Web hasn’t helped financial filings

NEW YORK — With the government prodding investors to adopt the Internet as their primary source for key documents such as annual reports and proxy statements, it’s time for regulators and companies to make finding and reading online information reports more user friendly.

Next year, the Securities and Exchange Commission plans to replace paper mailings with electronic delivery as the default mode of distributing these reports to shareholders of public companies.

There’s plenty of logic to that plan, ranging from savings on printing and postage to the simple fact that so many investors already use the Internet to mine the vast stores of corporate information now available. But compared with more civilized neighborhoods of cyberspace, online delivery of corporate information is an untamed thicket of confusion and clunky Web design.

These shortcomings extend well beyond the intimidating financial and legal jargon that has been derided by SEC Chairman Christopher Cox, who recently described this prose as “written more like insurance policies against lawsuits than shareholder-friendly guidance.”

The challenge of replacing all the legalese and financial lingo with plainer language will not be a quick fix. It’s been two years now since the SEC set out to inject clarity into mutual fund sales disclosures, an effort that’s still under way.

But there are simpler deficiencies that can be resolved more swiftly.

This means not forcing investors to decipher an arcane system of filing codes, a mysterious land where 10-K is a pseudonym for a company’s annual report and a DEF 14A is the proxy statement of matters to be voted upon at the annual meeting and how much management is getting paid. Whether they’re searching at the Web site of the SEC or the home pages of individual companies, investors are more apt to encounter these codes than a simple label and description.

All this presupposes that the average person can even get so far as locating those oddly monikered documents. In an era where you can dig up precise information on just about anyone or anything with a few words typed into Google Inc.’s search engine, the SEC’s Web site is woefully primitive.

To navigate www.SEC.gov, investors are offered an assortment of search options, with a prominent emphasis on an unfamiliar acronym known as the CIK, short for “Central Index Key,” whatever that is.

The would-be simplest option, typing in a company’s name, often produces confusion by turning up multiple listings, generally related business entities, that won’t necessarily be ordered with the primary choice first.

The best way of searching is to punch in the stock ticker symbol. Still, while many investors may know tickers by heart, this hardly seems a user-friendly requirement.

Worse, once documents are found, the frustration continues.

With many filings running 100 pages or more, the Internet and some pretty basic software should allow for easier reading. But most companies have done little to simplify the process of locating information within these documents.

Even Adobe Systems Inc., whose Acrobat software is one of the most ubiquitous computer programs for viewing online documents, comes up short in exploiting its own technology for the benefit of shareholders.

A key feature of Acrobat is to provide an index of quick links alongside the pages of text, helping users jump around with a mouse click, toggling between sections or cross-referencing a financial table with a relevant footnote dozens of pages later. But in Adobe’s own annual report for 2005, a 108-page affair, there are a mere 11 live links.