first three quarters

Includes unaudited financial statements

41
Q

When must companies file Form 10-Q?

A

Large accelerated filers and accelerated filers – within 40 days of quarter-end

Nonaccelerated filers – within 45 days

42
Q

What is Form 8-K?

A

Announces major events for shareholders (e.g. change in control of company)

Companies have four business days to file 8-K following event

43
Q

What are triggering events for Form 8-K?

A

Bankruptcy, acquisition or disposition of assets, asset impairment, changes in company’s accountant, departure of director(s) or officer(s), etc.

44
Q

What is Form 3?

A

Filed by corporate insiders – officers, directors, and beneficial owners (>10% stock owners) to state their beneficial ownership when first obtained

45
Q

What is Form 4?

A

For a change in beneficial ownership

Must be filed within 2 business days

46
Q

What is Form 5?

A

Filed by insiders to summarize insider transactions during the year – can report things which should have been in earlier Form 4s, or things which were allowed to be deferred

Filed annually, within 45 days of year-end

47
Q

What is Form D?

A

Companies raising less than $1 million do not need to register with the SEC, but do need to provide info about their business and their stock in Form D

Part of Regulation D

48
Q

What is the Basic Information Package (BIP)?

A

Financial info in SEC filings – usually in 10-K and annual report

49
Q

What is the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system?

A

Allows for electronic filings

50
Q

What does Regulation S-T include?

A

Rules for electronic filings, which must be done rather than hard paper (except for dire circumstances)

Also contains a safe harbor against errors from electronic filing (Rule 103)

FAR (26 decks)

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