SEC Registration Thompson Tire and Crane recently provided the Securities and Exchange Commission with financial statements and other information in anticipation of issuing an additional 3,000,000 shares of convertible preferred stock. Management was quite shocked when the response from the SEC was to notify the company that the information was insufficient and that sale of the securities would be in violation of U.S. securities laws.

a. What type of filing must Thompson make with the SEC before issuing additional securities?

b. What authority does the SEC have with respect to regulating securities?

c. What basis does the SEC use when deciding whether to permit or deny requests to issue new securities?

d. What should Thompson’s next action be?