To : Commission File No. S7-08-02
From : Jeffrey J. Minton
Special Counsel
Office of Rulemaking
Division of Corporation Finance
U.S. Securities and Exchange Commission
Re : Acceleration of Periodic Reporting Filing Dates and Disclosure Concerning Website Access to Reports, Release Nos. 33-8989; 34-35741

Date :

May 20, 2002


On April 23rd, Division of Corporation Finance staff received a call from James G. McMillan of Hogan & Hartson LLP who inquired about conforming amendments to Rule 3-09 of Regulation S-X for the period of time before financial statements for unconsolidated entities must be filed. According to the caller, one of his clients, a publicly traded Nasdaq company, has an unconsolidated entity that is a private company. The public company owns 20% of the private company. He asserted that it would be extremely difficult, if not impossible, for the publicly company to pressure the private company to provide the financial statements needed for Rule 3-09 within 60 days (both companies have a calendar fiscal year end).

If the deadline for those financial statements was accelerated, the issuer would most likely need to divest itself of the subsidiary so the issuer would not be late in its filing and lose Form S-3 eligibility. The proposals therefore could have a negative effect on capital investment, particularly in young start-up companies. The caller mentioned that the Commission should alternatively consider allowing relief in this situation under Exchange Act Rule 12b-21.