Investment Company Institute
May 15, 2003
Mr. Jonathan G. Katz
Re: Certification of Disclosure in Certain Exchange Act Reports (File No. S7-06-03)
Dear Mr. Katz:
The Investment Company Institute1 appreciates the opportunity to comment on the Securities and Exchange Commission's proposal to require issuers to provide the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as exhibits to the periodic reports to which they relate.2 The proposal also provides interim guidance about how the certifications required by Section 906 may "accompany" a periodic report to which they relate, pending the adoption of final rules.
The Institute supports the Commission's proposal, which is intended to enhance the accessibility of the required certifications that are filed or submitted by issuers. We note that for registered management investment companies, the Commission's proposal would not impose any new filing requirements related to their Section 302 certifications. This is because Form
N-CSR, the new form used by funds to satisfy their certification obligations, already requires them to file the Section 302 certification as an exhibit to their Form N-CSR reports.3 The Commission's proposal similarly would require funds to provide the Section 906 certification as an exhibit to their Form N-CSR reports. The Institute supports this requirement as it represents a logical approach to the certification submission process and would be consistent with the way funds are presently required to submit their Section 302 certifications. We also support the Commission's decision to require issuers to "furnish," rather than "file," the Section 906 certification, in recognition that Section 906 requires that such certifications "accompany" a periodic report, rather than be included "in" a periodic report (as required for Section 302 certifications).4 We have one technical comment, however, on the Commission's interim guidance regarding the manner in which issuers should submit their Section 906 certifications.
The interim guidance encourages issuers, until final rules are adopted, to submit Section 906 certifications as an exhibit to the periodic reports to which they relate. It states that an issuer that files its periodic reports electronically via the SEC's EDGAR system "should retain the manual signature page for each certification, or another document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of the certification."5 The guidance further directs the issuer to "insert a legend after the text of each certification that reads: `A signed original of this written statement required by section 906 has been provided to [the issuer] and will be retained by [the issuer] and furnished to the SEC or its staff upon request'."6 While it is not totally clear why this legend is necessary,7 we note that, as drafted, the legend seems to contemplate the retention of only one of the two types of authentication documents generally permitted by Regulation S-T and specifically referenced in the interim guidance, that is, a "manually sign[ed] signature page." This raises an issue for funds and other issuers who utilize an alternate document to authenticate electronic submissions.
Specifically, a fund that uses an alternate authentication document with respect to its Section 906 certification would not have a manual signature page for its certification and thus the required legend, as currently worded, would be inaccurate. Accordingly, to correct this apparent oversight, and to better align the legend requirement with permissible authentication methods, we recommend modifying the legend requirement to accommodate the option of retaining a signed document "authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of the certification." Furthermore, because the guidance relates to the interim submission of Section 906 certifications and thus is already in effect, we recommend that such modification be made as soon as possible and that this matter be addressed in the Commission's Frequently Asked Questions that are posted on its website.8
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The Institute appreciates the opportunity to provide comment on the Commission's proposal. If you have any questions, or would like additional information, please contact the undersigned at (202) 326-5923.
cc: Mark A. Borges, Special Counsel
Andrew Thorpe, Special Counsel
Office of Rulemaking
Carol McGee, Special Counsel
Jonathan Ingram, Special Counsel
Office of Chief Counsel
Division of Corporation Finance
Christian Broadbent, Senior Counsel
Susan Nash, Associate Director
Office of Disclosure Regulation
Paul F. Roye, Director
Division of Investment Management