Accurate, Focused Research on Law, Technology and Knowledge Discovery Since 2002

Category Archives: Securities Law

A 2011 dictionary is reshaping the language of corporate reporting

Quartz – “A new corporate principle is: Never say you’re restating anything. The machines will hold it against you. Over the past decade, “restatement” is the word companies have most strenuously tried to avoid in the text of their filings with the Securities and Exchange Commission, according to an upcoming paper by academics at Georgia State University’s J. Mack Robinson College of Business and Columbia Business School. The evasion is a response to the army of bots that investors routinely deploy to catch any whiff of implicit market intelligence. The bots flag “restatement” as a negative word, which darkens their outlook on a company’s prospects. The paper, which builds on an earlier version released last October by the National Bureau of Economic Research, analyzes nearly 360,000 10-K and 10-Q documents filed with the SEC between 2003 and 2016. It shows how companies are trying to phase out words that, like “restatement,” are judged to have negative connotations by financial analysis algorithms. “Corporate disclosures and reporting have been reshaped by machine readership,” Baozhang Yang, one of the paper’s authors, said. The dog-eat-dog nature of markets has always tended to favor those with an extra sliver of information. When everyone has access to the same, structured sources of data—published reports, earnings figures, profit-and-loss statements—the appetite for alternative data, of even the least merit, can turn very keen. Sometimes analysts and investors try to latch on to such alternative data using their own intuition. Nils Paellmann, a former vice-president for investor relations at T-Mobile, recalled how, on one earnings call, the company’s CEO—known for cursing freely and often—was far less profane than usual. “I got a lot of calls from investors, asking: ‘What’s wrong? Why wasn’t he his usual self? Is he less confident about the company’s outlook?’” But the real thrust has come with the advance of automation. In the past decade, the channels of obtaining alternative data have grown, as has the raw computing power to crunch and weigh such data. Within the industry, practitioners tell wild stories—of trading equities by using satellites to count cars in parking lots, as a proxy for economic activity; or of planting an infrared camera outside a Tesla plant, to determine how busy it was at night and therefore how full its order book was. Some of this is what one expert calls “innovation theater,” but investors also glean genuine value out several of these strategies…”

COVID-19 Liability: Tort, Workplace Safety, and Securities Law

CRS report via LC – COVID-19 Liability: Tort, Workplace Safety, and Securities Law, September 24, 2020: “Although the COVID-19 pandemic is still unfolding, a number of plaintiffs have already filed lawsuits seeking compensation for COVID-19-related injuries. Some stakeholders have expressed concern that the risk of COVID-19-related lawsuits threatens a range of businesses and other entities… Continue Reading

How to make sure Google automatically deletes your data on a regular basis

Vox: “…The company announced on Wednesday that auto-delete will be the default setting for user account activity settings. That said, this “default” setting only applies to new accounts or existing accounts that now turn on data retention after having it disabled. And the default auto-delete time still gives Google as much as three years of… Continue Reading

SEC is plugged into the potential pitfalls of making Covid-19 vaccines

Via Quartz: SEC filings tell us a lot about the potential pitfalls of making Covid-19 vaccines. Companies working on vaccines detail how unlikely it is for a trial to fail, and it underscores how vaccines aren’t a magic bullet—total public health must be considered if we’re going to make progress….Enter 8-K forms. Publicly-traded companies are required… Continue Reading

Move Fast and Break Things Law, Technology, and the Problem of Speed

Chesterman, Simon, ‘Move Fast and Break Things’: Law, Technology, and the Problem of Speed (January 8, 2020). NUS Law Working Paper 2020/001. Available at SSRN: https://ssrn.com/abstract=3516032 or http://dx.doi.org/10.2139/ssrn.3516032 “Since computers entered into the mainstream in the 1960s, the efficiency with which data could be processed has raised regulatory questions. This is well understood with respect… Continue Reading

SEC Launches New Strategic Hub for Innovation and Financial Technology

“The U.S. Securities and Exchange Commission today announced the launch of the agency’s Strategic Hub for Innovation and Financial Technology (FinHub). The FinHub will serve as a resource for public engagement on the SEC’s FinTech-related issues and initiatives, such as distributed ledger technology (including digital assets), automated investment advice, digital marketplace financing, and artificial intelligence/machine learning. The FinHub… Continue Reading

Securities Regulation and Initial Coin Offerings: A Legal Primer

CRS Report – Securities Regulation and Initial Coin Offerings: A Legal Primer. August 31, 2018 R45301 “Initial coin offerings (ICOs)—a method of raising capital in exchange for digital coins or tokens that entitle their holders to certain rights—are a hot topic among legislators, regulators, and financial market professionals. In response to a surge in the… Continue Reading

OpenEDGAR: Open Source Software for SEC EDGAR Analysis

Computational Legal Studies: “Our next paper — OpenEDGAR – Open Source Software for SEC Edgar Analysis is now available.  This paper explores a range of #OpenSource tools we have developed to explore the EDGAR system operated by the US Securities and Exchange Commission (SEC).  While a range of more sophisticated extraction and clause classification protocols can… Continue Reading

You Can’t Opt Out Of Sharing Your Data, Even If You Didn’t Opt In

FiveThirtyEight: “…Yonatan Zunger, a former Google privacy engineer, noted we’ve known for a long time that one person’s personal information is never just their own to share. It’s the idea behind the old proverb, “Three may keep a secret if two of them are dead.” And as far back as the 1960s, said Jennifer Lynch,… Continue Reading

SEC Launches Additional Investor Protection Search Tool

News release: “The Securities and Exchange Commission today announced the launch of an additional online search feature that enables investors to research whether the person trying to sell them investments has a judgment or order entered against them in an enforcement action. The new tool is intended to assist the public in making informed investment… Continue Reading

Equifax data breach fallout – hundreds of class action suits and SEC subpoena

Equifax faces hundreds of class-action lawsuits and an SEC subpoena over the way it handled its data breach “Equifax, the credit reporting firm, is facing more than 240 class-action lawsuits from consumers — in addition to suits from shareholders and financial institutions — over the way it handled a massive data breach that affected 145.5 million Americans. The… Continue Reading

Google – Updating our Transparency Report and electronic privacy laws

“Today, we are releasing the latest version of our Transparency Report concerning government requests for user data. This includes government requests for user data in criminal cases, as well as national security matters under U.S. law. Google fought for the right to publish this information in court and before Congress, and we continue to believe… Continue Reading