Company
Carta
Project Type
New product
Duration
3 months to launch
My role
As the lead UX designer and PM driving the product to completion, it was my responsibility to understand the industry and competitors, and analyze the opportunities to create a better experience.
Skills applied
Industry and user research, user flows, sketches, wireframes, high fidelity prototypes, feedback, testing, collaboration with business, engineering, and marketing.
Problem
When a company becomes public, they are under strict regulations and heavy scrutiny by the Securities and Exchange Commission (SEC) and general public. To ensure there is no insider trading, the government and public need to have visibility into the trading activity of the company's insiders and C-suite. The SEC requires all such people to file what is known as a Form 4 within two days of any trading activity. The information is then made available to the public on the SEC's website. Failure to submit a form before the deadline is an action punishable by the SEC. Traditionally, the company or individual hires a 3rd party service to fill out all forms on their behalf. This can cost a lot of money.
Research
Technically, it is the stakeholder's responsibility to file their own Forms 3, 4, and 5. Each insider must setup their own unique ID and passcode with the SEC's EDGAR filing system. But because these forms are so confusing, the service is usually outsourced in a few different ways. The individual may choose to hire their own consultant to have power of attorney, or the company may choose to hire a consultant or law firm to service all of their insiders. A brokerage may also provide this service, which is the case with Merrill Lynch. Regardless, it is one or more person's full time job to service a public company.
Constraints
EDGAR is a system built over a decade ago by the SEC to help streamline the filing process and go paperless. After tracking down an engineer there, it was clear the EDGAR filing tool had no API we could leverage. This meant that the submission would have to remain manual for the time being.
Another complication that would prevent full automation is that individuals could hold shares outside of Carta. It would be unreasonable to assume Carta had all the information. That being the case, we not only had to automate the creation of the forms, but also allow administrators to make changes before submitting the forms.
Old User Journey
Filling out the lengthy Form 4 is a time sensitive task, and it has to be done manually by an expert. The communication between the transaction and the person with power of attorney (POA) also requires human interaction. The POA usually doesn't have a steady stream of work and often receives high volume spikes, making their lives the most stressful at precisely the moment they need to speed up.
Carta User Journey
By using data in Carta, forms can be generated and filled automatically, so the POA doesn't need to scramble for the finish line. POA can spend less time servicing more companies and lower the cost to companies.
Administrator
In order to know which individuals are insiders, administrators must be able to manage a list of insiders. Because Carta could not be relied upon as the only source of activity, administrators must also be able to add and edit forms as they see fit.
System
Since the deadline for filing a Form 4 is two days after a trade, we streamlined it with a process that runs after the market closes each day. It searches our system for all activity that happened, automatically generates a Form 4 for each insider, and notifies the administrator of all activity that day.
Administrator
Upon receiving the notification, it is up to the administrator to go to Carta and verify all the information. Due to lack of API, the administrator must download it from our system in an XML format and submit it into EDGAR themselves.
User Flow
Result
We launched a beta product with 3 customers using it and more waiting eagerly to test it out.
We've only cracked the surface of this industry surrounding SEC mandated forms. With Carta's information, we could automate and streamline the process of filling out all of them.
As for EDGAR, it is currently impossible to submit a form without manually logging into the system. A stagnant old system may not be the worst thing for us, as it may be possible to build a bot to crawl and submit forms on behalf of individuals. If Carta does close the loop, it would completely revolutionize the way SEC forms are filed. Thinking back to why the government and public need this information, it all revolves around transparency. If everyone used Carta, we could simply expose to the public all the ownership and trading activity of all insiders of all public companies, and there would be no need to submit anything to the SEC.
SEC Forms
Overview
