Thursday, February 28, 2013

The Last Independent Standing-- Meet Intelligize: One of the Best Little SEC Research Products You Never Heard Of....

When I first heard about Intelligize, I have to confess. I rolled my eyes and groaned at the thought of yet another securities  research product. What in the world could be new in the over populated territory of securities research products? But the rumors were persistent, that  this product did something new. Intelligize could save a lawyer hours of research time. I took a look and blimey... There was something new in securities research!

Painful Research as the Mother of Invention

Gurinder Sangha
Intelligize is the brainchild of Gurinder Sangha a former corporate associate at Shearman & Sterling and White & Case. In 2007 he left the practice of corporate law, retreated into his apartment and began developing a " better way to conduct securities research". He wanted to apply what he calls the "Apple approach" to legal research. He defines the "Apple approach" as creating a complex product with a simple intuitive interface which requires no training manual.

The traditional approach to research starts with a broad  search of all documents which is then narrowed with a series of sub-searches. Sangha decided to turn the process on its head. He developed a search engine with the ability to search by deconstructing documents. Start with the best document  and then expand your search by finding more documents or clauses like the original document or clause..

Sangha had a great idea, but as we all know,  building the technology for a start-up  requires some angels for funding.

Every Start up Needs an Angel

The first potential investor Sangha attempted to contact was Phil Brown, the founder and former CEO of Global Securities Information (GSI). GSI, one of the grand daddies of the securities research business, started in the pre online world of the early 80's.The technology involved a telephone, a photocopier and a chair in reading room at the Securities and Exchange Commission Office in downtown DC. Brown grew GSI into one of the most successful and respected SEC research providers. He sold the company to Thomson Reuters in July 2005. They re branded product as Westlaw Business, a  company which remains a competitor to Intelligize. Since Brown was under a non-compete agreement, he was unable to discuss Sanga's venture until  his non-compete expired.

Before GSI was sold, Brown wanted to tackle SEC comment letter research.  but  Brown  admits he could not figure out how to link the series of communications in comment letter chains of correspondence. The challenge wasn't just linking the relationship between the letters, but identifying and matching the question and answer pairs through a series of letters. Nonetheless. Brown had unknowingly contributed to the creation of one of the key components of the Intelligize product. In 2004, GSI made the FIOA request which led to the public release of the entire SEC comment letter archive. The documents were now available to all, but still difficult to research.. A lawyer who conducted a keyword search of comment letters, might have to review hundreds of letters including many irrelevant documents before reconstructing the thread of communications in which the SEC responded to the issue of interest to the lawyer.

When Phil's non-compete expired, he agreed to meet with Sangha but he was initially extremely skeptical that Intelligize had anything new to offer. By the end of the meeting Phil was convinced and ready to invest.

The First "Killer App:" The Precedent Analyzer

From his own experience as a "big law " associate, Sangha knew that one of the most challenging securities research tasks facing a corporate associate was reviewing precedents of specific clauses within SEC filings. If for example, you wanted to research precedents for a particular risk factor, you would have to flip through each registration statement one at a time to locate and read that risk before moving on to the next document. As a result, it was very challenging to quickly analyze and synthesize multiple precedents. Sangha's technology broke apart SEC filings down to the clause level. For the first time a lawyer could easily review the same clause form multiple flings simultaneously on one screen. 

The Intelligize Products. Since the release of the precedent analyzer in 2009, Sangha has added 7 more products which apply his search technology to new data sets and provide new and improved workflows for analysing SEC research documents. Here is a brief summary of the Intelligize products released since 2009

Comment Checker Next  Sangha  tackled the SEC staff review process. Preparation for the staff review normally involves locating and organizing coherent threads of inquiries and responses from SEC Staff in comment letters. Sangha's technology blew apart the documents and identified the threads of issues through chains of correspondence. For the first time a lawyer could easily identify the question and answer pairs that threaded thorough a long chain of correspondence. Comment Checker pulls together all publicly disclosed SEC comments and responses including over 1.2 million  comments from more than 5,000 public companies. It is the only tool that provides the entire chain of communication between the SEC and a company for each comment (including follow-up comments/responses) on one screen. Released in 2009.

Precedent Analyzer The most efficient tool in the marketplace for analyzing multiple SEC fillings and isolating what’s market, what’s new and what’s changing (e.g. the program can simultaneously analyze the Competition risk factor from 10 different companies and show what’s been updated). Released in 2009.

SEC Checker pulls together all publicly disclosed SEC filings and related documents. Using our patent-pending processes, we’ve organized, reformatted, and indexed all of this information – enabling you to search, filter, compare, copy, and assemble content for internal or client review. Allows you to compare year over year changes. Automatically links to all underlying filings which are incorporated by reference. As far as I know - this is the only product that automatically links to documents "incorporated by reference" in SEC filings.

No Action Letter Database Full-text searchable database of No Action Letters and SEC responses  which lets you research Reconsideration Requests and Shareholder Proposals. Released in 2011.

Memos Database The largest and only fully-text searchable  database of law firm and accounting firms memos in the marketplace. It includes over 150,000 memos written by over 100 law firms. Released in 2011.

Rule 144/Reg S Database Over 10,000 hard-to-find Rule 144A and Regulation S offering documents. Released in 2011.

M&A Researcher. Helps you easily analyze M&A deal terms from over 10,000 transactions (e.g., you can easily pull up all “Go-Shop” language where Wachtell is the target’s counsel). They plan to add documents going back 10 years. Released in 2012.

Agreement Checker The only product that can run searches within specific clauses and sub-clauses for any type of contract (e.g., you can research the notice periods within each termination clause in all public license agreements to see what’s standard). It blasts apart documents and allows law firms to identify their own standard clauses or review clauses prepared by other law firms. To support this product, they have created a taxonomy allowing lawyers to navigate form to the appropriate clause or language. Takes a more granular approach to analyzing documents. Released in 2012

Tapping the Librarian Brain Trust

Sangha worked closely with early adopter firms such as Skadden, Latham and DLA Piper. Those firms provided valuable feedback for enhancing products. In particular, he regards  law librarians as a special  product development "brain trust" who  he credits as the source of major enhancements in content and functionality.

Now More Than Ever

Sangha's immersion in SEC research has provided him with some interesting insights. According to Sangha, recent changes in SEC regulations, have resulted in an explosion in the size of SEC filings. According to Sangha's analysis of public filings, all 3 major filings (10Ks, 10Qs and Proxy Statements) have doubled in length in the past 10 years. Proxy Statements in particular are becoming the primary form for disclosure of major issues. Since the SEC has increased penalties, Intelligize can be positioned as a tool for helping clients mitigate increasing risk exposure. This  issue is detailed in a recent Intelligize "white paper" on risk. .And of course  Gurinda is pleased to point out that Intelligize's powerful search engine can help lawyers analyze and compare this ever growing database of filings.

The Business Model

Sangha plans on growing revenue by  creating value. That value includes adding new products, content and functionality, rather than focusing on steep price increases to meet revenue targets. I can already  hear law firm librarians cheering!
The Last Independents Standing: This is the first in an occasional series on legal information companies which are not owned by one of the major legal publishers.


  1. Good assessment. I wrote a review of Intelligize a couple of months ago and came to many of the same conclusions.

  2. Hi Jean,

    Viewers who have a Twitter account can follower them @Intelligize.

    Good post. Can't wait to read the other companies.