The S.E.C. Starter Kit

(1996 author unknown)

  1. The Registration Statement:
    The Mother of All Documents. It is also called the Form S-1, and for new companies, it usually includes a prospectus. If a new issue of stock is being sold by an existing company, a prospectus may be issued, and ordered, separately. For maximum usefulness, you should order the exhibits that are attached to the registration statements.

  2. The Perfect Tens:
    10-Qs and l0-Ks, and their foreign cousin, the 20-F. Much better than an annual report, although it lacks the pretty pictures and the Letter to Shareholders. If you can, get both; if you must choose, go for the 10-K. The good parts: "Litigation," "Certain Transactions," and "Related Party Transactions." Always helpful: Management's Discussion and Analysis and the footnotes in the financial statements.

  3. The Proxy Statement:
    A proxy is the corporate equivalent of a ballot. A proxy statement is the equivalent of those voter information booklets you get from city hall before the election. A proxy statement (called a "proxy" for short) announces the time and place of the annual meeting; discloses how much the executives and board members are paid, and any side deals they have with the company: gives the background and qualifications of board members; lists questions that shareholders will get to vote on, and how management and the board think they should vote. Corporate democracy in action!

  4. The Lucky 135: The Form 13-D. Who is buying whom? With what? why?
    These forms must be filed by any outside investor who buys 5 percent or more of a public company's stock, and must be updated to reflect any changes in those holdings. They are short and cheap to order, but are full of neat information. You can find an important investor's Social Security number; the actual dates the stock transactions occurred, and at what price; the source of funds; sometimes even extensive descriptions of the corporate structure of the investor, even if the investor is privately held.

  5. The 8-Ks: Or "How to Keep the Flacks Honest."
    In legal lingo, a Form 8-K is a "report of a significant event." An 8-K must be filed to update investors and shareholders on any major development in a company's life: The sale of assets, a change in management, a purchase or merger, a lawsuit, a court judgment, a regulatory penalty. The filing of an 8-K separates the wheat from the chaff. Regardless of what the flack tells you, if the event doesn't merit an 8-K filing, it probably doesn't merit being on Page One either.

When you are checking out a company, here are some things to look for and some places to find them:

The S.E.C.

For companies that have sold stock; also for some private companies that have sold bonds. Recent filings are on Edgar and so are available on the 'Net (it's easiest to go to the S.E.C. home page, . Older filings are available through Disclosure Information Services, 262-7070. For info on the major forms, see above. The S.E.C. web site also includes releases about recent litigation and administrative proceedings; these are often listed under individuals' names.

New York State Attorney General's Office

The state requires people selling things like limited partnerships here to file documents; they are not reviewed, but they are at the AG's office. Richard Barr is the flack, 416-8064. The state is also one place to get a broker's CRD (see below)

Secretaries of State

For incorporation records. Cites are on-line (INCORP, in Nexis) . But getting the actual documents from Albany is a nightmare. Useful if you suspect, for example, that two or three businesses are really being run by the same people.

Federal Agencies

Sometimes you'll find stuff at the F.C.C., F.D.A., F.T.C. or other agencies. It's always a good idea to make friends with the flacks, especially if you will be doing a Freedom of Information Act filing. For routine documents, the Washington Document Service, at 800-728-5201, is useful.

The CRD (for Central Registry Depository; don't ask)

The National Association of Securities Dealers and state securities regulators operate a database tracking disciplinary histories of people in the brokerage industry. A summary report is available from the NASD at 800-289-9999 or call the flacks: 202-728-8884. State regulators will often give out more complete versions; individuals can call 202-737-0900 to get the number for their state's agency (in New York, the Attorney General's Bureau of Investor Protection, at 416-8222, will check the database for you) . I usually call Kelly Heffron at the North American Securities Administrators Assn. (NASAA) at 202-737-0900. Anybody who sells securities should be registered.


The American Bar Association's Center for Professional Responsibility, at 312-988-5319, operates a national database tracking lawyers' public discipline records; the ABA also suggests checking with state bar associations. The National Fraud Infocenter ( Has links to lots of enforcement people, including some AGs, and info on current scams. Generally worth a look.


Check state and federal courthouses, especially in the area where the company has its headquarters. Mead Data Central's Lexis can give you decisions, but it's worth looking at complaints, both criminal and civil. There are services that will get court documents for you, though it's not cheap; I've used Research Information Services at 800-452-3320.

Credit checker

Dun & Bradstreet is on Dialog and Newsnet; sometimes all they have is an address, other times they have lots of info. They will send you a report on a company's history and background, payment record, finances, and lawsuits, liens and judgments. The cost is $75. 800-362-2255


People who own big stakes in a company are listed in the 10-K; outsiders who buy big chunks must file 13-Ds with the S.E.C. Big institutions (like mutual funds and pension plans) file 13-Fs every quarter with all of their holdings. CDA (800-232-6362) compiles these so that you can tell who owns stakes in individual companies (this is their Spectrum 3 report) ; it's also available on Bloomberg.


The last resort. Remember that most of these folks are in business to sell stock, not to analyze companies. Be especially wary of the underwriters' analysts (these are the guys who sponsored -- and profited from -- the stock sale) . Analysts are listed by the company they follow in Nelson's Directory of Investment Research