Stoecklein Law Group:
A Professional CorporationPractice Limited to Federal Securities
April 5, 2004
Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Mandated Electronic Filing For Form ID
Dear Mr. Katz:
This correspondence is in response to your request for comments in reference to the proposed rule mandating the electronic filing of Form ID.
We are responding to your comments in our representative capacity of the Securities Law Institute, which is an EDGAR filing agent for numerous companies. After a conference with the staff at Securities Law Institute, we are providing the comments to your proposed rule.
First, we commend the staff on the implementation of this proposed rule mandating the electronic filing for Form IDs. We believe the direct entry into the Commissionís records of the Form ID information, and thus avoiding the information being keyed in by Commission personnel should improve the speed and accuracy of the process that leads to our receipt of the codes needed to file on EDGAR. Additionally, this speed will allow for a more efficient compliance with the two day mandated filing of initial 16(a) reports.
Requirement of Notarized Faxed Form ID. We do not agree with the requirement of having the applicants having to file in paper by fax within two business days before or after electronically filing the Form ID a notarized document, manually signed by the applicant over its typed signature. Although the mandating of the electronic filing of the Form ID creates an efficient and speedy method, the requirement of filing a fax document appears to hamper the efficiency of the process. In the event of the adoption of a faxed notarized Form ID, the Commission staff members will still be required to interrupt the flow of the electronically mandated system, thereby creating potential inefficiency. Under the current system, when faxed Form IDs are received by the Commission, there are times when documents are lost or misplaced, thus requiring the applicant to re-send the faxed request.
What is the Commission proposing to do with the large number of faxed notarized forms. Will they be scanned and available for some verification procedure. We are unclear as to the result of not sending the notarized Form ID. Does it mean the Form ID in invalid and will not function. If so, have we not just gone back to a manual system that requires staff time to authenticate the process. Although we understand the reason for such process, we fail to see how truly useful the authentication will be. Under the Commissions current process, one can obtain EDGAR codes for another individual without any comparable authentication process. If an individual is desirous of obtaining false EDGAR codes we do not believe that the fax will sufficiently solve the problem. Clearly if the desire is to obtain improper codes, a copy of a forged notary seal over ones name, and then faxing the document does not avoid the improper and fraudulent authentication. Would it not be more prudent to place some form of coding (grabbing the electronic identification of the user) into the system to capture an electronic users identification.
Additionally, we believe the requirement of the notarized form will impede the efficiency of the process. Not all individuals will have ready access to Notaries.
Cost-Benefit Analysis. We do not believe that mandating the electronic filing for the Form ID will result in any significant costs to the applicant. Those individuals without access to computers most likely will be able to obtain the assistance in the electronic process of filing the Form IDs for nominal, if not zero costs from EDGAR filing agents.
We believe the true cost in the proposal to the applicant is in the time required to go to a bank, law firm, or like office to obtain the notarized stamp. The cost of the notary is insignificant when compared to the time required to obtain the stamped document.
Conclusion. We concur with the proposed rule mandating the electronic filing of Form ID. We believe that the proposal will create a more efficient process. We believe that the efficiency created by the electronic filing will be impeded for both the Commission and the applicant by the requirement of a notarized Form ID. We believe the explicit costs are minimal, the implicit costs of having to obtain the notarized signature should be considered.
Donald J. Stoecklein