Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
May 23, 2002
Re: File No. S7 - 08 - 02
Dear Mr. Katz:
Trover Solutions, Inc. appreciates the opportunity to comment on the proposal to shorten filing deadlines for period reports. In light of recent events, registrants, investors, and market professionals are increasingly concerned with the quality and flow of financial information to the markets. Getting the regulations right is a matter of central importance.
Our first response, therefore, is one of caution. Moving up filing deadlines will certainly increase the risks that the quality of information will be impaired. Along with the improvements that have been made in information technology over the last 30 years, there has occurred, in most industries, an increase in the complexity of business. Whether the new technological capabilities of registrants offset that complexity is ultimately an empirical question, and the only way to know is by testing the hypothesis. Rather than adopting an aggressive position on deadlines-and a 33% shortening is surely that-a more gradual approach would allow the Securities and Exchange Commission to achieve the desired effect without undesirable risk. More modest reductions over a period of three to five years, subject to feedback on the effects of the changes, would give the markets assurance that the reforms do not, indeed, compromise the quality of information or impose excessive costs. Advancing the deadline for Form 10-Q filings to 80 days seems a reasonable starting point.
It also seems to us that the market has already communicated to registrants its need for the prompt disclosure of certain types of information. Hence the reporting of quarterly and annual earnings through news releases inevitably precedes the filing of periodic reports. Although earnings releases are not standardized, there is enough consistency of practice to demonstrate that registrants are responding to a common set of known market demands. Most of the good sought by the proposed regulations could be achieved by requiring that all earnings releases contain a specified minimum of information and be filed as part of the periodic reporting system. This could easily be done through Form 8-K filings. Such a rule would build on a market-driven approach to disclosure and would avoid compromising the quality of information contained in the more complete filings mandated by the Securities Exchange Act of 1934.
Lastly, having reviewed the matter internally and with our independent accountants, the cost side of the proposals is certain. The proposed accelerated deadlines will put tremendous strain on the finite resources of our financial staff. A look at the letters posted on the SEC website reveals the same to be true for other public companies of similar size.
We agree with the Commission's timely focus on registrant disclosure and investor confidence. The proposed regulations, however, create significant, needless risks for investors and excessive costs for registrants.
TROVER SOLUTIONS, INC.
Douglas R. Sharps
Executive Vice President-Finance &
Administration and Chief Financial Officer