Intricate, convoluted, maddening: Knowledge Mosaic takes on incorporation by reference
Dear Friends & Colleagues,
Incorporation by Reference! If Rube Goldberg had designed the SEC EDGAR Filings system, he could not have created a more intricate, convoluted, maddening way to disclose information to the public. In fact, anyone with a good design sensibility and CAD software could diagram the SEC Filings information architecture and when the software tried to make sense of Incorporation by Reference, the software would no doubt freak out and start playing Gangnam Style over and over again.
Incorporation by Reference makes no sense from a public policy perspective. It defeats the purposes of transparency. Incorporation by Reference also makes no sense from a research standpoint. The absence of formatting standards and rules for incorporation, the absence of hyperlinks to relevant documents, the absence of direct access to required information – all of these limitations create significant barriers and inefficiencies to harvesting meaningful information from SEC filings.
We have long thought that solving the problem of Incorporation by Reference would be the holy grail for law librarians. Other companies share this belief, and some new “black box” solutions to the Incorporation by Reference “problem” are emerging into the marketplace. We have a different approach.
Knowledge Mosaic has developed a lightweight Incorporation by Reference tool that brings you into the process of selecting and organizing the referenced filings. We believe this interactive approach is intuitive and beneficial because it actively engages you with the raw material and opens the possibility of absorbing the nuances of Incorporation by Reference as you use the tool. The black box solution does not allow for this possibility. You do not know why or how you get the results the black box delivers. The black box solution also may limit the scope of your research to specific form types. By contrast, with our Incorporation by Reference tool, you will always know exactly what selection options are available to you. You also face no limitations in working with the full body of SEC filings.
Here are some fun facts. Most (although not all) of the Incorporations by Reference are to exhibits. We estimate that we can provide you access to approximately 25 million references to exhibits incorporated by reference to more than 1.2 million filings. The distribution of form types that incorporate by reference is also interesting, with about 25 percent from 10-K and 10-Q filings, 20 percent from 8-K filings, 20 percent from registration statements, 7 percent from prospectus supplements, 5 percent from proxy filings, 3 percent from foreign private issuances, and 2 percent from tender offer filings. In general, about 60 percent of the filings with incorporated references are in 1934 Act filings. About 30 percent are in 1933 Act filings. And about 10 percent are in 1940 Investment Company Act filings.
We are presently conducting usability tests of our Incorporation by Reference tool and hope to roll out the tool in the first few months of 2013. We think you will benefit enormously from its combination of simplicity and power, and learn a lot from how the tool draws you into the selection process.
Thanks very much.
Peter Schwartz, President
Knowledge Mosaic Inc.