SEC Form 8-K: Definition, What It Tells You, Filing Requirements (2024)

SEC Form 8-K, titled Current Report, is a mandatory filing that publicly traded companies must submit to the Securities and Exchange Commission (SEC) to announce significant or "material" events that shareholders need to know. Unlike mandated periodic reports such as annual (Form 10-K) or quarterly (Form 10-Q) filings, Form 8-K is designed to reveal essential matters in time for shareholders to react. Matters that must be reported on the form include acquisitions, bankruptcy, directors' resignations, or fiscal year changes.

Before the introduction of Form 8-K, corporate disclosure was vastly different, when it existed at all. A significant lack of standardized reporting requirements led to a significant informational divide between company, banking, and Wall Street insiders and the general public. Insider trading was endemic, and retail investors were often treated as rubes to be exploited. Meanwhile, investors had limited access to timely and material information about corporate events, such as mergers, acquisitions, executive changes, and financial troubles.

The SEC created Form 8-K in 1936, requiring companies to promptly report major corporate events, aiming to equip investors with prompt information—"prompt" meaning 15 days at the time—to know whether to buy, hold, or sell shares in specific companies. Researchers have long confirmed its value for investors, linking their filings to abnormal volume and return volatility; some reduction in the differences among institutional, insider, and retail investors in the information they have; and far more substantive disclosures of crucial company information, especially after a 2004 regulatory change that greatly expanded what was to be reported via Form 8-K.

Over the years, the SEC has made several amendments to Form 8-K to improve transparency and protect investors. A major overhaul came in 2004 when the SEC significantly expanded the list of reportable events and shortened the filing deadline. The number of reportable items increased from five to almost two dozen, covering a broader range of corporate events. The filing deadline was also reduced to four business days for most items—dramatically improving the timeliness of disclosures.

As time went on, regulators added further items as to what counted as a significant event, such as disclosing notice of a company being delisted from an exchange, major changes in executive compensation, and serious cybersecurity incidents.

In recent years, there have been ongoing discussions about further modernizing Form 8-K. Topics of debate include whether the four-day filing window is still appropriate in an age of instant communication and whether additional events should be added to the list of reportable items. Below, we take you through what investors and other Wall Street stakeholders need to know about this form. We also discuss whether it's lived up to its promise to make the investing world more accessible beyond a network of insiders.

Understanding Form 8-K

An 8-K is required to announce significant events relevant to shareholders. Companies usually have four business days to file an 8-K for most items.

While the general rule is that companies must file Form 8-K within four business days of a triggering event, there are important exceptions to the timeline. For example, some disclosures fall under Regulation Fair Disclosure (Reg FD), which aims to prevent selective disclosure of material information. In these cases, companies must file Form 8-K or make public disclosure simultaneously with or before any intentional disclosure to select individuals. For unintentional disclosures, the filing must be made promptly—no later than 24 hours or the start of the next trading day.

Companies must determine if the information is "material," meaning it would be considered important by a reasonable investor to make an investment decision. This assessment can impact both the decision to file and the timing. Companies also use Form 8-K to voluntarily reveal information they deem important, even if it's not required.

Once filed, the SEC makes these reports publicly available through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) platform.

Sections of Form 8-K

Form 8-K is organized into nine main sections. Each section covers specific types of events or changes that trigger a reporting obligation. Here's a breakdown:

1. Registrant's business and operations: Including material agreements, bankruptcy filings, and mine safety violations.
2. Financial Information: Covers acquisition or disposition of assets, material impairments, and changes in shell company status.
3. Securities and trading markets: These include delistings, failures to meet listing standards, and unregistered sales of equity securities.
4. Matters related to accountants and financial statements: These include changes in auditors and non-reliance on previously issued financial statements.
5. Corporate governance and management: Covers changes in control, director departures, executive officer appointments, and amendments to governing documents.
6. Asset-backed securities: Specific to issuers of asset-backed securities.
7. Regulation FD Disclosure: For disclosures made under Regulation Fair Disclosure.
8. Other events: A catchall for voluntary disclosure of events not explicitly required but that the company deems important.
9. Financial statements and exhibits: For including financial statements, pro forma financial information, and other exhibits as required.

Most of these main sections contain several subsections, totaling over 30 specific reporting requirements. Companies must carefully evaluate events against these criteria to determine if a Form 8-K filing is necessary. The particular item number under which information is reported provides immediate context for the nature of the disclosure.

This structured approach is meant to ensure that Form 8-K filings are consistent across companies, making it easier for investors and analysts to quickly identify and understand the significance of reported events.

The Advantages of Form 8-K

First, Form 8-K provides investors with timely notification of significant changes at listed companies. Many of these changes are defined explicitly by the SEC. In contrast, others are simply events that firms consider sufficiently noteworthy. In any case, the form allows firms to communicate directly with investors.

The information provided is not filtered through media organizations in any way. Furthermore, investors do not have to watch TV programs, subscribe to magazines, or even wade through financial news websites to get the 8-K, though most do.

Form 8-K also provides substantial benefits to listed companies. By filing an 8-K promptly, the firm's management can meet specific disclosure requirements and avoid insider trading allegations. Companies may also use Form 8-K to tell investors of any events that they consider to be important.

Finally, Form 8-K provides a valuable record for economic researchers. For example, academics might wonder what influence various events have on stock prices. Estimating these events' impact usingregressionanalysis is possible, but researchers need reliable data. Because 8-K disclosures are legally required, they provide a more complete record than would otherwise be available.

Event Date vs. Filing Date

There are two significant dates for Form 8-K: the date the event occurs and the date it's reported to the public.

Usually, companies are required to file Form 8-K within four business days of the event of interest occurring. For example, if the event happened on a Monday, it would need to be reported by Friday the same week. Likewise, if it happens on Tuesday, it would need to be reported by Monday of the following week.

There are a few exceptions to the four-business-day rule. Different deadlines may apply in certain circ*mstances. For example, a company may be given more time to report a material cybersecurity incident if disclosing it poses a risk to national security or if the breach involves customers' proprietary network information.

Alternatively, for information about earnings calls that are “complementary” to an earnings press release, a Form 8-K detailing this information must be shared no later than when the call begins. Voluntary disclosures, meanwhile, don't have a specific deadline.

Advantages for Institutional Investors

Form 8-K is supposed to protect retail investors and ensure they learn about important events at the same time as the industry's major players. However, researchers argue that the SEC’s efforts to create a level playing field haven't succeeded over time.

Recent studies, following work in previous decades, reveal a significant difference in how institutional and retail investors receive information, and this has given rise to very different kinds of trading around the events depicted in the 8-K.

Institutional investors, who typically use sophisticated and expensive tools like Bloomberg terminals, show significant interest in Form 8-K information on both the event date and the filing date. In contrast, media coverage, which is where most retail investors get their information, tends to peak on the filing date.

A 2022 study used specific data that tracks retail and institutional investors and then juxtaposed that data with Bloomberg terminal search data as a proxy for institutional investor attention and media coverage data to gauge broader retail attention. The study found that much of the price discovery and gains were already off the table before retail investors had a shot, concluding that Form 8-K filings "may have little direct informational benefit, particularly to retail investors."

How Could Traders Know About Events Before the Filing of an 8-K?

Other studies have found traders making major moves before or right as an event occurred, as well as in the time between the event and the SEC filing of the 8-K days later. What does that mean? Let's game out the possible ways that investors and traders might learn about events not yet reported to the SEC:

1. Industry connections: Institutional investors often have extensive networks within industries, allowing them to hear about significant events through word-of-mouth or informal communications.
2. Expert networks: Some firms pay for access to networks of industry experts who may have early knowledge of important events.
3. Data analysis: Advanced algorithms can detect unusual patterns in trading data, social media, or other sources that might indicate a significant event has occurred or is about to.
4. Company leaks: Despite laws against it, sometimes information is leaked by company insiders, either intentionally or unintentionally.
5. Supplier or customer information: Changes in orders or business practices at a company's suppliers or major customers can signal important events.
6. Regulatory filings in other jurisdictions: Sometimes, companies must file information in other countries before U.S. markets open.
7. Conference calls or investor days: Companies might disclose information in these settings that isn't immediately filed in a Form 8-K. This type of information, though, would likely be available through the financial media.

It's important to note that trading on material nonpublic information can be illegal if it violates insider trading laws. However, many methods listed above often fall into gray areas or are considered legitimate forms of research by institutional investors.

When companies finally submit their Form 8-K, news outlets start talking about it more. This catches the eye of retail investors. These investors often buy or sell based on this news, pushing the stock price further in the direction it was already moving. Big investment firms notice this pattern. They use it to their advantage by offering to buy or sell shares at just the right time, making money from the predictable way regular investors behave.

Form 8-K-Related Problems

Let's summarize the problems researchers have identified:

• There are still insiders and outsiders when it comes to major company news. There's information asymmetry, with institutional investors gaining an advantage by accessing and acting on information before it's officially filed.
• Retail investors end up trading only after many of the gains are gone. Retail investors, in contrast, appear to be trading on "stale" news, which could lead to trades that disadvantage them while advantaging institutional investors.
• Worse, they seem to be handing further gains to the very investors who already got a head start: When retail investors react to news like the filing of a Form 8-K, they create price pressure, pushing the stock price in a specific direction. However, this price movement is often followed by a reversal, indicating that the initial move wasn't entirely justified by the fundamental information. If the market were efficient, we wouldn't expect to see these patterns of price pressure followed by reversals.

Taking these problems together, retail investors aren't just losing out on the news from before the filing; they are also providing added trading benefits to those who've already gotten a head start. It's like a race where one side is told to start days later. When they do, they're told they'll need to share any winnings with those who've already been out front.

Fixing the Form 8-K Information Asymmetry

The key argument emerging from recent studies is that filing Form 8-K may not provide significant informational benefits for retail investors. Instead, it creates a sequence of events that sophisticated investors can anticipate and exploit.

Thus, the Form 8-K system may not be achieving its intended goal of providing equal and timely information to all investors. Despite regulatory intentions, institutional investors seem to maintain both an informational and strategic advantage over retail investors in the context of Form 8-K disclosures.

When this happens, institutional investors gain an unfair advantage over retail investors. They are able to get a head start and trade on the information ahead of everyone else. And they are able to know ahead of time that the share price will likely move up or down when retail investors get wind of the news.

Here are potential ways to address the concerns raised by researchers:

1. Faster filing requirements: Reducing the time between the event and the filing could help minimize the information gaps among investors.
2. Improved disclosure methods: Exploring alternative ways to disseminate information that reaches all investors more equally and quickly.
3. Education for retail investors: Programs to help retail investors understand the nature of Form 8-K filings and the potential for "stale" news.
4. Enhanced monitoring: Increased scrutiny of trading patterns around Form 8-K events to detect and discourage potential exploitation of information asymmetries.
5. Real-time disclosure: Implementing a system where material information is disclosed in real-time rather than allowing a delay between the event and the filing.

The Retail Investor Disadvantage

The fact that retail investors often react too late to the kind of news found in 8-Ks highlights a deeper issue in the financial world, one that fuels the derisive attitudes commonly found in certain corners of Wall Street and the financial media.

Over the past few decades, as retail investing has undergone significant changes, some of the more arrogant Wall Street players have coined dismissive terms for retail investors: "dumb money," "sheep," or "noise traders."

Compounding the problem is that these pejorative terms have seeped into analysts' talk on major financial news networks. These platforms purport to guide retail investors with the latest, actionable news. However, researchers have been revealing a troubling reality. Major institutional players have already capitalized on the information by the time Form 8-Ks are filed and subsequently covered by these outlets. Thus, when financial news sources finally deliver this news to retail investors, the opportunity for significant returns might have passed.

This isn't just a matter of slightly delayed information; in many instances detailed by recent studies, it's a fundamental disadvantage baked into the system.

Other Critiques of Form 8-K

Like any legally required paperwork, Form 8-K imposes costs on businesses. There is the cost of preparing and submitting the forms and possible penalties for failing to file on time. Although it is only one small part of the problem, the need to file Form 8-K also deters some small companies from going public in the first place. Requiring companies to provide information helps investors make better choices. However, it can reduce their investment options when the burden on businesses becomes too high.

Another critique centers on the complexity and volume of the information provided in Form 8-K filings. Institutional investors argue that while the form is comprehensive, it often includes jargon and detailed data that can be difficult for retail investors to parse quickly. This complexity can lead to delays in market response among less experienced investors, further widening the gap between them and institutional players who can quickly analyze and react to the information.

Lastly, the form's broad applicability and the range of events it covers mean that not all disclosed information is immediately relevant to the market. This can sometimes lead to information overload, where critical data might get buried under less significant updates, making it challenging for investors to discern what is truly important at any given time​.

The Bottom Line

TheSEC requires public companies to keep investors updated about their financials and important events and to file this information in a way that makes it accessible to everyone simultaneously. One of the more important documents is the 8-K. This form needs to be filed when a material event occurs that shareholders want to know about.

Unlike reporting the latest annual or quarterly financials, which generally have a scheduled release date, 8-Ks can come out of the blue. In most cases, the company has to inform investors of the material event via Form 8-K within four business days. Investors can find this form on the SEC's EDGAR platform.