Davis Polk & Wardwell

April 5, 2004

Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: File Number S7-14-04
      "Mandated Electronic Filing for Form ID"

Dear Mr. Katz:

We appreciate the opportunity to respond to the request for comments on the proposed rule change, S7-14-04, “Mandated Electronic Filing for Form ID”, (the “Proposed Rule”).

Davis Polk routinely prepares and submits Form ID applications on behalf of our clients; in the last four years, we have submitted over 500 Form IDs. Our comments are based on this experience.

Existing Process
Thecurrent process of filling out a paper Form ID, faxing it to Filer Support and waiting for a response by return fax or phone is both inefficient and error prone. Despite often valiant efforts by Filer Support staff to process applications, there are inevitable delays due to surges in the volume of requests and lost fax transmissions, and errors in the accuracy of critical information, such as the applicant’s name, that occur as a result of re-keying the Form ID data.

Proposed Process
Under the Proposed Rule, the current system could be replaced as soon as later this month, possibly after little further notice. The published summary states, “the intended effect of the proposal is to facilitate the more efficient transmission and processing of the information Form ID requires in a manner that will benefit investors, filers and the Commission.” We generally support this central goal of the Proposed Rule change; it is sound and can be accomplished through electronic submission of the Form ID.

The second stated goal, security through additional verification, seems underdeveloped and requires further analysis and planning before implementing.

Initially, the Proposed Rule would require applicants to fax a notarized document containing the same information as the Form ID. Assuming the notarized document is a copy of the Form ID, with the passphrase redacted, the Commission staff will have to physically match up the faxed document with the electronic document and proofread both documents to confirm they contain identical information. The mechanics of this proposed process are laborious. If the notarized document is not a copy of the Form ID with the information arranged in the same pattern, this process becomes much more labor intensive.

Faxing a notarized document to authenticate identity is at best a half-measure, and at worst only serves to promote a false sense of security. In a digital age with readily available inexpensive document scanners and software, anyone intent on “creating” a notarized document for the purpose of satisfying this requirement would have little challenge in doing so. There is no cost-effective way for Commission staff to confirm the authenticity of a faxed document.

The release further states, “We expect that eventually we will replace this procedure with a requirement that applicants use a certificate from a certification authority to authenticate their Form ID filings”. While this would seem to be a useful procedure, no indication is provided of what Class of certificate would be required.

According to the current VeriSign Certification Practice Statement (“CPS”), version 2.2, “Class 1 authentication does not provide assurances of identity (i.e. that a Subscriber is who he or she claims to be).” Obviously, this Class certificate would not be consistent with the Commission’s goal of authentication.

More advanced Classes of certificates (Class 2 and Class 3) confirm identity and guarantee non–repudiation using information residing in approved identity proofing services, such as credit reporting agencies, or require personal appearances. These Classes of certificates do provide assurance of identity, but raise concerns of privacy and expense.

There are other issues and opportunities the Proposed Rule raises, and until a more comprehensive solution is formulated, the Commission might consider interim options, such as utilizing the existing network of law firms, financial printers, and other professional groups who have both an ongoing relationship with many of the issuers, and a wide presence who can vouch for new applicants.

We commend the Commission’s efforts to recognize the need to improve the existing process, but urge careful review of the issues outlined above prior to final adoption of the Proposed Rule.

Please feel free to contact me at (212) 450-4519 if the staff would like to discuss any of these points in greater detail.

Richard K. Bonaparte
Manager, EDGAR/Compliance Systems