The U.S government enables investors to get a clear view of a company's history and progress, and a glimpse of its future, through a set of required filings. These filings are registration statements, formal and periodic reports and other forms that are provided to the U.S. Securities and Exchange Commission (SEC).

The SEC is a regulatory watchdog, which was created in the 1930s to help stop stock manipulation and fraud. It collects documents detailing the financial and operational health of domestic and foreign companies that have stock owned and traded by the public.

The SEC checks the quality of information provided in those forms and makes sure the information meets certain requirements. Many investors take a look at these filings as well and often select a particular form over another. They study the forms for the clues they may offer, a quick analysis of the company's performance, or for a more comprehensive description of its activities. Let's take a look at the SEC filings available to investors and what they can tell you about a company.

Registration Statements
Registration statements provide investors with an understanding of the securities offered and the profitability of the company. All companies, foreign and domestic, must file these statements or qualify for an exemption. The statements consist of two parts:


  1. Prospectus - A legal document that charges the issuer of the securities to provide details of the investment offered, how the business operates, its history, management, financial condition and insight into any risk. The financial forms included in the prospectus, such as an income statement, must be audited by an independent certified public accountant.
  2. Additional information - In addition to the prospectus, the company may provide any relevant additional information, such as recent sales of unregistered securities.
10-K Report
The 10-K provides investors with a comprehensive analysis of the company. It's similar to a prospectus and contains more information than an annual report. For instance, the financial statements are more detailed. Companies have to submit this lengthy annual filing within 90 days of the end of their fiscal year.


The 10-K is comprised of several parts:

10-Q Report
A truncated version of the 10-K is the 10-Q. The 10-Q is provided within 45 days of the end of each of the first three quarters of the company's fiscal year. It details the company's latest developments and provides a preview of the direction it plans to take. Major differences from the 10-K include unaudited financial statements and less detailed reports.


8-K Report
Major developments that investors should know about are described in the 10-K or 10-Q, but if those developments don't make the two filings in time, they are presented in the 8-K. This unscheduled document addresses specific events and provides further detail and exhibits, such as data tables and press releases.


Events that lead to the filing of the 8-K include a bankruptcy or receivership, material impairments, completion of acquisition or disposition of assets, departures or appointments of executives and other events of importance to the investor.


Proxy Statement
In the proxy statement, investors can view management's salaries, any conflicts of interest that might exist and other perks received. It's presented prior to the shareholder meeting and must be filed with the SEC before soliciting a shareholder vote on the election of directors and approval of other corporate actions.


Forms 3, 4 and 5
In Forms 3, 4 and 5, investors watch how ownership and purchases are shifted by the company's officers and directors.


  • Form 3, the initial filing, tells the ownership amounts.
  • Form 4 identifies the changes in ownership.
  • Form 5 is an annual summary of Form 4 and includes any information that should have been reported.
Schedule 13D
The Schedule 13D form not only reveals who owns most of the company's shares, but also introduces the owner (or owners) to investors and provides contact information. It's filed within 10 days of any entity acquiring 5% or more of any class of a company's securities. It provides the following information:


  • Background information on the owner, including any criminal misbehavior, and the type of relationship this owner has with the company
  • An explanation of why the transaction is taking place
  • The type and class of the security
  • Where the money is coming from for the purchase
Form 144
With Form 144, investors get clues to a corporate insider's pattern of selling securities and pressure to sell. It's a notice of the intent to sell restricted stock, typically acquired by corporate insiders or affiliates in a transaction not involving a public offering. The stock is restricted because it must meet certain conditions before becoming transferable. The transaction, or at least part of it, is made within 90 days of filing. Form 144 is required when the amount sold during any three-month period exceeds certain sales thresholds.


Foreign Investments
U.S. investors' participation in cross-border securities has eased as result of a 2008 rule change. The SEC recognized global and technological changes by eliminating the need for foreign companies without SEC-registered securities to submit paper disclosures and instead allowing investors to access them in English on the internet. Investors will also receive more timely annual reports because the companies will have to submit them to the SEC two months earlier.


Reading the SEC Forms
Understanding the information submitted by companies involves taking some extra steps to read between the lines. Review SEC documents together as opposed to separately to get a better view of the overall picture, especially with the financial forms. Financial ratios are often used in the statements to identify the company's short- and long-term financial strength.


Red flags are often revealed in a company's footnotes. Red flags include:

  • Paying attention when the company discredits short sellers
  • Very confusing sections in a 10-K or 10-Q
  • Sudden one-time or special charges
The Bottom Line
Ultimately, the SEC wants investors to know the facts, so that they can make informed decisions about when they buy, sell or hold a company's securities. Obtaining the available material and interpreting it correctly can provide any investor with valuable guidance when making investment decisions.




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