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How to find stories on fraud

Posted: March 1, 2014 | Tags: journalism

A free workshop hosted by the Reynolds Center for Business Reporting offered plenty of tips for how reporters can better develop enterprise stories about corporate fraud.

The workshop on Feb. 26 preceded the four-day conference hosted by Investigative Reporters & Editors (IRE) and the National Institute for Computer-Assisted Reporting (NICAR) in Baltimore.

 Workshop instructor Theo Francis, an investigative reporter at The Wall Street Journal, said that when developing stories, journalists should rely “on a mosaic” of documents.

 “You’re not going to find one thing that indicates fraud,” he said.

Regulatory filings by publicly traded companies like the 10-K, an annual report to the Securities and Exchange Commission (SEC), and the 10-Q, a quarterly report, are a key resource for reporters who want to dig into corporate behavior, Francis said.

If these reports are filed late, it’s a possible sign that something is amiss with a company’s accounting, he added.

Other regulatory documents that could prove useful for reporters include proxy filings, which companies must release annually, and 8-Ks, which update investors about important developments. Scrutinizing these documents can also give a better sense of where a large business conglomerate is really making its profits. Instructor Roddy Boyd used General Electric as an example.

A look at General Electric’s 2004 10-K filing reveals that the company makes most of its revenue from offering loans and credit cards. This contrasts with the company’s popular image, which emphasizes its involvement in energy and medical technology, Boyd said.  

Besides understanding what documents are available, journalists also have to know what to look for, the instructors emphasized.

“Some warning signs are simply that,” Francis said. “When the red flags start multiplying, that’s when you really want to look.” Executives who keep their assets in the names of family members is one such warning sign. And with a proliferation of online business schools with shaky credentials, it’s always worth checking out someone’s educational background, the instructors said.With the war winding down in Afghanistan, that also means there may be an influx of people in the business world with military experience. When doing a background check, journalists would do well to revise discharge papers — the DD Form 214 — when relevant. 

Other helpful resources for reporters include the search engine BrokerCheck, which is exactly what it sounds like: a way to check the backgrounds of those who work at brokerages and investment firms. There’s also Seeking Alpha, which tracks transcripts of earnings calls.

More of the Reynolds Center resources on how to use regulatory documents to better develop stories can be found here




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