By now, you’ve probably heard or read about the massive document dump that the SEC unleashed on Friday night: 536 exhibits related to the Bernie Madoff case. Reading all of these — even figuring out which ones are worth reading — was all but impossible, even if it wasn’t earnings and 10-Q season. The New York Times, which has summarized 11 of them, tallied up the dump as being over 6,100 pages of material.
So far, the biggest headlines to emerge has been about Madoff’s jailhouse interview with SEC Inspector General David Kotz. The Times also posted highlights of interviews with former SEC Chairman Arthur Levitt Jr., William Donaldson, and Chris Cox. Exhibit #29 was also pretty interesting because in it, an SEC branch chief and assistant director for Compliance, Inspections and Examinations said he couldn’t remember “off the top of my head” what a Form 13-F was for. Even Kumara, my SEC file reading dog, knows what that one’s for!
But here’s the real rub: by dumping this kind of thing on a Friday night and providing no description next to the 536 exhibits, the SEC is essentially green-lighting companies to do the same thing with their filings. Right now, the overwhelming majority of companies provide some sort of description of what’s in the exhibits that they file, so that you can figure out whether a particular exhibit is worth reading. It’s the difference between stating “material contract” and “employment agreement with John Doe”.
Over the weekend, I asked the SEC why they chose to release the information this way and didn’t exactly get a good response. In a nutshell, the folks at the SEC blamed the OIG’s office for the Friday night dump and David Kotz, whom I spoke to this morning, said it was the SEC’s decision. “To be honest, I’m surprised that they did this on a regular Friday, instead of waiting for a holiday Friday to put this out,” Kotz told me a short time ago.
Not very reassuring, is it?
UPDATE 11/3: Just to be clear here, the person whom I spoke to at the SEC gave me information on background and never used the word blamed. The choice of the word was my own based on my understanding of the facts after speaking to both this person and David Kotz.