In June 1934, President Franklin Roosevelt signed the Securities & Exchange Act, one of the most important pieces of legislation that regulates business in the United States. I thought it would be interesting to write a bit on the impact the agency and its activities have had on making public company information more transparent and broadly available.
In the wake of the stock market crash of 1929, there was a strong desire to ensure an orderly and fair stock market and as a result, Congress passed a number of laws including the Securities & Exchange Act. The act created the Securities & Exchange Commission (S.E.C.), and along with related legislation, required companies to report, in a relatively standardized way, financial and other information in an effort to provide some level of consistent, fair, and open information that everyone could access and understand.
Over time, the filings required by the S.E.C. became much in demand because they were filled with a wealth of information people could pour over. The level of detail in a 10K and proxy as well as the updates provided by the 10Q, would provide investors with a much better sense of a company and its financial position.
Publishers like Standard & Poor’s and Moody’s which already published information on public companies, were well positioned to take advantage of the filings and used information found in them to either enhance already existing publications, or create new ones. These publications presented information that was synthesized, streamlined, and digested, and were then sold to libraries and anyone who was interested.
Our guide on Doing Historical Company Research lists a few of the most popular publications that were often found in public libraries, but there were many others. Many titles looked at stocks while others covered dividends. If you look in the Library’s catalog you will see that Moody’s Investors Service and Standard and Poor’s Corporation published a couple hundred different publications and that doesn’t even count titles from other publishers.
Then there is what the S.E.C. itself made available.
It wasn’t so long ago in D.C. that couriers and other interested parties actually went to the S.E.C. and copied filing after filing, while companies created microfiche sets to offer additional avenues for access. All of that began to change in 1993 when the S.E.C. mandated electronic filing and created the Electronic Data Gathering, Analysis, and Retrieval system – most often referred to as EDGAR – that was phased in beginning in 1994. Now anyone with an internet connection sitting anywhere in the world could look at those company filings. While the original system was not sophisticated in terms of search, private information providers developed their own systems that allowed for better search and download of the filings. There are now databases that allow researchers to do some pretty sophisticated searching and downloading of financial information that is beyond anything a business researcher 100 years ago would have ever thought possible.
Specialized databases go beyond just searching for, and in, S.E.C. filings. Some are hyper-focused on mergers, acquisitions, and initial public offerings information and allow researchers to search the contents of S.E.C. filings for specific events, to develop a highly targeted list of comparable situations and business deals, and then customize the data they download. While others are digital archives of older S.E.C. filings or have focused on detailed financial data with sophisticated search and download options.
This is just a glimpse–the future is likely to provide even more specialized data sources that allow us to do things that we can’t picture right now. While company information was available before the S.E.C. was created, the creation of the agency definitely had a major impact on the publishing of company information. If you want to know more, see Signing of the Securities Exchange Act of 1934 in our This Month in Business History project that commemorates the creation of the agency.
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