What is SEC Reporting in Mergers and Acquisitions?
The U.S Securities and Exchange Commission (SEC) is a group that regulates how public companies trade their stocks. They also regulate any mergers or acquisitions between those public companies. In recent years, due to the increased need for transparency of companies, trading activity and excessive corporate activity has increased. In an effort to increase accountability and understanding, the Securities Exchange Commission (SEC) has developed a new set of rules that will require public companies to provide more information in their public disclosures as well as issue quarterly reports on their accounts. This is a big change from what was previously required in just annual reporting by these companies. The SEC’s goal is twofold: increase investor awareness of how their investments are doing without having too much disclosure; and improve transparency within companies so that investors can know what’s going on with them at any given time.
New SEC Reporting Rules
The SEC has put out a set of rules and regulations to make sure that there is better overall awareness and transparency in companies. With the implementation of Regulation FD there will be a new way to review corporate actions. In order to comply with this new law, companies must provide information about their activities on a timely basis to everyone at the same time. They must report this information via press releases, regulatory filings or by distributing it through other avenues that are open to the public but may not reach everyone on time. The new rules have the following requirements:
Current SEC rules, which are known as Regulation FD, require all companies to disclose material information in periodic reports that include audited financial statements and Management’s Discussion and Analysis, an explanation of what they did in the past year. This must be done on a quarterly basis. Companies are required to obtain outside auditing firms to complete this job and file with the SEC. In addition, those who manage their accounts must also report directly to the SEC, who will report publicly on their company activity. Due to this one-way reporting between the company and SEC there are many problems that arise. Some of these problems are as follows:
Regulation FD is here to correct these problems and ensure that public companies are more transparent for all investors. This new disclosure policy requires that companies disclose their material events simultaneously to everyone.
The SEC believes that these changes will be a positive step in improving company transparency, investor awareness and confidence in the U.S. markets and will ultimately help our economy. These changes are meant to direct investors to the same information at the same time which means they can benefit from this information rather than learn about it after everyone else has already acted on it.
Even though these new rules have been in place since February 2005, the SEC has yet to issue a regulation that outlines the exact details of this new policy. Until that regulation is published, it will not be certain how companies will report and what investors will receive from this information.
Lawmakers and other policy makers believe that proper disclosure can help maintain stability in the market and keep investors from selling their shares at the wrong time or selling stock before it is going to increase in value. They believe this will ultimately lead to more stable corporate portfolios for all investors and will allow them to take advantage of stock price movements.
The SEC has also put forth Regulation FD to ensure that all market participants get the same information at the same time. They want everyone to have the same level of knowledge so that everyone is on equal playing ground when it comes to trading decisions. They do not want any one person or group of people to be more aware of a piece of information than others and act on it without considering other people’s positions. The SEC hopes that by implementing this new rule they will help maintain stability in financial markets and keep them from becoming less volatile as a whole.
Regulation FD is also meant to increase investor awareness and knowledge about how their investments are doing. This should help increase sales for these companies which would ultimately benefit our economy as a whole.
Currently, investors have to rely on a company’s annual report to know how they are doing. This makes it difficult for them to make educated decisions without enough information. With the implementation of Regulation FD this should change and they should be able to get the information they need on a more regular basis, thereby improving their investing outcomes.
How Fintalent can help you meet SEC Reporting Requirements
SEC filings are created before any transaction takes place to make sure both parties have the same information about the company being merged with or acquired by another company, including any debts or liabilities it may have which need to be disclosed to the investor. Fintalent, the hiring and collaboration platform for tier-1 M&A and strategy professionals offers a large pool of M&A experts that can help firms meet all of their SEC Reporting obligations.
Fintalent’s M&A experts possess the requisite experience drawn from various years of helping firms across the world handle all of their M&A activities and are pre-screened to ensure only the best M&A Consultants are made available to hiring clients.
