Disclosure Discovery is Difficult

By Michelle Leder
May 13, 2008

Whenever I do a presentation, I usually stress one key thing: companies are required to disclose all sorts of things in their routine SEC filings. But there’s nothing that requires them to make that information easy to find.

In the old days, finding new disclosures meant looking at two lengthy documents, like a 10-K, side-by-side. Or, you could cut and paste pieces of the filing into a Word document and let the program do some of the work. But both methods often took more time then they were worth. Now, programs like 10KWizard's Compare Wizard feature make it relatively painless to find what’s new.

Take the 10K that Premier Exhibitions, a company best known for its expensive displays of Titanic remnants and human bodies that have been sliced and diced, filed on May 8. Relatively high up in the filing is this new disclosure:

“In addition, legislators in the states of California, New York and Pennsylvania have proposed legislation that could require us to follow special requirements in connection with our presentation of human anatomy exhibitions in such states. Such requirements could restrict our ability to conduct human anatomy exhibitions in such states in the future. We cannot predict whether any such legislation will be adopted or, if adopted, how such legislation might affect our ability to conduct human anatomy exhibitions. Additional states may introduce similar legislation in the future.” 

Of course, a casual reader wouldn’t necessarily know that this was a new disclosure. And while the legislation in California, sponsored by State Assemblywoman Fiona Ma, attracted a fair amount of media attention in that state, it paints a much different picture to know that legislators in three different states have proposed legislation. (Actually, the correct number is four states because the 10K that Premier filed failed to mention this bill from Washington State.)

Needless to say, Premier has not put out any press releases in response to the various bills, even those that have passed, so the only way to really find out about this would be by finding it in the 10K.

That’s because waiting around for the company – any company -- to put out a press release on anything that could possibly be perceived as being remotely negative is kind of like waiting for a bus that will never come. Remember: the SEC rules require disclosure of anything that’s potentially material. But there’s nothing in the giant SEC rule book that requires companies to make it easier for journalists to do their jobs.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism