Did you know that the U.S. Security and Exchange Commission’s (SEC) EDGAR system processes around 3,000 filings daily, provides around 3,000 terabytes of data to the public every year, and accommodates 40,000 new filers annually on average?
EDGAR, short for Electronic Data Gathering, Analysis, and Retrieval system, is the main system for businesses to submit documents pursuant to the Securities Act of 1933, the Trust Indenture Act of 1939, the Securities Exchange Act of 1934, and the Investment Company Act of 1940.
It goes without saying that filing accurate financial documents on time is essential. So, you must have the systems and processes to ensure your Form 10-k meets compliance with SEC filing requirements.
But are you aware of the potential problems if you miss SEC filing deadlines or if the filings contain errors? The fallout can adversely impact not only your business but also your shareholders. It’s worth understanding what’s at stake.
Continue reading to learn about the potential consequences of SEC filings that are late or inaccurate.
Stock Price Could Drop In Value
It’s been shown that late quarterly and annual filings can negatively impact share prices. So, if your company files late, for whatever reason, the markets may react negatively. This might cause your stock price to dip. Sometimes the delays are a function of accounting issues or a corporate event. If the regulatory deadline is missed, consequences may include loss of SEC registration, delisting from stock exchanges as well as possible legal consequences.
If your business is late with its filings and offers no explanation, investors may take that as a red flag. In fact, the market reaction may be adverse even if there’s an explanation. It’s essential, therefore, to file on time.
One way you can avoid late filings is to have an up-to-date SEC filing calendar that will keep you on your toes for upcoming regulatory deadlines. It’s an effective way to file on time to avoid the negative consequences of late SEC filings.
Investors Might Assume the Worst
Investors and stakeholders might assume the worst if your business has to amend filings. There are various reasons a company might have to file amendments. Some reasons are less harmful than others, such as omitted exhibits or signatures.
But other times, the mistakes can have far-reaching implications, such as accounting mishaps. You’ve likely already heard about some of the worst corporate accounting scandals in the U.S., such as situations involving Enron, WorldCom, and General Electric. You can avoid these problems if you have the right cloud solution that simplifies 10-Q, 8-K, or proxy statement processes, procedures, and controls in one centralized SEC filing platform. Otherwise, the results can be disastrous.
SEC Comment Letters Can Spook Investors
An SEC comment letter is a response to a business’ SEC Form S-1 registration for new securities by an issuer. It’s used to correct or amend the S-1 registration so that all data provided to possible investors is straightforward, correct, and up-to-date.
If your company is on the receiving end of an SEC comment letter about a filing, it could see its stock price take a hit. These letters often spook investors. Of course, the content of the comment letter factors into how investors respond. But an SEC comment letter is enough to raise eyebrows.
SEC Can Suspend Trading
The Securities Exchange Act of 1934 actually makes it possible for the SEC to halt trading or cancel the registration of businesses that don’t file disclosure documents, submit erroneous periodic reports, or don’t submit periodic reports on time. So, if you want to avoid facing such a scenario, make every effort to submit SEC filings on time. Again, an SEC filing calendar can be a godsend if you want to avoid late SEC filings.
An SEC Filing Calendar Can Help
Your business must submit SEC filings on time. Failing to do so can negatively impact your company and investors. With an SEC filing calendar, your accounting team can help ensure your business never misses a filing deadline. With a cloud SEC reporting solution, you can simplify regulatory disclosures that are investor-trusted and get notifications on upcoming deadlines in advance so that nothing slips between the cracks. You’ll be able to spend less time worrying about the consequences of late filings and more time focusing on running a successful and profitable company.
