February 10, 2003
Via Electronic Filing
Mr. Jonathan G. Katz
Re: Mandated Electronic Filing and Website Posting for Forms 3, 4 and 5 Release Nos. 33-8170, 34-47069, 35-27627, IC-25872; File No. S7-52-02
Dear Mr. Katz:
The Investment Counsel Association of America1 appreciates the opportunity to submit comments related to the Commission's proposed rules that would require electronic filing and website posting by issuers with corporate websites of beneficial ownership reports under Section 16(a) of the Securities Exchange Act (Section 16 Reports). ICAA members collectively manage trillions of dollars in assets for institutional and individual investors, and require adequate, prompt, and complete information from issuers to make appropriate investment decisions on behalf of their clients. The proposal, required by Section 403 of the Sarbanes-Oxley Act of 2002, would provide investment advisers and other investors with ready access to timely and important information about insider transactions. As investors, we strongly support the proposal and previous Commission initiatives to improve the transmission of clear and current information about companies to investors.2
The proposal would mandate electronic filing of Form 3, the initial statement of beneficial ownership, Form 4, the statement of changes in beneficial ownership, and Form 5, an annual statement of beneficial ownership. An issuer's insiders use Forms 3, 4 and 5 to report beneficial ownership of and trading in equity securities of the issuer. Consistent with Sarbanes-Oxley, the proposal would require electronic filing of these Section 16 Reports. The proposal also would require all issuers with corporate websites to post these reports on their website by the end of the business day after filing. An issuer may choose to provide access to forms directly or through a hyperlink to a third-party service.
The Commission's proposal will provide for more prompt and efficient disclosure and access to information about insiders at public companies. Investment advisers regularly assess information regarding insider transactions in analyzing issuers. Many advisers believe that transactions by officers and directors in company securities provide insights into management's views about the company's current condition and future outlook. The posting of this information on company websites would facilitate even better access to this important information. Given the convenience to investors of using the Internet to access information and the relative cost to companies in posting such information, we believe that a company with an electronic presence should be required to post insider information on its website.
We have the following responses with respect to some of the Commission's specific requests for comment:
We appreciate the opportunity to comment on the proposed rules and would be pleased to discuss any questions the Commission may have with respect to this letter.
Karen L. Barr
cc: Harvey L. Pitt, Chairman