On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it.
A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing – Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document – I’d simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes.
A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing – Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document – I’d simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes.
