June 2018 Quarter End Post One – A Picky Reminder – Attention to Detail and the Compliance and Disclosure Interpretations

In our SEC Reporting Skills Workshop we always mention the importance of getting details right in your periodic and current reports.  Little picky mistakes could give an experienced reader a negative impression of your overall reporting.

One simple example of such a detail is the Form 10-K cover page check-box S-K Item 405 disclosures about Section 16 reporting by insiders.  It is surprising how many companies don’t get this check box right. The box should be checked if all Section 16 people filed all their required reports on a timely basis.  A knowledgeable reader, when they see a mistake with this cover page item, may ask “what else did this company not get right?”  (As a side note, thank goodness this confusion may finally be eliminated if this part of the FAST Act Modernization and Simplification of Regulation S-K proposal is made final!   You can check out page 33 in this proposed rule release.)

In the world of SEC reporting we all get to learn as we make mistakes and also from the mistakes of others. Here is a kind of unfortunate example of a company that made a mistake in one of the pickier parts of a filing, the certifications, and then missed a detail in the follow-up.

S-K Item 601, paragraph 31, which sets out the form of the certifications, contains this language:

(31)(i) Rule 13a-14(a)/15d-14(a) Certifications. The certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)) exactly as set forth below:

Certifications* I, [identify the certifying individual], certify that:

  1. I have reviewed this [specify report] of [identify registrant]; (remainder omitted)

Well, as you can see on Exhibit 31of this Form 10-K, this company made a simple mistake.  They forgot to update the language in the certification, unfortunately referring to a Form 10-Q rather than Form 10-K.  OK, these kinds of things happen to all of us, and this situation is at least easy to fix.  It would appear, from the order of the company’s filings, that they found the mistake on their own, and filed this amendment.

Unfortunately, the company forgot to check one of the sources of guidance we emphasize in our workshops, the CorpFin Compliance and Disclosure Interpretations.  This is the relevant C&DI, which is included in the S-K Item 601 Exhibits section of the C&DI’s:

246.14 The following errors in a certification required by Item 601(b)(31) are examples of errors that will require the company to file a corrected certification that is accompanied by the entire periodic report: (1) the company identifies the wrong periodic report in paragraph 1 of the certification; (2) the certification omits a conformed signature above the signature line at the end of the certification; (3) the certification fails to include a date; and (4) the individuals who sign the certification are neither the company’s principal executive officer nor the principal financial officer, or persons performing equivalent functions. [July 3, 2008]

That lead to the company getting this comment from the SEC:

Amendment No. 1 to Form 10-K for the Fiscal Year Ended December 29, 2017

  1. Please file an amendment to your Form 10-K that includes the entire filing. Refer to Compliance & Disclosure Interpretation No. 246.14 on Regulation S-K.

It is always a bit embarrassing to have to amend an amendment.  And, this is a great reminder that when you are dealing with issues that are not part of your regular reporting process to always check all the sources of guidance from the SEC. The C&DI’s in particular deal with a huge variety of process questions, disclosures and tactical issues and are always a good resource to check.

As a PS, the company did get the Section 16 box right!  The box is checked, and their proxy indicates that to the best of the company’s knowledge everyone filed all required reports on time.

As always, your thoughts and comments are welcome!


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