From: Klafter, Cary [cary.klafter@intel.com] Sent: Monday, August 19, 2002 11:17 AM To: 'rule-comments@sec.gov' Subject: File no. S7-31-02; comments from Intel Corporation August 19, 2002 U.S. Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D. C. 20549-0609 via rule-comments@sec.gov Attention: Jonathan G. Katz, Secretary Re: File No. S7-31-02; comments from Intel Corporation Ladies and Gentlemen: This letter is submitted by Intel Corporation in response to the Commission's request for comments in Release No. 34-46313, dated August 6, 2002 (the "Section 16 Release"), proposing significant revisions to the rules and forms adopted under Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"). The Commission was prompted to issue the Section 16 Release on relatively short notice due to the recent enactment of the Sarbanes-Oxley Act of 2002 (Pub. L. No. 107-204, 116 Stat. 745) (the "Sarbanes-Oxley Act"). Section 403 of the Sarbanes-Oxley Act amends and restates Section 16(a) of the Exchange Act in its entirety, effective August 29, 2002. Section 16(a) of the Exchange Act, as amended by Section 403 of the Sarbanes-Oxley Act, will require insiders subject to that provision to report all changes in beneficial ownership by the end of the second business day following "the day on which the subject transaction has been executed," except where the Commission provides for deferred reporting through its exemptive authority. In addition, Section 403 of the Sarbanes-Oxley Act amends Section 16(a) to provide that, beginning no later than July 30, 2003, all Section 16(a) reports shall be filed electronically, and are to be posted by the Commission and by the insider's company (if it has a corporate website) on their respective websites by the end of the next business day following the filing of the report. In the Section 16 Release, the Commission indicated that it intends to amend its rules and forms relating to Section 16(a) in three areas: * Form 4 and the instructions to the form are proposed to be revised to reflect that Form 4 no longer is a monthly reporting form, but instead is a form to be filed within two business days (or such other period specified by the Commission) after a change in beneficial ownership reportable on that form has occurred; * Rule 16a-3(f) is proposed to be amended to provide that transactions between the issuer and its officers and directors that are exempt under Rule 16b-3(d) and (e) no longer will be eligible for deferred reporting on Form 5, but instead will be reportable on Form 4; and * Exemptive rules are proposed to be adopted for the purpose of providing extended Form 4 due dates for narrowly-defined transactions for which two-day reporting is not feasible. Given the significantly reduced filing deadlines and the revised manner in which Section 16 reports must be filed, we urge the Commission to adopt rules that will facilitate companies' ability to assist insiders in satisfying the accelerated reporting obligations through EDGAR filings. In particular, we believe the Commission should adopt rules under which: * all Section 16 reports (including Forms 3, 4 and 5) filed electronically on EDGAR should receive a "same day" file date, even if they are filed after the current 5:30 p.m. Eastern time deadline; * companies should be permitted to file Section 16 reports on behalf of their insiders using the company's CIK and EDGAR codes (with the insider's permission); and * company insiders should be permitted to file Section 16 reports using the company's CIK and EDGAR codes (with the company's permission). We believe that these rule changes to the EDGAR system are necessary in order to meet the shortened two-business day filing deadline for Form 4 reports. Currently, electronic submissions are accepted on EDGAR through 10:30 p.m. Eastern time, but any such filings transmitted and accepted after 5:30 p.m. Eastern time receive a "next day" file date. Particularly for companies and insiders located on the west coast, this significantly reduces the number of business hours available to prepare and file Section 16 reports, imposing a substantial burden on the ability to satisfy the accelerated reporting deadline. Therefore, we believe Section 16 reports submitted electronically and accepted by EDGAR on or before 10:30 p.m. Eastern time should receive a file date the same day the report is accepted. Implementing the requested EDGAR rule change would not extend the "two-business day" filing deadline imposed by Section 403 of the Sarbanes-Oxley Act, but would simply enable more insiders to comply with the shortened filing deadlines. Permitting companies and their insiders to share CIK and EDGAR codes also would greatly facilitate compliance with the new Section 16 filing requirements. We do not believe that this change would impair investor's ability to track insiders' transactions, because the reports would appear on EDGAR under the company's name. In addition, the reports would also be available through third party reporting services (such as Yahoo) and through third party EDGAR resources that provide term search features. Finally, we believe that this measure would only be necessary on a temporary basis, until the Commission is able to fully implement Section 403 by providing a user friendly electronic filing system. Therefore, the requested changes should not impair the public's or investors' ability to find Section 16 reports on EDGAR. We appreciate the opportunity to submit these comments. While they relate to technical aspects of the EDGAR filing system, we hope the Commission will seriously consider them as an essential aspect of implementing the mandate of the Sarbanes-Oxley Act's goal of providing information to investors in an electronic format and on a timely basis. Respectfully submitted, Cary Klafter, Director of Corporate Affairs, Intel Corporation _________________ Cary Klafter Intel Corporation 408.765.1215 408.653.8050 (fax) 408.219.6959 (cell)