Santangel's Review


Another tool in the due diligence toolkit

Bloomberg did an interview with Carson Block and he shared one of his research tools, SEC generated letters to companies. It seems simple, but I bet most folks don’t check for these.

“The CorpFin accountants do a good job of spotting issues in the companies’ filings,” said Block, co-author of “Doing Business in China for Dummies.” “We’ve read some astute questions from CorpFin on a range of issues.”

The SEC, set up in 1934 to lift confidence in securities markets during the Depression, reviews 4,000 companies a year with special attention to new filers and industries in the spotlight, from Facebook Inc. to big banks. SEC letters and company responses aren’t posted to the regulator’s website until a month after they are sent, receiving no fanfare to alert interested investors.

As useful as the hidden-in-plain-sight SEC correspondence can be to investors as an early warning of unknown risks, the letters might be even more useful if published in real time, Block said. “In the investment world, information is always more valuable when made public sooner,” he said. “SEC correspondences sometimes contain important red flags, and publishing them sooner would give more investors a chance to read them before making investment decisions.”