Monthly Archives: December 2016

Top 10 IR and SEC (regulatory) blogs of the 2016

HAPPY NEW YEAR!!  

First things first. Thank you for reading Building Shareholder Confidence throughout 2016. Our readership continues to accelerate each year. Judging by our numbers, the tone (informative & “breezy”) and the topic-range fits the niches’ appetite.

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I’d like to think that informative & “breezy” aligns with our 2016 brand mission in regard to our products and services: intelligent value – the right scale for your needs.  

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The 2016 Top 10:.

  • A review of Section 16 filing responsibilities READ HERE
  • What is required in an SEC 10-K file READ HERE
  • You don’t want the SEC to be your XBRL proofreader READ HERE
  • IR Room Fundamentals: Are investor relations websites required by the SEC? READ HERE
  • 9 questions answered about holding your first earnings conference call READ HERE
  • The 5 Stages of M&A looks at both sides of the deal READ HERE
  • What Investors Must Learn Before Buying Mini-IPO Stocks: A two-part webinar on Dec 13 READ HERE
  • Investor relations and social medi(um) to luke warm READ HERE
  • GE’s “Integrated Summary Report” is a superb example of both IR transparency and a really, really big IR budget READ HERE
  • New Report Compares How Wall Street vs. Main Street Investors Research Stock Opportunities READ HERE

One caveat… there should be eleven donuts in that box. Our weekly IPO and Transactions is by-and-away the most popular content; viewed by thousands of securities lawyers and corporate executives.  The top ten above are the most prose-based posts.

Thank you again,
~ Bradley H. Smith

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REPORT: 66% of institutional investors listen to earnings calls before they consider a position

Two weeks ago, we learned about the listening practices of current shareholders in regard to earnings calls. But what about potential (hopeful) investors? Does the verbal tenor of your CEO matter to them? Do investors go beyond the flat numbers and listen for the cadence of confidence?

As you can see below, over two-thirds of institutional investors tune in before they take a position.

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There’s no question, webcasting your earnings call is important. True, regulatory-wise you don’t “have” to webcast. However, it’s essential content for investors… a point small-cap companies need to heed.

Click here to request the complete Shareholder Confidence 365 Study.


About the study

Initially launched in 2012, the Shareholder Confidence 365 Study is an ongoing survey targeted at two key constituents with whom public companies communicate: institutional investors and individual investors. It was the first study of its kind — directly asking investors how they consume investor relations content. In 2014, we published an updated study.

For this 2016 iteration, we have segmented and compared the results between institutional investors and individual investors. To date. we have accumulated over 6,870 responses from a pool of 16,000 buy-side analysts & portfolio managers and from over 15,000 long-term holding retail investors. There are 29 questions.

Questions include:

  • How often do you visit IR websites?
  • Why do you visit IR websites?
  • Do you use Twitter for stock research?
  • Would a CEO video instill trust?
  • Do you use earnings estimates?

The inbound response ratio is 1:3, Wall Street to Main Street. All of the data is unedited, except for any typos within the comments and the exclusion of inappropriate comments.

 

 

Section 16 filings are easy to DIY (a review of insider Forms 3, 4 and 5)

Prior the new year, we hold re-cap meetings with many clients. One of the most frequent topic is regarding Section 16 filings. 

There are three types of corporate insiders for purposes of Section 16: officers, directors and greater than 10% shareholders. We refer to these three types of corporate insiders collectively as Section 16 insiders.

The company officers subject to Section 16 are:

  • The president
  • The principal financial officer
  • The principal accounting officer (or, if there is no such accounting officer, the controller)
  • Any vice president in charge of a principal business unit, division or function (such as sales, administration or finance)
  • Any other officer who performs a significant policy-making function
  • Any other person who performs similar policy-making functions for the company

Section 16 insiders must file reports with the SEC disclosing their beneficial ownership of and transactions in a public company’s equity securities. The three forms on which Section 16 insiders must make these reports – Forms 3, 4 and 5.

Our DIY portal is very easy to learn and use.

Our DIY portal is very easy to learn and use.

Form 3: Initial Statement of Beneficial Ownership of Securities.

Section 16 insiders must file an initial report on Form 3 with the SEC within 10 days of becoming subject to Section 16. For a person who is elected an officer or director of a company that already has a class of equity securities registered under Section 12, the 10-day period begins when the person becomes an officer or director. Section 929R of the Dodd-Frank Act amended Section 16 of the Exchange Act to authorize the SEC to establish by rule a shorter time period within which a new Section 16 insider would be required to file a Form 3. As this handbook goes to publication, the SEC has not proposed any rule change that would shorten the current 10-day reporting window.

Persons who are officers, directors or greater than 10% shareholders of a company that registers a class of equity securities (and did not previously have a class of registered equity securities) are required to file a Form 3 on the effective date of the company’s registration statement. In any case, the Form 3 must disclose all equity securities of the company that the Section 16 insider beneficially owned on the date the person became subject to Section 16. Even if a director or officer owns no securities on the date he or she becomes a Section 16 insider, he or she is still required to file a Form 3.

In certain circumstances, the Section 16 insider should file an initial Form 3 earlier than is required. As discussed below, a Section 16 insider generally must report changes in his or her beneficial ownership of the company’s equity securities on Form 4 within two business days. If the Section 16 insider’s beneficial ownership of the company’s equity securities changes during the 10-day period before he or she must file a Form 3 (e.g., where a new director is granted restricted stock upon his or her appointment), the SEC recommends that the Section 16 insider file an initial Form 3 concurrently with a Form 4 reporting the change, notwithstanding that the rules permit the Form 3 to be filed at a later date.

Form 4: Statement of Changes in Beneficial Ownership.

After filing a Form 3, a Section 16 insider must report any subsequent change in beneficial ownership of the company’s equity securities by filing a Form 4 within two business days, unless the transaction is exempt from reporting or is eligible for deferred reporting.

Transactions that must be reported on Form 4 include, but are not limited to:

  • Non-exempt purchases and sales of equity securities held in the Section 16 insider’s name
  • Transactions involving equity securities held by others but that the Section 16 insider is deemed to beneficially own (i.e., equity securities in which the Section 16 insider has a “pecuniary interest,” as discussed above)
  • Exercises or conversions of derivative securities
  • Acquisitions and grants of any of the company’s equity awards (including options), even if not presently exercisable
  • Entry into various other derivative transactions, including equity swaps and similar hedges
  • Awards to non-employee directors made pursuant to equity incentive plans
  • Equity securities received from a non-exempt dividend reinvestment
  • Dispositions of equity securities to the company (e.g., the company’s retention of shares to pay the Section 16 insider’s tax withholding obligation upon the exercise of stock options)

Following an IPO, the directors and officers of the company before it became public may be required to report certain pre-IPO transactions in the company’s equity securities. Such a filing obligation may arise if the director or officer engages in a reportable transaction less than six months after the date that the company’s registration statement becomes effective. In such event, the director or officer is required to “look back” for a period of six months from the date of the reportable transaction and report on its first required Form 4 any transactions in the company’s equity securities that occurred during that period. Persons who are Section 16 insiders by virtue of being greater than 10% shareholders are not subject to six-month look-back periods. Likewise, a covered officer or director may be required to report transactions that occur after the company ceases to be a public company (i.e., because of termination of its Section 12 registration and reporting obligations). An otherwise reportable transaction occurring after the company is no longer public will be reportable on Form 4 if (and only if) the transaction is not exempt from Section 16(b) and occurs within six months of an “opposite way” transaction that was also subject to Section 16(b) and occurred while the company was public. For purposes of this rule, an acquisition and subsequent disposition (or vice versa) are considered “opposite way” transactions.

A covered officer or director may also be required to report transactions that occur after the termination of that person’s officer or director status. An otherwise reportable transaction occurring after the cessation of a person’s officer or director status will be reportable on Form 4 in the same circumstance as a transaction that occurs after a company ceases to be public (i.e., if (and only if) the transaction is not exempt from Section 16(b) and occurs within six months of an “opposite way” transaction that was also subject to Section 16(b) and occurred while the person was still a director or officer). A person who is a Section 16 insider solely by virtue of being a greater than 10% shareholder ceases to be subject to Section 16 reporting requirements once the person ceases to be a greater than 10% shareholder.

The SEC has adopted a variety of exemptions from the reporting requirements of Section 16(a) based upon the nature of the transaction. These exemptions apply to the following types of transactions:

  • Any increase or decrease in the number of equity securities held as a result of a stock split or a stock dividend applying equally to all securities of a class
  • The acquisition of rights, such as shareholder or preemptive rights, pursuant to a pro rata grant to all holders of the same class of registered equity securities
  • Transactions that effect only a change in the form of beneficial ownership without changing the person’s pecuniary interest in the subject equity securities (note, however, that this exemption does not cover the exercise and conversion of derivative securities or deposits to and withdrawals from voting trusts)
  • Certain transactions pursuant to tax-conditioned employee benefit plans
  • Acquisitions made pursuant to a dividend reinvestment plan, provided that the plan meets certain requirements specified in Rule 16a-11 under the Exchange Act
  • Acquisitions or dispositions of an equity security pursuant to a domestic relations order
  • The disposition or closing of a long derivative security position as a result of cancellation or expiration, provided that the Section 16 insider receives no value in exchange for the expiration or cancellation

In addition to the above exemptions, the SEC has adopted a number of exemptions based upon the status of the Section 16 insider. Depending on the circumstances, certain of these exemptions may be available to executors and other fiduciaries, odd-lot dealers, market makers, arbitrageurs, underwriters and other persons who participate in a distribution of the company’s equity securities.

Form 5: Annual Statement of Changes in Beneficial Ownership

A Section 16 insider must report certain transactions on a year-end report on Form 5within 45 days after the end of the company’s fiscal year. Some transactions, most notably gifts, are not required to be reported on Form 4, but must be reported on Form 5. A Section 16 insider is required to file a year-end Form 5 to report any transaction that the person should have reported during the fiscal year on Form 3 or Form 4, but did not. Transactions reportable on Form 5 are limited to the following:

  • Certain transactions occurring during the most recent fiscal year that are exempt from short-swing profit liability under Section 16(b), such as bona fide gifts of the company’s equity securities, but excluding exempt transactions which involve the company
  • Qualifying de minimis acquisitions of the company’s equity securities
  • Transactions that the Section 16 insider should have reported on Form 3 or Form 4 during the most recent fiscal year, but did not

Disclosure of Reporting Delinquencies; Compliance Programs. Item 405 of Regulation S-K requires a company to disclose in its annual proxy statement and annual report on Form 10-K certain information regarding the failure of any Section 16 insider to timely file a Section 16 report during the previous fiscal year or prior fiscal years. For each such delinquent Section 16 insider, the company is required to set forth the number of late reports, the number of transactions that were not reported on a timely basis, and any known failure to file a required Form 3, 4 or 5. Although there is no official sanction placed upon the company as a result of the filing delinquencies of its insiders, such disclosures are potentially embarrassing.

Accordingly, every public company should develop and implement a strong compliance program to ensure that its directors and officers timely file all required reports. In addition to minimizing the potential for embarrassing disclosures of the type described above, a strong compliance program will assist the company’s directors and officers in avoiding both short-swing liability under Section 16(b) and SEC enforcement actions to enforce Section 16(a)’s reporting requirements.

Filing Procedures and Website Posting.

All Section 16(a) reports must be filed with the SEC electronically using the SEC’s EDGAR filing system, and all reports become publicly available immediately upon filing.

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2017 SEC filing calendar – don’t miss a deadline or holiday closing

This is the shortest post you’ll ever read hereClick here to download our 2017 SEC filing calendar.

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*Pushpin not actual size

IPOs and Transactions: Dec 19 – 23

There were 76 transactions filed with the SEC last week.

Congratulations to all of the corporations and law firms that selected our transactions services last week including Function(X) Inc. w/ Reed Smith LLP and Sichenzia Ross Ference Kesner LLP, Bio-path Holdins Inc w/ Winstead PC, Five Oaks Investment Corp w/ Kaye Scholer LLP, Golub Capital BDC Inc. w/ Dechert LLP, Lion Biotechnologies Inc. w/ TroyGould PC and Seacoast Banking Corp of Florida w/ Foley & Lardner LLP and Cadwalader, Wickersham & Taft LLP.

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We appreciate that they selected to work with us and we’re pleased that they found us to be the intelligent value.

Law firm / advisor Registrant Symbol Form Industry
Akerman LLP CATALYST PHARMACEUTICALS INC CPRX S-3 Pharma preparations
Andrews Kurth Kenyon LLP JAGGED PEAK ENERGY INC S-1 Crude petroleum & natural gas
Bart and Associates, LLC NEW AGE BEVERAGES CORP ABRW S-1 Malt beverages
Bozki, Inc. BOZKI INC ~ 10-12G ~
Breakwater Law Group, LLP NTN BUZZTIME INC NTN S-3 Television broadcasting stations
Bryan Cave LLP GENERAL MOLY INC GMO S-3 Metal mining
Cadwalader, Wickersham & Taft LLP SEACOAST BANKING CORP OF FLORIDA SBCF S-4 State commercial banks
Cleary Gottlieb Steen & Hamilton LLP WESTERN DIGITAL CORP WDC S-4 Computer storage devices
Cooley LLP HELIUS MEDICAL TECHNOLOGIES INC HSM S-3 Electromedical & electro- therapeutic apparatus
Covington & Burling LLP OXFORD IMMUNOTEC GLOBAL PLC OXFD S-3 In vitro & in vivo diagnostic substances
Cravath, Swaine & Moore LLP SCHNEIDER NATIONAL INC ~ S-1 ~
David Lubin & Associates, PLLC COOL TECHNOLOGIES INC WARM S-1 Educational services
Davis Graham & Stubbs LLP PDC ENERGY INC PDCE S-4 Crude petroleum & natural gas
Davis Polk & Wardwell COBALT INTERNATIONAL ENERGY INC CIE S-3 Crude petroleum & natural gas
Day Pitney LLP PEAPACK GLADSTONE FINANCIAL CORP PGC S-3 Commercial banks
Dechert LLP GOLUB CAPITAL BDC INC GBDC N-2 Investment advice
Dentons US LLP MYND ANALYTICS INC CNSO S-1 Services – misc. health & allied services
DLA Piper LLP ADOMANI INC 1-A Motor vehicle parts & accessories
DLA Piper LLP COTTONWOOD COMMUNITIES INC ~ S-11 ~
Dorsey & Whitney LLP ARBUTUS BIOPHARMA CORP ABUS S-3 Pharma preparations
Drinker Biddle & Reath LLP AEOLUS PHARMACEUTICALS INC IC9B S-1 Pharma preparations
Ellenoff Grossman & Schole LLP FINTECH ACQUISITION CORP. II S-1 Blank checks
Farris, Vaughan, Wills & Murphy LLP ARBUTUS BIOPHARMA CORP ABUS S-3 Pharma preparations
Fenwick & West LLP AMYRIS INC AMRS S-3 Industrial organic chemicals
Fenwick & West LLP KALVISTA PHARMACEUTICALS INC CBYL S-3 Pharma preparations
Foley & Lardner LLP SEACOAST BANKING CORP OF FLORIDA SBCF S-4 State commercial banks
Gennari Aronson, LLP TECOGEN INC TGEN S-4 Air-conditioning & warm air heating equipment & commercial & industrial refrigerators
Goodwin Procter LLP EMAGIN CORP EMAN S-3 Semiconductors & related devices
Hogan Lovells US LLP PORTO HOLDCO B.V. ~ S-4 ~
Hunton & Williams LLP CHATHAM LODGING TRUST CLDT S-3 REIT
Hunton & Williams LLP CHATHAM LODGING TRUST CLDT S-3 REIT
Incorp Services, Inc. KALMIN CORP S-1 Plastics, foil & coated paper bags
Jones Day HORIZON GLOBAL CORP HZN S-3 Motor vehicle parts & accessories
K&L Gates LLP EATON VANCE HIGH INCOME 2022 TARGET TERM TRUST ~ N-2 ~
Kaye Cooper Kay & Rosenberg, LLP MIDWEST ENERGY EMISSIONS CORP MEEC S-1 Measuring & controlling devices
Kaye Scholer LLP FIVE OAKS INVESTMENT CORP OAKS S-3 REIT
Kilpatrick Townsend & Stockton LLP INVESTAR HOLDING CORP ISTR S-3 State commercial banks
Kirkland & Ellis LLP KLEOPATRA HOLDINGS 2 S.C.A. ~ S-1 ~
Kirkland & Ellis LLP REGENCY CENTERS CORP REG S-4 REIT
Latham & Watkins LLP MILACRON HOLDINGS CORP MCRN S-1 Special industry machinery
Latham & Watkins LLP SUNOCO LOGISTICS PARTNERS L.P. SXL S-4 Pipelines
Ledgewood FINTECH ACQUISITION CORP. II S-1 Blank checks
Legal & Compliance, LLC IEG HOLDINGS CORP IEGH S-1 Wholesale – motor vehicle supplies & new parts
Libertas Law Group, Inc. BARFRESH FOOD GROUP INC BRFH S-1 Services – motion picture & video tape production
Locke Lord LLP CONNECTICUT WATER SERVICE INC CTWS S-4 Water supply
Loeb & Loeb LLP IMMURON LTD ~ F-1 ~
Loeb & Loeb LLP PRESSURE BIOSCIENCES INC PBIO S-1 Laboratory analytical instruments
Lowenstein Sandler LLP CANCER GENETICS INC CGIX S-1 Medical laboratories
Lucosky Brookman LLP PRESSURE BIOSCIENCES INC PBIO S-1 Laboratory analytical instruments
Manatt, Phelps & Phillips, LLP IMPAC MORTGAGE HOLDINGS INC IMH S-3 REIT
McGuire, Craddock & Strother, P.C. RAVE RESTAURANT GROUP INC RAVE S-3 Wholesale – groceries & related products
Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C. NEUROTROPE INC NTRP S-1 Services – prepackaged software
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. ALBIREO PHARMA INC ALBO S-3 Pharma preparations
Mitchell Silberberg & Knupp LLP HELIOS & MATHESON ANALYTICS INC HMNY S-3 Misc. business services
Mitchell Silberberg & Knupp LLP NEW MEDIA TRADER INC 1-A Computer processing & data preparation
Morris, Manning & Martin, LLP COLE CREDIT PROPERTY TRUST V INC S-11 REIT
Morrison & Foerster LLP BOYD GAMING CORP BYD S-4 Amusement & recreation services
Murtha Cullina LLP CONNECTICUT WATER SERVICE INC CTWS S-4 Water supply
Nelson Mullins Riley & Scarborough LLP CAROLINA FINANCIAL CORP CARO S-3 State commercial banks
Ober, Kaler, Grimes & Shriver, PC OLD LINE BANCSHARES INC OLBK S-3 State commercial banks
Ortoli Rosenstadt LLP Q BIOMED INC ISMT S-1 Computer programming services
Paul Hastings LLP MITEK SYSTEMS INC MITK S-3 Computer peripheral equipment
Pillsbury Winthrop Shaw Pittman LLP MACOM TECHNOLOGY SOLUTIONS HOLDINGS INC MTSI S-4 Semiconductors & related devices
Reed Smith LLP FUNCTION(X) INC DDAY S-1 Computer programming services
Reed Smith LLP NEW AGE BEVERAGES CORP ABRW S-1 Malt beverages
Ropes & Gray LLP MACOM TECHNOLOGY SOLUTIONS HOLDINGS INC MTSI S-4 Semiconductors & related devices
Ropes & Gray LLP MILACRON HOLDINGS CORP MCRN S-1 Special industry machinery
Securities Counselors, Inc. MCGRAW CONGLOMERATE CORP ~ 1-A ~
Shearman & Sterling LLP AMERICAN AXLE & MANUFACTURING HOLDINGS INC S-4 Motor vehicle parts & accessories
Shearman & Sterling LLP KLEOPATRA HOLDINGS 2 S.C.A. ~ S-1 ~
Shumaker, Loop & Kendrick, LLP TAPIMMUNE INC TPIV S-3 Pharma preparations
Sichenzia Ross Ference Kesner LLP FUNCTION(X) INC DDAY S-1 Computer programming services
Sichenzia Ross Ference Kesner LLP IMMURON LTD ~ F-1 ~
Sidley Austin LLP CARE CAPITAL PROPERTIES LP CCP S-4 REIT
Sidley Austin LLP CATERPILLAR FINANCIAL SERVICES CORP S-4 Misc. business credit institutions
Sidley Austin LLP CELSION CORP CLSN S-1 Electromedical & electro- therapeutic apparatus
Sidley Austin LLP VISTRA ENERGY CORP ~ S-1 ~
Simpson Thacher & Bartlett LLP SCHNEIDER NATIONAL INC ~ S-1 ~
State Agent and Transfer Syndicate, Inc. OS SUPPORT INC ~ S-1 ~
Steven I. Weinberger, P.A. FUSION TELECOMMUNICATIONS INTERNATIONAL INC FSNN S-3 Telephone comm.
Sullivan & Worcester LLP TECOGEN INC TGEN S-4 Air-conditioning & warm air heating equipment & commercial & industrial refrigerators
Sutherland Asbill & Brennan LLP THL CREDIT LAKESHORE INC ~ 10-12G ~
TroyGould PC CYTRX CORP CYTR S-3 Biological products
TroyGould PC LION BIOTECHNOLOGIES INC LBIO S-3 Biological products
Venable LLP BRT REALTY TRUST BRT S-4 REIT
Vinson & Elkins L.L.P. EXTRACTION OIL & GAS INC XOG S-1 Crude petroleum & natural gas
Vinson & Elkins L.L.P. JAGGED PEAK ENERGY INC S-1 Crude petroleum & natural gas
Vinson & Elkins L.L.P. SUNOCO LOGISTICS PARTNERS L.P. SXL S-4 Pipelines
Wachtell, Lipton, Rosen & Katz REGENCY CENTERS CORP REG S-4 REIT
Weil, Gotshal & Manges LLP AMERICAN AXLE & MANUFACTURING HOLDINGS INC S-4 Motor vehicle parts & accessories
Weil, Gotshal & Manges LLP PORTO HOLDCO B.V. ~ S-4 ~
Weintraub Tobin Chediak Coleman Grodin, Law Corp. DIGITAL POWER CORP DPW S-3 Electronic components
White White & Van Etten PC TECOGEN INC TGEN S-4 Air-conditioning & warm air heating equipment & commercial & industrial refrigerators
Willkie Farr & Gallagher LLP VIRTUS INVESTMENT PARTNERS INC VRTS S-3 Investment advice
Wilson Sonsini Goodrich & Rosati, PC ACXIOM CORP ACXM S-3 Computer processing & data preparation
Winstead PC BIO-PATH HOLDINGS INC BPTH S-3 Retail – misc. shopping goods stores

Whether in-house, your-house or 100% virtual… click here to discover why we are the intelligent value for both traditional and confidential IPOs.

Post IPO, thousands of organizations count on us to assure regulatory compliance and target new investors. Click here and opt-in to receive this weekly summary via email.

Click here to review the week’s underwriters.

Have a great week

IPO Underwriters of the Week: Dec 19 – 23

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Congratulations to the corporations and underwriters that worked with our transaction services team. Whether in-house, your-house or 100% virtual… click here to discover why we are the intelligent value for both traditional and confidential IPOs.

Registrant Form Underwriter 1 Underwriter 2 Underwriter 3 +
NEW AGE BEVERAGES CORP S-1 Aegis Capital Corp. ~ ~
FUNCTION(X) INC S-1 Aegis Capital Corp. ~ ~
MYND ANALYTICS INC S-1 Aspire Capital Fund, LLC ~ ~
COOL TECHNOLOGIES INC S-1 Bellridge Capital, LP ~ ~
ADOMANI INC 1-A Boustead Securities LLC ~ ~
FINTECH ACQUISITION CORP. II S-1 Cantor Fitzgerald & Co. Northland Securities, Inc. ~
BIO-PATH HOLDINGS INC S-3 Cantor Fitzgerald & Co. ~ ~
JAGGED PEAK ENERGY INC S-1 Citigroup Global Markets Inc. Credit Suisse Securities LLC J.P. Morgan Securities LLC
KLEOPATRA HOLDINGS 2 S.C.A. S-1 Citigroup Global Markets Inc. Credit Suisse Securities LLC Goldman, Sachs & Co. / Merrill Lynch, Pierce, Fenner & Smith Inc. / Robert W. Baird & Co. Inc. / Jefferies LLC
OXFORD IMMUNOTEC GLOBAL PLC S-3 Cowen and Company, LLC ~ ~
IMMURON LTD F-1 Joseph Gunnar & Co., LLC ~ ~
PRESSURE BIOSCIENCES INC S-1 Joseph Gunnar & Co., LLC ~ ~
SCHNEIDER NATIONAL INC S-1 Morgan Stanley & Co. LLC UBS Securities LLC Merrill Lynch, Pierce, Fenner & Smith Inc. / Citigroup Global Markets Inc. / Credit Suisse Securities LLC / J.P. Morgan Securities LLC / Wells Fargo Securities, LLC

Post IPO, thousands of organizations count on us to assure regulatory compliance and shareholder communications.

Click here to review the week’s IPOs and active securities law firms. Click here and opt-in to receive this weekly summary via email.

Have a great week.

 

SEC closed for New Year’s Day (observed): January 2, 2017

In honor of the New Year celebration, the SEC is closed on Monday, January 2, 2017.  No files can be received. 

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Files submitted after 5:30 pm ET, Friday, December 30, 2016 will receive a filing date of Tuesday, January 3, 2017 and will be posted to the public on January 3, 2017 .As with other holiday closings, the following file types will receive a Friday, December 30, 2016 filing date if filed by 10:00 pm ET on Friday:

  • Section 16 filings (3, 3/A, 4, 4/A, 5, 5/A)
  • Filings pursuant to Rule 462(b)

For any filing with a due date of Monday, January 2, 2017, the SEC will move the due date to Tuesday, January 3, 2017.

Need a 2017 SEC filing calendar? Click here.

HAPPY NEW YEAR!

The SEC talks XBRL (part 2)

Parsing the data: While Inline XBRL reporting may allow for more streamlined filing, XBRL data has already opened the door to faster and better analytics for companies and investors alike. We discussed the latest developments with five experts – as well as with a representative of the SEC, Mike Willis, assistant director of the US Securities and Exchange Commission’s Office of Structured Disclosure, for his views on the hot-button issues surrounding XBRL.

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Vintage question > What are the biggest challenges being tackled by those filing when it comes to XBRL?

SEC > At a macro level, the biggest challenge is addressing the growing number of XBRL structured compliance requirements from regulators (e.g., taxation, statutory, registrars, financial services, securities) in countries around the world migrating from paper and unstructured electronic formats to structured digital formats. This transition from paper to structured standardized information is providing enhanced automation opportunities and thereby increasing challenges for enhancing remaining manual reporting processes and controls (e.g., quality assessments, reporting validations, disclosure best practice and risk benchmarking, etc.).

At a micro level – realizing that the judgment required for GAAP reporting is also relevant for structured reporting concepts. Professional reporting judgments are very applicable when assessing appropriate element selections; and when to/or not to create company specific extensions; and how to consistently model disclosures across time periods and/or companies in common industry groups. These are possibly new and somewhat unfamiliar skills for some reporting professionals that may work to enhance their communication capabilities well beyond the targeted compliance requirements.

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Finally, leveraging new software capabilities specifically designed to facilitate  standardized reporting processes, controls and risk assessment capabilities. Supply chain standardization of information results in a set of common economic outcomes (e.g., lower cost, accelerated frequency, improved quality, more timeliness, etc.). Visualizing these new process and control enhancements and identifying new software capabilities enabling these outcomes is a challenge for many filers as well as software vendors. For example, the taxonomy reference linkbase has been available since the initial GAAP Taxonomy was published; however, the open source Inline Viewer was the first software to provide topical search report capabilities for filers and their stakeholders.

Vintage question > What are some of the ways you think XBRL implementation and financial data gathering can be improved? What do you see as some of the possibilities for the future in the realm of structured data?

SEC > At a macro level – implementation as a standardization vehicle rather than a compliance requirement with application to earlier processes and controls earlier in the reporting supply chain. At a micro level – standardization enables a range of process and controls enhancements including:

  • Improved automation of validation and quality assessments;
  • Improved automation of benchmarking and peer assessments;
  • Simplified data collection processes from internal data stores and external sources;
  • Improved process and controls automation to reduce reporting costs;
  • Enhanced presentation options and thereby reusability and consumer personalization;
  • Improved timeliness of information for management decision analysis.

Vintage question > What are some of the main benefits and challenges involved in implementing iXBRL?

SEC > Some challenges to consider when implementing Inline XBRL include:

  • iXBRL adoption by software vendors and service providers is a required capability critical for filer implementation. Since the exemptive order was released, SEC staff has participated in XBRL US hosted webex sessions that target software vendors and service providers.
  • Filer realization of benefits provided by the iXBRL Viewer as previously outlined. Filers can find the Inline XBRL Viewer embedded within the EDGAR Previewer and the EDGAR Test filing processes.

We welcome any technical implementation questions at StructuredData@sec.gov. As for the benefits to consider when implementing iXBRL, they include:

  • iXBRL doesn’t define how the disclosure is presented (as with XBRL rendering), thereby providing filing professionals with complete control over how disclosures look in the final report.
  • Improved data quality capabilities via the Inline XBRL Viewer’s data quality filters help highlight common data quality-related topics, making them more transparent to reporting professionals.
  • Expanding the benefits of structured Inline XBRL disclosures by both filers and their stakeholders (e.g., adapting the open-source Inline XBRL Viewer to enable new features • and data).

Vintage question > For investors, what possibilities does structured data open up? How can they analyze the data made more easily available by XBRL? Is this direct tagged comparison important?

SEC > The most obvious possibility is more timely access to exponentially more data than has been traditionally available from data vendors. Enhanced access to detailed disclosures commonly found within the notes to the financial statements is one area that may be particularly useful to investors and analysts.

Another possibility for investors is that structured data enables faster and better analysis. Investors can not only more cost effectively assess more information but may also increase the range of companies they follow. Greater efficiency with higher-quality investment decisions is a win for all investors, particularly as it provides better opportunities to assess small-cap companies by making it easier and less costly to access and analyze their disclosures. Lowering data access costs while increasing data access provides highly relevant possibilities for all investors, particularly those interested in small-cap companies.

Direct disclosure comparison is important for some investors’ assessments. That said, many investor valuation assessments are highly judgmental, resulting from insights on unique company business practices, processes, and models, and these are reflected in unique company disclosures. While some disclosures may be highly comparable – particularly within a single industry sector – some valuation assessments may rely on time series changes in company operations, segments, product and other unique company disclosures. The structured data quality consideration here is to consistently model disclosures – regardless of their highly comparable or company-unique nature.

(NOTE: The iXBRL Viewer is open source and freely available for technical user adoption here: http://arelle.org/2016/03/08/edgar-update/)

* The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. Therefore, the views expressed here are my own, and do not necessarily reflect the views of the Commission or other members of the staff of the Commission.

 

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The SEC talks XBRL (part 1)

Parsing the data: While Inline XBRL reporting may allow for more streamlined filing, XBRL data has already opened the door to faster and better analytics for companies and investors alike. We discussed the latest developments with five experts – as well as with a representative of the SEC, Mike Willis, assistant director of the US Securities and Exchange Commission’s Office of Structured Disclosure, for his views on the hot-button issues surrounding XBRL.

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Vintage question > XBRL is currently being used primarily for SEC quarterly filings, but do you think it holds possibilities for broader applications in accounting and financial data gathering?

SEC > XBRL, and structured data in general, holds potential possibilities across a broad range of disclosures. The CFA Institute paper “Data and Technology: Transforming the Financial Information Landscape” seems to concisely address this question: “Broader and deeper use of structured data across all reports in their entirety would bring about untold efficiencies and transparency for all users.”

Vintage question > Some groups, such as The Data Coalition, have been critical of the SEC’s implementation of XBRL, arguing that the Commission has been lax in its enforcement of data quality and slow to improve the system. How do you respond?

SEC > In a program as far-reaching and complex as the SEC’s accelerating number of structured data rules, there are plenty of improvement opportunities. The staff have issued Dear CFO letters, provided observations on quality error types, directly engaged filers, and are seeking to improve the quality of structured disclosures in a number of ways, including: Rendering engine:

The updated rendering engine now publishes warning and error messages as part of the test filing and filing processes. While these are not 100% data quality-validation rules, these messages are intended to highlight scenarios where the disclosure structures are inconsistent, inappropriate or simply suspicious and deserve attention prior to filing. Registrants should pay close attention when they receive one of these messages.

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Inline XBRL Viewer: The SEC’s exemptive order now enables voluntary iXBRL submissions. iXBRL is an effective method of presenting disclosures so that potential errors are more obvious, and the open-source Inline XBRL Viewer provides several tools to enhance data quality, including:

  • Data quality filters – filtering for specific metadata is useful in identifying common data quality related topics, including negative values, missing calculation links, company-specific extensions, scaling, incorrect reporting-period dates, and others.
  • Topical search – search reported disclosures using the taxonomy references to the FASB Codification, the Inline XBRL Viewer identifies disclosure “topics” (rather than just words) contained in the report.
  • Dynamic indexes – search and navigate directly to specific tagged disclosures and line items at every level, as well as indexes for data quality filter results.
  • Meta-data detail “pop-ups” – identifying attributes, definitions, labels, references and calculations for each structured disclosure. One software vendor has already adapted this feature to include trending and peer group data charting for the selected elements using the open-source inline viewer’s source code.

Market engagement: Staff periodically meets with data consumers and aggregators to better understand data quality issues impacting the reuse and analysis of structured data. Some feedback we have received that may be useful to enhance quality includes:

  • “Dear CFO” letters are an effective communication and education vehicle;
  • Enhanced guidance on extensions, including examples, would be useful;
  • Relationships between company-specific extensions and base taxonomies would facilitate automated consumption of company structured reports containing extensions.

We are also encouraged by the market data quality efforts of the XBRL US Data Quality Committee and their development of open source data quality rules. Staff review: Structured company reports are reviewed by staff for quality topics. Outreach occurs most frequently via phone calls to discuss these quality topics.

In addition to these steps, the increasing staff use of the structured data via the Corporate Issuer Risk Assessment (CIRA) dashboard, Financial Statement Query Viewer (FSQV), Internal Inline Viewer, and text analytics highlights data quality issues across a broader range of internal users, thereby enhancing data quality relevance.

* The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. Therefore, the views expressed here are my own, and do not necessarily reflect the views of the Commission or other members of the staff of the Commission.

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SEC closed for the Christmas Holiday (observed): December 26th

In honor of Christmas, the SEC is closed on Monday, December 26, 2016.  No files can be received. 

Files submitted after 5:30 pm ET, Friday, December 23, 2016 will receive a filing date of Tuesday, December 27, 2016 and will be posted to the public on December 27.

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(Need a 2017 SEC filing calendar? Click here.)

As with other holiday closings, the following file types will receive a Friday, December 23, 2016 filing date if filed by 10:00 pm ET on Friday:

  • Section 16 filings (3, 3/A, 4, 4/A, 5, 5/A)
  • Filings pursuant to Rule 462(b)

For any filing with a due date of  Monday, December 26, 2016 the SEC will move the due date of Tuesday, December 27, 2016.

Have a happy holiday!