Firm To Flag Undisclosed SEC Probes

By Marie Thibault, Compliance Reporter
May 16, 2008

Research firm Disclosure Insight has started offering free notifications about undisclosed Securities and Exchange Commission investigations. According to the firm, the information is made available through Freedom of Information Act requests and is the only data of its kind in the private sector.

Disclosure Insight files roughly 2,500 FOIA requests each year, CEO John Gavin told CR. In some cases certain information is withheld under a law enforcement exemption. The firm then files an appeal and is told in response that there is an active continuing investigation, that an investigation is closed or, in rare cases, that an error has been made in denying access. If analysts find that an investigation hasn't been disclosed by the company, subscribers to the service will be notified.

The firm is also giving free access to its library of SEC comment letters on EDGAR filings, which dates back to the late 1990s, Gavin said. "Now that we have the platform to release our FOIA records, we hope to compel public companies to improve their disclosure practices when it comes to SEC and other risks that are so often wrapped in useless boilerplate or hidden from investors."

Martin Zacarias, CEO of SEC online research service 10-K Wizard, said the service would help investors access information in what he described as an arcane and complicated system. A spokesman for the SEC declined to comment.