When an email came through entitled “Conference Call with SEC,” I took notice. It’s sort of like, “Police knocking on your door.” Luckily, it was not that kind of conversation; it was actually something far from it.

On Friday April 18, 2007, I had the chance to participate in a conference call with the SEC on the topic of XBRL. In short, this is about the SEC computerizing SEC data. This means that when you want to calculate a valuation you just need to talk to a web service and it will provide you the information. I am in awe! This is wonderful. How often I’ve had to punch in the numbers by hand to calculate the valuation of a company. With this web service, however, I can query and ask for the details of a publicly traded company.

Cool, yes! Note: If you have further questions, please do not hesitate to contact me at christianhgross at gmail.com. Some background information: I’ve been building web services since 1999 and am always on the lookout for interesting web services.

Here are some of the questions posed to the SEC and their answers:

Q: What about performance, especially when earnings are released for the appropriate company?

A: It will be dealt with and they [SEC] have experience in this problem.

[Comment: I believe them and I believe they will work through these problems, but I do expect some growing pains. Especially once the service catches on.]

Q: What about legal liability? If somebody posts incorrect information due to a mistake, unintentional or intentional, how will the legal ramifications be worked out?

A: First the SEC requires legal filings according to standard accounting practices. Thus if there is a mistake then it can happen without the web service. This is not a web service issue. Additionally, the SEC in conjunction with other groups is actively working to define a common taxonomy. The common taxonomy will ensure that whatever information is published will be accurate. And if there are intentional mistakes then they will be dealt with like today.

[Comment: While the possibility exists of intentional and unintentional mistakes, this is not a web service issue because it can happen with regular filings. What I think still needs sorting are the versions of documents.]

Q: Who is participating? And will this be a requirement for all companies?

A: Right now there are 70 major companies with 370 submissions representing 2 trillion of share holder value. The problem that we are facing now is how to nudge companies to publish their information and provide them with the tools so that it is not a major effort. Right now there is great interest from the mutual fund industry.

[Comment: I don’t envy the position of the SEC. There is Sarbanes-Oxley, and a whole host of other things publicly traded companies need to do. This is yet another item to do on a corporations check list and I can see companies getting annoyed. Though if I were in the position of the SEC I would say, “Hey, forget about filing using paper, from now on use electronic.” I think that corporations would appreciate, but it does assume a completely working and bugfree system. Not yet, but I could see it in the future.]

Q: What about fixing mistakes or ensuring that the appropriate people make the appropriate changes?

A: Working on the defining the exact process, but something that is being thought about.

Q: What about other exchanges?

A: There is a global effort to get this working on multiple exchanges, with examples being China, Israel, Singapore, and Japan. The idea is to define a global taxonomy so that a person in Japan speaking Japanese can view through the magic of translation an English filing. Right now the taxonomy is available in 18 languages for 100 countries.

[Comment: I am impressed and hopeful. It will not be easy, but what I find impressive is that the SEC is from day 1 working with other communities and exchanges in other countries. Kudo’s]

Q: What information will be filed?

A: As much as possible and something that is still being worked upon.

Q: What about real-time vs static data?

A: We are working towards a real-time model, or near real-time model.

Another reason to be impressed: the SEC is talking to bloggers and not just the press. The SEC has said it wants to start a direct dialogue with bloggers. I thoroughly appreciate being included, and it illustrates how the blogging community has matured to the point of being respectable. Kudos to the SEC.

Overall, my impression is that this is a very good thing. Right now this is geared towards developers who will add services (like myself). In the long term, though, the SEC database will be a central repository of information, much like Yahoo finance.