Texan plays April Fool’s joke on SEC, investors with 999 billion shares

June 20, 2011

Footnoted regulars know that we don’t usually pay much attention to insider-related filings — those Form 3s,4s and 5s — which make up roughly 1/3 of all filings made to the SEC. Instead, we prefer to focus our attention on the roughly 400,000 other filings for a number of reasons, but mostly because we think that human intelligence still has the edge when it comes to massive amounts of unstructured data, which is essentially what these filings are.

Still, we’re fascinated when we spot unusual filings and there’s really no other way to describe the 61 filings made by Johnny Earl Satterwhite since June 2 other than downright bizarre. Among the claims are that Satterwhite, who lives in Killeen, Tx, owns 999 billion shares of Microsoft (MSFT) and Exxon Mobil (XOM). We’re attaching a screenshot of a Microsoft filing made on June 14 since the filings have since been removed from the SEC’s site

 

Besides the obvious errors — 999 billion shares represents roughly 118 times more shares of Microsoft than actually exist — and it would cost a lot more than $999 billion, is the bigger question of how a very obvious fake filing could make it into the SEC’s Edgar system. A spokeswoman for Microsoft declined to comment on the filing. So did Florence Harmon, a spokeswoman for the SEC. Alan Jeffers, a spokesman for Exxon Mobil, where Satterwhite also claimed to own 999 billion shares (despite the fact that shares outstanding is only 4.9 billion), said it was up to the SEC to resolve this. “We didn’t file it and we alerted the SEC when we saw it,” Jeffers said on Friday. Indeed, the fake filings appear to have been found by a journalist — Steven D. Jones of Dow Jones, who wrote this story on Friday.

As much as we know about SEC filings here at footnoted, we have no idea how to go about actually making a filing to the SEC. Not to mention why you would want to make a filing like this since it seems like a pretty stupid way to wind up in the federal pen. We tried to reach Satterwhite over the weekend and earlier today, but he hasn’t returned our calls yet at the number listed on several of the filings.

However, several experts that we spoke to said that it was relatively easy to make a fake filing to the SEC and that this incident showcased just how easy it was. “There’s really no safeguards to someone doing something like this to manipulate the markets,” one expert who preferred to be on background told us. Another said that he was surprised that the SEC didn’t have systems in place to flag this type of filing and prevent it from winding up in the database in the first place. “The number of shares should have tripped a flag. And the price paid should have tripped another flag. Plus the codes are wrong,” said Ben Silverman of InsiderScore. “But based on the fact that these made it into the SEC system in the first place, it suggests there’s a flaw in the system.”

That’s a mild understatement. Imagine if instead of filing these Form 4s and 5s, someone decided to try to manipulate the markets by filing a fake 13F, which discloses institutional holdings. Or someone decided to file a Form 4 pretending to be Steve Jobs of Apple (AAPL).

So while the 999 billion share purchases may have started out as an innocent joke, it raises serious questions about the ability of the SEC to spot fraudulent filings before they’re pushed out to the public. As nice as it is to read filings in real time, it’s also important to know that what we’re reading isn’t coming from someone who’s trying to manipulate the markets.

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