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The importance of accurate data reporting for funds regulated by the SEC

SEC commissioner Caroline Crenshaw recently spoke on data quality and accuracy, noting that there are “many tools available to aid with the submission of high-quality, accurate data.”
Sumit Mahajan, CAIA, FRM
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SEC commissioner Caroline Crenshaw recently spoke on data quality and accuracy, noting that there are “many tools available to aid with the submission of high-quality, accurate data.” Outlining how the use of EDGAR, which notifies filers of any data quality issues, and global framework XBRL is key to ensuring the most accurate data possible, describing the latter as “delivering a myriad of benefits”.

The importance of filing and keeping accurate data cannot be understated, with the SEC continuously looking for ways to improve the accuracy of data collection. Kelly further outlines this when concluding that “we should not hesitate to take whatever action may be necessary to accomplish the objective of a complete, accurate, and accessible source of market data, including further rulemaking, if needed.”

The SEC have also been taking a firm approach on firms who use misrepresentation and deceptive practices in obtaining data and the misuse of personal data, with App Annie Inc. being the first case of the SEC enforcing action against an alternative data provider back in 2021, when the company used non-aggregated, non-anonymised confidential data to improve the performance estimates it sold to security trading firms.

Accurate data reporting is fundamental to any company for several reasons, with the overarching purpose of it being accountability, management and organisation. The volume of data a manager has to contend with has incrementally increased over recent years and continues to do so. Firms are now at a point where reviewing their overall business operational model can be a sensible approach. Implementing new systems on an ad hoc basis means not getting the best result from any of the platforms. A deep dive review of your current workflow can evidence that a highly automated system, via a centralised platform, is more cost effective, time efficient, easier to use and more secure.

A fund can start the process by analysing spreadsheet usage as part of daily processes and look at the inefficiencies and inaccuracies plus the security risk to you and your investor. Once the operational steps have been broken down, inventory the current spreadsheet use and work out the total time required outside core processing to open, maintain, process, back up and move data in and out of the spreadsheet environment. Once a fund compares use of legacy processes, it becomes clear that a platform that assists managers with connecting to their data viewing, processing and reporting makes sense as a scalable, value driven solution.  

https://www.sec.gov/news/speech/crenshaw-lessons-structured-data-111021
https://www.sec.gov/news/press-release/2021-176?utm_medium=email&utm_source=govdelivery
https://www.davispolk.com/insights/client-update/sec-enforcement-action-highlights-scrutiny-alternative-data-and-trading

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