December 31, 2005
This proposal would seem to go against the underlying objective of the Sarbanes-Oxley Act, namely to provide investors with reliable financial information for decisionmaking. Many investors do not have access to the internet. Such a proposal if implemented could threaten the "market in information" so essential for investment decisionmaking.
Investment elitism would be given an impetus.
This proposal, while transparent in itself, smacks of a lack of reality on how the public interest is to be served in financial markets. The issue of www archives being unalterable has not been addressed.
Perhaps the most negative consequence of such a proposal is that those companies that show the SOX Section 302 certification and the management Section 404 statement on Internal Controls in the annual report will no longer allow these documents to be read and digested in this hard copy form.
Investors need reassurance that all is well with a vital part of their investee corporation's governance.
The SEC have already shown a lack of public interest by allowing the S. 302 certification to be deemed adequate if in the 10K only, a terrible document for lay investors to navigate through. The SEC have marginalized the S.302 certification by prescribing the format...thus denying directors free expression on the state of their company's internal controls. At least 2 companies have failed in their IC objectives according to their 2005 annual reports but they have filed "clean" S.302 certifications
This proposal is most imprudent and ill timed. Hard copy annual reports must be retained if corporate accountability is to be maintained.