SEC Making EDGAR Files Interactive on Internet

XBRL Is the New Language for Speedy Reading of Company Financials

Sep 4, 2009

Congress created the US Securities and Exchange Commission (SEC) in 1934, in response to the dangers to America of excessive malfeasance and recklessness on Wall Street.

The runaway madness there in the Roaring Twenties had led to the Stock Market Crash of 1929.

The mission of the regulatory commission is to ensure investors get a fair shake; maintain fair, orderly, and efficient markets; and facilitate capital formation. Although there had been several financial crises in the US before then, a federal role in closely regulating Wall Street affairs was never seriously considered, until the 1929 Crash and the misery-laden depression that followed.

Era of Government Intervention Had Roots in 1930s

It was a horrific event. During the financial apocalypse that began in the twilight of the Roaring Twenties, half of the $50 billion in new securities issued became worthless. Eddie Cantor’s popular recording of 1928, “Makin” Whoopee,” could have been the theme song for most of the rambunctious decade; but only a funeral dirge could be heard by the end of 1929.

Since creation of the SEC and passage of companion securities laws, it seems government’s benign neglect of financial storms will never again be tolerated. The US Treasury and Federal Reserve, in conjunction with other financial regulators, mounted a mammoth response to the meltdown of 2007-2008, evidence of the new messianic mood in Washington.

SEC Installing Interactive Financial Reporting in Its EDGAR Program

In an effort to modernize how it displays information required of registered companies, the SEC has commenced a new look called “interactive financial reporting.” Presently, many large publicly-trading companies are reporting their affairs in the new format.

Ex-Chairman Christopher Cox and his successor Chairman Mary Schapiro have both advanced the transition conceptually and technologically. Eventually most large companies will be included.

Technically, the new, faster format will be incorporated into EDGAR, the commission’s original HTML program created in 1986, to present company reports on the Internet.

In the words of Corey Booth, SEC Chief Information Officer, "Interactive data represents the logical next step in the evolution of company disclosures, just as HTML and Internet access were the next logical step a decade ago. And like a decade ago, this move will usher in a quantum leap in helping companies explain their business to investors."

New Language Called XBRL Supports Interactivity on Internet

Interactive Financial Reporting introduces a new computer language – XBRL or Extensible Business Reporting Language - to global finance, one in which it becomes necessary for companies to “flag” essential items in key financial reports filed with the SEC.

Investors can read filings by “clicking” on hot buttons like the following ones:

SEC Will Continue to Regulate Adequacy – Not Accuracy – of Information

What once was tedious searching for information targets in the old formula is becoming as fast as using links on the Internet. In many respects, company searches using the SEC’s EDGAR program will be like trolling for investment ideas on “Yahoo! Finance,” “Google Finance,” or “Market Watch.”

However, there is a major distinction: the SEC is objective, almost clinical by comparison – just the facts, presented transparently.

A word of caution is in order here. The new jazzed-up way of presenting company filings does not mean their veracity is any better. The SEC passes judgment on the adequacy of the material presented, not the accuracy.

Monitoring Company Information Is SEC’s Closest Interface with Public

The bottom line is that filings are becoming much easier for investors to read. Before 1986, they had to look up details by thumbing through 100 or so pages of a 10K or annual report. And before that, they had to find a way to Xerox copies. Much like Yellow Page commercials ballyhooed a few years back, interactive filing “lets the investor’s fingers do the walking.”

While requiring and displaying company filings is but one of the SEC’s four divisions – namely, Corporation Finance, Enforcement, Investment Management and Trading and Markets - it is the one that directly interfaces with more investors. It is the SEC’s showcase, and investors should be pleased with the new show.

The copyright of the article SEC Making EDGAR Files Interactive on Internet in Shares/Stocks is owned by Howard Bryan Bonham. Permission to republish SEC Making EDGAR Files Interactive on Internet in print or online must be granted by the author in writing.