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Disclosure

SEC Disclosure

Companies that are publicly owned are subject to detailed disclosure laws about their financial condition, operating results, management compensation, and other areas of their business. The level of disclosure does fluctuate with the exchange, disclosure being one of the factors that became the Sarbanes Oxley Act passed by congress July 25 2002 everyone discussed during scams such as Enron, where disclosure was misrepresented. Disclosure may be linked to large publicly traded companies, but also the Over The Counter Bulletin Board and voluntarily SEC reporting companies whom are public by nature and definition. Generally, smaller issuers become reporting due to a desire to raise capital, making shares of a company available to the public via a registration. (See Build An OTC Listing For Under $50,000 Blog) Disclosure laws and regulations are monitored and enforced by the U.S. Securities and Exchange Commission (SEC). Since 1934, the SEC has required disclosure in forms and documents. In 1984, EDGAR began collecting electronic documents to help investors get information. The SEC‘s new system requires data disclosure — the next step to improve how investors find and use information.

All of the SEC’s disclosure requirements have statutory authority, and these rules and regulations are subject to changes and amendments over time, such as the Sarbanes Oxley Act, one of the more significant changes in the 1934 Act. Other example of changes have been in definitions of Regulation Fair Disclosure as it applies to new media such as websites, blogs, twitter, facebook, etc, and the newly developing global pressures to increase the climate-risk disclosure. For example as recent as November 23^rd 2009,

“This is calling for real transparency on material risks that have a profound impact on share value of companies,” said Mindy Lubber, president of Ceres, a group of investors and environmentalists that organized the petition to the SEC.

“These are now real on-balance sheet risks. They are material. They ought to be disclosed,” she said.

The group wants the SEC to assure that emissions data and associated risks, opportunities and management strategies are analyzed by companies and disclosed in SEC filings.

Under SEC regulations, companies are required to disclose material information or information that an investor should posses in order to decide whether to buy a company’s stock.

Companies disclose material risks such as potential regulations and fluctuations in currency and commodities. But they do not routinely include climate-related risks in their filings nor is the information consistent.

Some changes are made as the result of new accounting rules adopted by the principal rule-making bodies of the accounting profession. In other cases, changes in accounting rules follow changes in SEC guidelines. For example, in 2000 the SEC imposed new regulations to eliminate the practice of “selective disclosure,” in which business leaders provided earnings estimates and other vital information to analysts and large institutional shareholders before informing smaller investors and the rest of the general public. The regulation forces companies to make market-sensitive information available to all parties at the same time.

In any event, SEC regulations have a direct impact on what are known as generally accepted accounting principles (GAAP). The rule-making bodies of the accounting profession, most notably the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA), must rely on “acceptance” of their statements. While FASB and AICPA statements do not have the force of law, they are widely accepted in the accounting profession and in some cases influence subsequent SEC rules on disclosure.

You can search information collected by the SEC several ways: