February 10, 2003

Via Electronic Filing

Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W. Mailstop 6-9
Washington, DC 20549

    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:

  • Posting of Form 3. We believe that issuers that maintain corporate websites should post all Section 16 Reports, including Form 3. Web access to information on Form 3 is important to investors because it provides timely and complete disclosure regarding initial ownership positions, which is useful in assessing changes in equity holdings.

  • Length of Website Posting. We recommend that, at a minimum, Section 16 Reports be posted for a period of 12 months. The Commission may also want to consider keeping these forms accessible for a longer period of time so that investors may have the opportunity to study trends in ownership positions and transaction history.

  • Access to Section 16 Reports by Hyperlink. We agree that a company with a corporate website can satisfy the posting requirement either by providing access directly or by hyperlinking to the reports via a third-party service. Both approaches are acceptable provided the forms are easily accessible. Accordingly, the conditions set forth in Section II.B. of the proposal should make clear that a company that chooses to display the reports by hyperlink should display the link clearly on the its website and the link should allow the user direct access to the reports.

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
General Counsel

cc: Harvey L. Pitt, Chairman
Cynthia A. Glassman, Commissioner
Roel C. Campos, Commissioner
Harvey J. Goldschmid, Commissioner
Paul S. Atkins, Commissioner


1 The ICAA is a not-for-profit association that exclusively represents the interests of SEC-registered investment advisers. Founded in 1937, the Association's membership today consists of approximately 300 investment advisory firms that collectively manage in excess of $3 trillion for a wide variety of institutional and individual clients. For additional information, please consult our web site at www.icaa.org.

2 The ICAA has submitted numerous comment letters in support of other similar Commission initiatives to improve corporate disclosure. See Letter from Karen L. Barr, General Counsel, ICAA, to Jonathan G. Katz, Secretary, SEC dated July 24, 2002 (supporting the Commission's proposals to expand Management's Discussion and Analysis disclosure related to critical accounting estimates and policies); see also Letter from Karen L. Barr, General Counsel, ICAA, to Jonathan Katz, Secretary, SEC dated June 27, 2002 (supporting expanded and expedited disclosure in Item 10 to Form 8-K); see also Letter from Karen L. Barr, General Counsel, ICAA, to Jonathan G. Katz, Secretary, SEC dated August 26, 2002 (supporting additional Form 8-K disclosure requirements).