The XBRL tagging requirement in SEC filings is part of a broader trend in financial regulation, domestically and globally, toward standardizing the data used by investors, analysts, regulators, and others in the capital markets. Like barcoding in the retail, shipping, and related industries, standardization of financial information involves the use of machine-readable structured data such as XBRL, as well as related technologies. This consistency makes it easier to convey, extract, and consume vast amounts of financial data swiftly and accurately. Data standards benefit not only investors making market decisions but also companies that need to tell their financial stories clearly to investors and market analysts.
Guarding a whistleblower’s back. In the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, Congress encouraged employees—including in-house lawyers—to report corporate fraud by shielding them from retaliation. Only Dodd-Frank offers a bounty: 10%-30% of sanctions over $1 million obtained in an enforcement action based on “original information” given to the SEC. The whistleblower must file a complaint with the Secretary of Labor not more than 180 days after facing retaliation and must exhaust administrative remedies before suing the employer under Sarbanes-Oxley. Under Dodd-Frank, explain attorney Kelly Crawford and law student Gerardo Adrian Galvan, the whistleblower may sue the employer first—and within six years.
DIMENSIONS interviewed Professor Paul G. Mahoney, a member of the SEC's Investor Advisory Committee (IAC), on how the IAC operates and how its recommendations influence the SEC’s disclosure rulemaking, as well as other securities disclosure topics.
Paul G. Mahoney is a professor at the University of Virginia School of Law, where he also served as the dean from 2008 to 2016. Professor Mahoney’s teaching and research interests include securities regulation, law and economic development, corporate finance, and financial derivatives and contracts. He is the author of Wasting a Crisis: Why Securities Regulation Fails (University of Chicago Press, 2015) and has served on the IAC since mid-2018.
This interview expresses the views of Professor Mahoney and does not necessarily reflect the views of the IAC, the SEC, the University of Virginia, or any other organization.
26 February 2019
You think it could never happen to your company—until it does. In 2018, the SEC announced a startling discovery: nine publicly traded companies in the United States were duped by a simple e-mail scam and lost a total of almost $100 million, most of which was not recoverable. Pretending to be company executives issuing instructions or vendors requesting payments, cyberfraudsters tricked corporate employees into sending millions of dollars to the perpetrators’ bank accounts. According to the SEC’s investigative report (SEC Release No. 84429), some of the scams persisted for months. The fraud in several cases was detected only when the real vendors complained about nonpayment or when law enforcement intervened. Each of the nine companies lost at least $1 million; two lost more than $30 million.
19 February 2019
Between a rock and a hard place. Few things distress a public company that has mailed a proxy statement more than finding the statement requires correction. Omissions of or mistakes in mandatory line-item disclosures are common, and numerous other errors can occur. Post-mailing events might also impel the company to add, remove, or modify proposals; to update the disclosure; or to do both. These include business developments and shareholders’ or proxy advisors’ objections to proposals. Certainly, The Corporate Counsel reminds, there are various post-mailing events that do not ordinarily call for corrections or updates. For example:
13 February 2019
The use of structured data, especially XBRL, is accelerating both in the capital markets and at the SEC. Public remarks from SEC commissioners and staff in recent years have clearly established the agency’s ongoing push to modernize all areas of financial disclosure through structured data—well beyond the SEC’s internal operations.