On the SEC and CIT…
Though it’s been awhile since we last footnoted CIT Group (CIT), given the news over the past few days, it seemed like a good idea to take a closer look at their filings.
One of the things that immediately jumped out was the relatively long string of comment letters between the company and the SEC, some of which just appear to be made public relatively recently. First, a reminder on comment letters: corresp are the letters that the SEC send to companies; uploads are the companies’ responses and uploads are the letters that the SEC sends. (Ed note: I don’t know why I can’t keep this straight in my own head!Grrrrr!) For some reason, Edgar always handles corresps as PDF files and uploads as links. And while the letters become eligible for public release 45 days after the issue has been deemed resolved, it doesn’t always work that way, which makes finding comment letters a bit tricky since you really have to be looking for them.
Now, the letters, the most recent of which was dated March 26 which is focused on disclosures in CIT’s proxy statement. Three days earlier, there was this longer letter which raised questions about CIT’s participation in Treasury’s Capital Purchase Program. Be sure to have a cup of coffee in hand before sitting down with this one!
All told, there’s been 13 letters back and forth between the SEC and CIT over the past year, which, trust me on this one, is a fair amount of correspondence, given everything else the SEC has on its plate. Still, until the SEC improves the way it handles comment letters, these incredibly useful documents will remain largely a historical exercise to look at after things start to go wrong, instead of a helpful tool for spotting problems in the past.
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Posted in Tags: comment letters, high flyers |
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July 13th, 2009 at 10:54 am
2 Marketwatch stories just now on this story. Do DD.
CIT bankruptcy would fuel suspicion on Wall St.
11:39a ET July 13, 2009 (MarketWatch)
NEW YORK (MarketWatch) — CIT Group Inc. isn’t a part of the Wall Street power circle, and that’s made it susceptible to trouble as it faces mounting loan losses.
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Struggling CIT in talks to secure liquidity
11:48a ET July 13, 2009 (MarketWatch)
LONDON (MarketWatch) — CIT Group officials were scrambling over the weekend to improve the group’s funding position amid fears that nervous customers could start withdrawing their funds, according to media reports, and as Treasury Secretary Timothy Geithner said he’s closely following the saga.
Separately Bloomberg reported Monday that CIT believes its demise would put 760 manufacturing clients at risk of failure and precipitate a “crisis” for up to 300,000 retailers.
Internal CIT documents seen by Bloomberg claim a collapse would create a ripple effect on the small and medium businesses that rely on CIT to be able to pay their vendors that ship goods and make their payroll payments, the report said.
July 13th, 2009 at 3:35 pm
Could be something to uncover. Why don’t we leave Palin and Michael alone and start focusing on real issues again. In all probability there are a string of scandals and schemes yet to be opened.
July 14th, 2009 at 6:52 pm
Just to clarify, UPLOADS are letters sent by the SEC, and CORRESP are letters sent by the company. I agree that the letters can be difficult to find. Often, the easiest thing to do is to just look at the CORRESP (i.e., company correspondence) because generally companies or law firms responding to staff comments will simply recite the staff’s comments in the correspondence they send back to the SEC.
I think the timing issues relate to the concept that the letters historically have not been viewed as a method of disclosing material information to investors. In other words, if the problems identified in the letters are that material, then the filing to which it relates should be amended in response to the comments. With that said, I agree with you that investors do rely on these letters to flesh out issues within the company and to see what the SEC identifies as potential issues or areas where the company should provide an explanation.
July 14th, 2009 at 7:03 pm
@Anon: Thanks for clarifying that for me (and other footnoted readers). I don’t know why I can’t keep the two straight in my head, but always appreciate it when readers who are smarter than me correct whatever mistakes that I make!