TRANSPARENT INVESTING

I want general information about investing.

SEC List of Investor Resources (by subject)

I want to learn about a broker, investment adviser, or related firm.

Search FINRA BrokerCheck
Search the professional backgrounds of FINRA-registered brokers, brokerage firms, investment advisers, and investment adviser firms (past and present).

Search Investment Advisers
Determine whether investment adviser representatives and investment adviser firms are properly registered and read their registration forms (“Form ADV”). Form ADVincluding business information (ADV Part 1) and the firm’s brochure (ADV Part 2).

Decipher Letters After Financial Professionals’ Names
Learn about professional designations, what is required to earn them, and how to verify information about a professional using them.

Determine whether a brokerage firm is a
member of the SIPC (Securities Investor Protection Corporation)
SIPC oversees liquidation of member brokerage firms in financial crisis when customers’ assets are missing. But, the SIPC’s customer protections are limited ($500,000 for securities and $250,000 for cash only). The SIPC is not a government agency and has no investigatory or regulatory powers over its members (regulating and investigating investment brokers and firms is largely the SEC’s job). 

I want to learn about a public company.

Search Company Filings (EDGAR Database)

The SEC requires public companies to disclose information concerning their finances, executive compensation, insider transactions, shareholder meetings, and mergers and acquisitions. These forms are a good starting point for your research (see SEC Forms List for many more available forms and the associated rules).

Form
10-K (Annual Report): Discloses audited financial statements (includes management’s analysis of finances and operations).
Sample 10-K from Apple Inc. discloses how many iPhones (150,257,000), iPads (71,033,000), Macs (16,341,000), and iPods (26,379,000) were sold in 2013, and how many billions of dollars Apple Inc. netted from those sales.

10-Q (Quarterly Report): Discloses unaudited quarterly financial statements.
Sample 10-Q from The Walt Disney Company discloses the acquisition of Lucasfilm Ltd. (December 21, 2012), including the Star Wars franchise. Estimated value of theStar Wars franchise: $2.6 million.

8-K (Current Report): Discloses the most significant new events (such as bankruptcy, acquisition, change in control). See SEC’s “How to Read an 8-K” for more information.
Sample 8-K from Facebook, Inc. discloses its acquisition of WhatsApp Inc. for $19 billion.

14A (Proxy Statement): Executive compensation details and proposed mergers.
(Note: start search for “DEF 14”, the definitive proxy materials)
Sample Schedule14A from Oracle Corporation discloses that the CEO’s, Lawrence Ellison, total compensation for 2013 was $78,440,657, not including the $1,165,502 bonus he declined.

I want to learn about a mutual fund.

Search Mutual Fund Filings (EDGAR Database)

Understand Mutual Fund Fees and Expenses

Analyze Specific Mutual Fund Fees and Expenses

I want to learn about investment fraud and whether I’m at risk.

Search FINRA’S Risk Meter
Determine your investment fraud vulnerability.

Search FINRA’s Scam Meter
Scam alert detector, after just four questions.

TRANSPARENT BUSINESS

I want to learn about how to form a corporation or LLC.

Business entities are formed according to state law. Although many choose to incorporate (or form LLCs or LLPs) in Delaware (Delaware advantages according to theState of Delaware and according to The New York Times), establishing a business in your home state may be an attractive option.

Wisconsin Business Entity Types

Wisconsin Corporation, LLC, and LLP Forms

I want to learn about charitable, tax-exempt organizations.

Access tax filings and other nonprofit-related information at Guidestar (note: some of Guidestar’s resources are fee-based). For example, take a look at the American National Red Cross’ 2011 IRS Form 990 (dated February 13, 2013), which includes compensation information for officers, directors, trustees, and certain employees. In 2011, the Red Cross’ CEO, Gail McGovern, earned $628,508 (see Schedule J, page 2).

Foundation Center also has a searchable 990 Finder

Search the Economic Research Institute for data collated from nonprofit organizations’ Form 990 reports and pdf links to the 990s. For example, theMetropolitan Museum of Art had $3,202,789,465 in assets (form year 2010). Other tools, including Nonprofit Exec Pay Software, are available for purchase.

TRANSPARENT POLITICS

I want to learn about how individuals and organizations affect public policy through political contributions (to candidates, parties, PACs, Super PACs, and Social Welfare Groups).

Individuals may contribute:
- $2,600 to a candidate for each election (maximum $5,200 if primary and general elections)
- $32,400 to a party each year
- $5,000 to a PAC each year
- Unlimited to a Super PAC (for example, Restore Our Future supported Governor Romney and Priorities USA Action supported  President Obama in the 2012 election)
- Unlimited to a 501(c) organization including Social Welfare Groups, labor unions, and business associations  (for example the NRA, Sierra Club, AFLCIO, and U.S. Chamber of Commerce) 

The U.S. Supreme Court, in McCutcheon v. FEC, struck down (on April 2, 2014) limits on individuals’ total contributions to candidates and PACs. Take a look at The New York Times’ before and after McCutcheon chart.

Organizations (including corporations and LLCs) may contribute:
- Unlimited to a Super PAC
- Unlimited to a Social Welfare Group

The U.S. Supreme Court made these corporate political contributions legal in the landmark case Citizens United v. FEC.

Businesses may also establish PACs. Although they are not allowed to contribute company funds, they may cover administrative expenses. Contributors to these “connected” PACs include certain company employees, shareholders, and board members (contribution limits are listed above). For example, Facebook Inc. formed a PAC in 2011. Find information about the Facebook Inc. PAC, including lists of recipients, donors, and expenditures on OpenSecrets.org.

I want information about political contributions made by individuals and organizations.

Contributions to candidates, parties, PACs, and Super PACs must be disclosed to the FEC (Federal Election Commission). Online data is available to search and compare political contributions.

The FEC’s website includes a Disclosure Data Search to find individuals, candidates, and PACs.

Maplight’s Contributions Search connects money, votes, and interest groups for the U.S. Congress and California and Wisconsin legislatures.
- U.S. Congress data: for example, view support and opposition dollars for the Water Rights Protection Act (passed on March 13, 2014).
- Wisconsin data: for example, view a list of contributions interest groups supporting or opposing a bill gave Wisconsin Senator Alberta Darling within 30 days of her vote on that bill.
- California data: for example, view a list of contributions by interest group.

501(c) organizations are not required to reveal their contributors. Accordingly, money from 501(c) is often called “dark money,” flowing through a tangled web of shell companies. But, because they secure IRS nonprofit status, general revenue and expense information is publicly available on their Form 990s (searchable at 990 Finder or Guidestar).

I want information about lobbying.

Businesses and interest groups spend significant sums lobbying the U.S. Congress federal agencies. Check out the Center for Responsive Politics Lobbying Database to research top spenders, top lobbying firms, industries, and issues (and more).

For example, the biggest spender when it comes to lobbying is the U.S. Chamber of Commerce, which spent $74,470,000 lobbying in 2013 (but compare that to the $157,187,500 it spent in 2010).

Congressional lobbying disclosures are also searchable at the U.S. Senate’s websiteand the U.S. House of Representative’s website

States’ rules concerning lobbying and disclosure vary, as does online access. But, some searchable databases exist. For example:
- Wisconsin’s Eye on Lobbying
- Massachusetts Lobbyist Public Search
- Washington Lobbying Database

TRANSPARENT LAWS

I want to learn about the JOBS Act (Jumpstart Our Business Start-ups Act).

The JOBS Act was passed to stimulate economic growth by increasing access to capital and decreasing some regulations for small and start-up businesses.

Crowdfunding
Crowdfunding is the process of obtaining financing from a large pool of potential investors, usually through an online platform. And now, small and privately-owned companies can utilize this powerful tool to advertise and solicit the general public for start-up funding.  At this time, start-up funding from the general public is limited to “accredited investors” and is subject to accreditation verification requirements. CAUTION: this also means that all companies must comply with SEC Form D filing requirements or else suffer harsh penalties.

Emerging Growth Companies
Several benefits easing regulatory reporting requirements are provided to companies that generate less than $1 billion in revenue before becoming publicly traded. These benefits continue until the company surpasses $1 billion in revenue or has been public for 5 years.

I want to learn about the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Dodd-Frank Act was enacted to address systemic deficiencies in the financial industry leading to the 2008 financial crisis. The goals of the Dodd-Frank Act are protecting consumers and avoiding future financial crises by improving Wall Street transparency and accountability. Dodd-Frank includes 16 essential areas of reform. Major new rules include:

Bank Regulation (a.k.a. Ending “Too Big to Fail”)
In 2008, large bank and financial institution failures caused economic instability, requiring government bail outs for those deemed “too big to fail”. Dodd-Frank established the Financial Stability Oversight Council (FSOC) to oversee banks and non-bank financial firms including hedge funds. Banks are also required have emergency plans for a fast and orderly shutdown in case of insolvency.

Say on Pay
Shareholders have a (non-binding) say on executive pay, highlighting accountability and transparency for company owners.

Credit Rating Reform
The SEC (Office of Credit Rating) will regulate credit rating agencies. You’ll recall these agencies contributed to the 2008 recession by over-stating the values of derivatives and mortgage-backed securities.

Volcker Rule 
Effective April 1, 2014, prohibits banks from owning or investing in hedge funds, private equity funds, or any proprietary trading operation for their own profit. Look for more about the Volcker Rule on Deal Transparency in the coming weeks.