Once again, we present a list of insiders who failed to report trades to the SEC within the required two business days.
The data, collected for Compliance Week by research firm Insider Insights, show that — on the whole — insiders' compliance with the recently shortened Form 4 filing deadline is very good.
In fact, of the 8,931 open-market transactions recorded at the SEC during February, the median number of days to file was two - which is precisely the new deadline Sarbanes-Oxley mandates.
Just over 9 percent of these filings were even filed the same day as the transaction, a feat made possible by new rules - effecting in June of 2003 - mandating the electronic filing of ownership reports.
Simple Oversight
However, the distribution of "days to file" remains heavily skewed by a smaller number of very late filings. This resulted in the average filing time of those same 8,931 filings being a less impressive 14 days.
We took some extra time to dig into the circumstances behind some of those very late filings, and found that they most often resulted from simple oversight. Given that Form 4s are basically considered "annoying paperwork" for insiders, this is understandable.
But SOX makes keeping tabs on this paperwork more important than ever, and companies we talked with appear to be taking their late filings seriously.
The late filings for stock trades of Heritage Financial Corp. and Enterprise Products Partners, for example, were actually prompted by the companies themselves.
The compliance procedures of these firms include an annual call for insiders to reaffirm their holdings. These reviews — which appear to snag directors more than other insiders — duly uncovered the oversights rectified in February.
Wilmington Trust's compliance procedures dictate a bi-monthly review of insiders' holdings, according to the company. But, as is common with most companies, the procedure ultimately relies on getting good data from insiders, and even this firm had a Form 4 that took 177 days to reach the SEC.
According to Jonathan Moreland, director of research at Insider Insights, a financial firm holding assets for Wilmington Trust director Robert Tunnell, Jr., sold shares on his behalf after the position became over-weighted in his portfolio. "Since Tunnell had a standing order not to sell any Wilmington shares, he understandably did not think it necessary to monitor this account," said Moreland, adding "such scenarios are not entirely uncommon."
Complete downloadable spreadsheets of data from February and prior months is available from the box, above.
WARNING AND DISCLAIMER:
Late filings data is provided to Compliance Week by Insider Insight. Compliance Week does not warrant the accuracy or completeness of the information, and warn readers that information above has been provided by a third party and that Compliance Week does not verify third-party data. Please contact provider at right regarding any questions.
SOURCE
Data for the story and charts at left is provided by Insider-Insights.
New York-based Insider-Insights provides independent research and money management services.
It also offers online access to insider filings and related compliance data at its Web site.
For information, contact Jonathan Moreland at (212) 631-0567.
Data presented is the property of Vickers Stock Research. For more information about Vickers, call (800) 645-5043.
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