||Computer Counselor - February 2002
Conducting Online Investigations of Companies and Their Finances
An abundance of information about companies can be found online, often for free
By Carole Levitt
Carole Levitt is an attorney and president of Internet For Lawyers. She can be reached at firstname.lastname@example.org.
An attorney often needs to investigate a company’s financial records, corporate structure, and the personal and business affairs of its executives. For example, the company may belong to, or be associated with, an opposing party or a potential or existing client. Before agreeing to represent a corporate client, an attorney needs to conduct a conflict check to ascertain whether he or she ever filed suit against one of the company’s other entities. To accomplish this, an attorney needs to research the company’s structure. An attorney would also be wise to investigate the company’s assets to discover whether the corporate client can pay for the legal work required. Only when armed with adequate information about a potential client or opponent may an attorney make the best decision about such issues as representation, potential conflict of interest, and case evaluation.
In the past, many attorneys hired specialists to search a variety of expensive databases and reference books to investigate a company’s background. This was often referred to as gathering competitive intelligence. Often, the specialist would require what seemed like an inordinate amount of lead time to complete the investigation. Now, however, with so much business and financial information available on the Internet, attorneys and other legal professionals can quickly accomplish the lion’s share of this task on their own by using a variety of free resources or reasonably priced databases that are accessible on the Web.
To locate company information on the Internet, take the following steps from the obvious to the not so obvious:
• Review the company’s Web site.
• Search company directories.
• Review the SEC filings of the company if it is public.
• Review state business records.
• Obtain news about the company and its executives.
• Ascertain whether any federal or state agency regulates the company and review the information that the agency has about the company and industry.
• Locate opinions, briefs, complaints, and settlements concerning the company.
• Think creatively about where to pursue additional information that lies off the beaten path.
||Whether investigating a client company or an opposing company, the best place to begin the investigation is at that company’s Web site. Most companies post a plethora of information about themselves. The site may provide information about the company’s background, its corporate structure, and its executives. The site may also provide links to press releases, stock quotes, and SEC filings. Additionally, some information found on company Web sites may be tantamount to a warranty or an admission that attorneys for the opposing side can use at deposition or at trial. On the other hand, if a company with a possible admission on its site is your client, be sure to know what information is on the site in case any of it could raise questions from an opponent that need to be answered.
Company directory sites compile background information about public and private companies and provide links to SEC filings, news articles, stock quotes, research reports, and financials. Hoovers (www.hoovers.com) provides all these categories of information and thousands of company capsules about both public and private companies, but only some of the data is free. For more detailed information, such as analyst reports, users need to subscribe to Hoovers for $99 per year. One can also link to fee-based credit report sites from Hoovers, such as D&B or Experian. For those investigating initial public offerings, Hoovers also sponsors IPO Central (www.hoovers.com/ipo/0,1334,17,00.html) For information about the more elusive private companies, Corporate Information ( www.corporateinformation.com) contains 20,000 company profiles on its site and a search engine that links to 300,000 public and private company profiles at other sites. While most company directories are searchable only by company name, Thomas Register is searchable also by product name or brand name (www.thomasregister.com). This can assist the searcher who needs to discover the name of the company that manufactures a certain product or brand name. For detailed analysis on over 20,000 American and foreign companies in English, see Wright Investors’ Service at http://profiles.wisi.com. Search by company name or ticker symbol or view a list of foreign companies by industry or by country. One of the most useful aspects of this site is a currency converter that converts the financial information expressed in a foreign currency into any other currency.
To find financial information about public companies, review SEC filings. While most people use the official SEC EDGAR (at www.sec.gov/
edgar/searchedgar/webusers.htm) site for free access to all public companies’ filings, it has many shortcomings. For example, publication of filings is delayed by one day, and searching is very limited—there is no full-text searching. For a more robust search engine and access to filings in real time, use 10K Wizard, found at www.tenkwizard.com. There, users may search the full text of all filings by key words and phrases or search by ticker symbol, company name, SIC code, industry, or filing form type. An attorney who needs to know specific information about the compensation package of a public company executive would be able to pinpoint this information on 10K Wizard by entering the executive’s name and the phrase “executive compensation” into the search menu. Although 10K Wizard recently became subscription-based at $99.95 per year, its search engine is still available for free. If you search too infrequently to warrant a subscription, use 10K Wizard to search and then take the results to the free SEC EDGAR site to view the relevant filings.
If an attorney needs to discover whether a company is incorporated in a specific state, who its registered agent is, or what the company’s address and phone number are, information from 42 states is available free at the Secretaries of State Web site. For a comprehensive list of links to sites for these states (and for information on how to obtain the information from states, such as Delaware, that do not provide free access), users can visit www.residentagentinfo.com.
Local business journals, general newspapers, and wires are an excellent source of information regarding companies and executives. CEO Express lists business news sources by subject (www.ceoexpress.com) while Northern Light (www.northernlight.com/news.html) provides a free search engine for real-time news from 56 newswires that can be limited to the past two hours, today, or the past two weeks. The New York Times and the Wall Street Journal are the best places to find news articles about companies. The New York Times archive (www.nyt.com), which goes back to 1996, can be searched for free; a reprint of an article costs $2.50. The Wall Street Journal costs $29 per year for those who also have a print subscription and $59 per year for those with an online subscription only (www.wsj.com).
For Los Angeles lawyers, the Los Angeles Times has the best site for researching local companies. The Times is searchable back to 1985 for free at the Los Angeles Public Library’s Web site (www.lapl.org), but only those with a library card (which can be applied for online) can perform this search. To access the archives of select business journals from around the country, see http://bizjournals.bcentral.com/search.html.
If a company is part of a publicly regulated industry, the federal or state agencies that regulate the industry may have sites that contain reams of information about the industry and its standards. Additionally, the sites may contain company-specific information, including any legal action taken or investigations made. If researching a merger between Media One Cable Company and AT&T, check the Web site for the Federal Communications Commission (www.fcc.gov) to find all the merger-related documents. If you are unsure of which agency regulates an industry, search First Gov (www.firstgov.gov), which indexes every word of 30 million federal government documents and features links to many state and local sites.
Since so many companies are incorporated in Delaware, many cutting-edge business suits are filed there. At the Delaware Corporate Clearinghouse (which is located at http://corporate-law.widener.edu/case.htm), users can search the full text of documents for selected opinions, briefs, complaints, settlements, motions, and other documents filed in the Delaware Court of Chancery as far back as March 1999.
These investigative tools are not an Internet searcher’s only resources. For instance, by finding out who is linking to whose Web site, one may discover unofficial connections between companies, products, or executives that do not appear in traditional corporate family trees. To discover such links, go to the Advanced Search page of Lycos at www.lycos.com and click on Link Referrals. Enter the target URL to discover what sites link to it. The links search of Google (www.
google.com), found on its Advanced Search page, performs the same function. To keep an eye on a company site, consider tracking changes by establishing a free alert account at either Mind-it (located at http://mindit.netmind.com) or Northern Light (www.northernlight.com). An e-mail alert will be sent to you every time the company changes its Web site.
To investigate a company’s old pages, where deleted but useful material may still be found, visit the Internet Way Back Machine (www.
archive.org), an archive of old Web pages. To find information, rumors, or public opinion about a company, product, or executive, try searching Usenet postings using Google Groups (which has archived 700 million postings since 1981) or Board Reader, which searches 732,456 forum and message boards (www.boardreader.com). Additionally, search Daypop, an index of blogs (personal Web logs), at www.daypop.com.
Attorneys can save time by using various sites to conduct company research, but since no site is perfect, information should be verified by at least two sources. Attorneys seeking solid information can ascertain a site’s credibility by reading the “about us” statement that most sites have. If the site has a bias, it will probably be manifest in its statement of purpose. Also note a site’s “last updated” statement when the currency of the information is an issue.