BUSINESS LAW SECTION
THE STATE BAR OF CALIFORNIA
180 HOWARD STREET
SAN FRANCISCO, CA 94105-1639
February 7, 2003
VIA E-MAIL: firstname.lastname@example.org
Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
re: SEC File No. S7-52-02
Release Nos. 33-8170, 34-47069, 35-27627, IC-25872
Dear Mr. Katz:
We are writing to comment on the above-referenced release and proposal (the
"Release") issued by the Securities and Exchange Commission
(the "Commission") in connection with Section 403 of the Sarbanes-Oxley
Act of 2002 (the "Act"). These comments are provided on behalf
of the Corporations Committee (the "Committee") of the Business
Law Section of the California State Bar. Please note that positions set forth
in this letter are only those of the Committee. As such, they have not been
adopted by either the State Bar's Board of Governors, its overall membership,
or the overall membership of the Business Law Section, and are not to be construed
as representing the position of the State Bar of California. The Committee is
composed of attorneys regularly advising California corporations and out-of-state
corporations transacting business in California.
Membership in the Committee is voluntary and funding for its activities,
including all legislative activities, is obtained entirely from voluntary sources.
There are currently more than 16,000 members of the Business Law Section.
California is home to a significant number of issuers and securities counsel.
According to one study, California serves as the headquarters for more public
companies than any other state, with approximately 16% of all publicly traded
corporations being headquartered in California.1 Therefore,
it is very likely that insiders of California headquartered companies will be
disproportionately affected by the rules proposed in the Release.
Currently, Rule 13(a)(3) of Regulation S-T provides that persons can file by
direct electronic submission between the hours of 8 a.m. and 10 p.m., Washington
D.C. time (5 a.m. and 7 p.m. California time) on weekdays that are not federal
holidays. A filing that is accepted before 5:30 p.m. Washington D.C. time (2:30
p.m. California time) is deemed filed on the same day. If a filing is accepted
after 5:30 p.m. it will generally be deemed filed on the next business day.
The Securities and Exchange Commission has solicited comment on whether Rule
13(a)(3) should be amended to treat an accepted Form 3, 4 or 5 filing in the
same manner as a Rule 462(b) filing. Under Rule 462(b), a post-effective amendment
or registration statement is deemed filed on the same business day as long as
it is received before 10 p.m. Washington D.C. time. (7 p.m. California time).
The Committee believes that persons in California and other western states
are at a substantial disadvantage under the current rule. The current rule
provides significantly fewer local business hours within which a person in the
Pacific Time Zone can timely file a report of beneficial ownership. This disadvantage
has become more acute in light of the requirement of the Sarbanes-Oxley Act
of 2002 that these reports be generally filed before the end of the second business
day following the day on which the subject transaction has been executed.2 The Committee
recommends that California and other western filers be put on an equal footing
with filers in the Washington D.C. time zone by amending Rule 13(a)(3) to treat
an accepted Form 3, 4 or 5 filing in the same manner as a Rule 462(b) filing
for purposes of the deemed filing date.
We hope the foregoing is useful to the Commission and Staff in considering
appropriate modifications to the proposed Rules under Section 307 of the Sarbanes-Oxley
Act of 2002, prior to adoption of final Rules. Please do not hesitate to contact
either of the undersigned if you have any questions on the matters raised herein.
Very truly yours,
|/s/ Keith Paul Bishop
Keith Paul Bishop
||/s/ Bruce Davis
|| Guhan Subramanian, The Influence of Antitakeover Statutes on Incorporation Choice: Evidence on the "Race" Debate and Antitakeover Overreaching 150 U. Pa. L. Rev. 1795, 1816 (2002).
|| Section 16(a)(2)(C) (15 U.S.C. 78p(a)(2)(C)), as amended by Section 403 of the Sarbanes-Oxley Act.