10-k Filing

What is a 10-k Filing?

Public companies are required to disclose certain information to their investors on a regular basis. Form 10-k is one way by which they are required to do it. A 10-k Filing is an annual disclosure required pursuant to Federal securities law.

What’s in a Form 10-k?

Through Form 10-k, public companies provide anyone interested in looking at it with a comprehensive overview of the company’s business and financial condition. The filing includes an audited financial statement, among many other wonderful bits of information. If you’re interesting in seeing exactly what’s required, you can take a look at the SEC‘s “General Instructions” for Form 10-k here.

Let me rephrase… Is there anything interesting in a Form 10-k?

Well, that depends on how pedantic your idea of what’s “interesting” is. I will say this, however: of particular noteworthiness, 10-k Filings generally (that is, they should, if they’ve followed the law) include a section outlining what the company views as risks to its financial or business well-being. In this section, companies usually pile in a list of everything imaginable that could even possibly go wrong. They do this as almost a “pre-emptive litigation tactic.” If a risk is listed on the 10-k (or really any public filing), there is a very good chance that this listing will protect the company from civil liability to its investors should that risk materialize and the company be damaged.

Why would anyone want to read a 10-k?

Good question. For the average investor, reading over the “risks” section of a publicly traded company’s 10-k is a really great way to get an understanding of that company. For instance, if you read as a risk that the company fears “not generating sufficient sales to create economies of scale,” you know that the end goal of that company is to grow absolutely huge. Based on your opinion as to whether growing absolutely huge is a possibility for this company, you may or may not want to invest.

How to Read a 10-k Filing

If you want to learn how to read a 10-k Filing, I’d suggest you jump right in. Pick a company, search it on EDGAR, and start reading. If you come across a term you don’t understand, look it up. Once you’ve finished the first one, move on to another. If you’re astute enough to be interested in reading this, you’ll probably pick up on the general form of the filing pretty quickly. If not, the SEC has a nice breakdown on how to read a 10-k Filing here.

Litigation and Form 10-k

Apart from action taken by the SEC, one of the most common things you see in securities litigation is the class action lawsuit. Here’s why. As described above, investors rely on companies’ public disclosures. However, unless you invest a lot of money into the company, if their stock drops $3.00 per share, ya – it sucks, but not enough to be worth hiring a lawyer over. Class actions allow large groups of people to get together and hold corporations accountable: while per-person damages are small, multiply that by a class of 10,000,000 investors and it gets pretty big. That’s why if a company lies on its 10-k Filing, it’s a huge deal, and usually makes the news.

Got A Form 10-k Question?

Attorney Chris Mutchler may be able to help. Get in touch with The Law Office of Christopher J. Mutchler. If we can’t help you, we’re more than happy point you in the direction of someone who can!

Christopher Mutchler
Christopher J. Mutchler, Esq.


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