Responses to ACSPC Request for Public Input

Disclosure System

Question 25. Is the relief provided by SEC Regulation S-B meaningful? Why or why not?

a) Should the SEC provide an alternative disclosure framework for smaller companies in the context of securities offerings and periodic reporting? Should the alternative framework be available to a broader category of companies than Regulation S-B is currently? Should the alternative framework be based on Regulation S-B or on a different approach? Could these steps be taken without impairing investor protection?

The following answers have been received:

08/02/2005 17:44:12   Not really. There is very little difference
a) S-B qualification should be expanded and quarterly reporting should be reduced in scope

08/03/2005 01:39:17   Not informed to comment.
a) NA

08/03/2005 07:01:34   yes, keep it simple and prosecute fraud.
a) yes, yes and yes.. do it already.

08/03/2005 08:55:04   Not sure
a) Not sure

08/03/2005 10:40:26   No

08/03/2005 12:17:58   not meaningful. self evident.
a) yes. less is better.

08/03/2005 13:55:42   a) Yes.

08/03/2005 15:01:40   Yes, The extra time is meaninful.
a) The current approach seems appropriate.

08/03/2005 15:22:49   This has not been an issue for our company
a) Not sure what you are looking for here

08/03/2005 18:01:35   Please look into item no 29
a) Please look into item no 29

08/03/2005 18:30:29   x
a) x

08/03/2005 19:54:33   I have no opinion on this question.
a) I have no opinion on this question.

08/03/2005 19:55:50   a) SEE ITEM #5 ABOVE AND THEN ANSWER YOUR OWN QUESTION!

08/04/2005 09:39:15   No comment
a) No comment

08/04/2005 10:40:16   Somewhat.
a) The thresholds are unrealistically low, as are the thresholds for defining a public company.

08/04/2005 12:09:05   Not really. As an example, With SOX you added 152 steps and SB takes away 8. Not really meaningful help.
a) Yes. And the SB framework should encompass a much larger universe than current.

08/04/2005 13:38:24   It doesn't help our company.
a) I'm not familiar with this.

08/04/2005 14:20:27   I will have our CFO give his opinion here.
a) I will have our CFO give his opinion here.

08/04/2005 18:05:44   Not sure
a) No

08/05/2005 12:44:28   I have no comment.
a) I have no comment.

08/05/2005 15:34:53   NA
a) SB would not help us

08/05/2005 15:43:46   In all circumstances for small bank financial reporting it would be most beneficial for the SEC to consider use in some form of the Call Report to eliminate redundant reporting. If SEC and the FFIEC could talk to each other it would be one of the significant events ...
a) In all circumstances for small bank financial reporting it would be most beneficial for the SEC to consider use in some form of the Call Report to eliminate redundant reporting. If SEC and the FFIEC could talk to each other it would be one of the significant events ...

08/05/2005 16:45:38   Unsure, haven't read enough on this to answer appropriately and with full knowledge and information.
a) Unsure, see above.

08/05/2005 19:33:08   Yes, it is helpful.
a) It should be simplified and possible expanded. I don't think it would hurt investor confidence. Once again, investors in small companies understand that there is a significant risk with a potential reward that is larger than with a big company. I tend to like these investments.

08/06/2005 13:52:06   Yes.
a) S-B framework is reasonable.

08/08/2005 11:10:11   yes. Just as the SOX 404 needs to be paired back for smaller companies, reg. S-B accomplishes for small companies. There are many items in the full Q and K that a small company would be very hard to compile, research or report on wihtout causing undue hardship and delays.
a) no.

08/08/2005 14:06:10   Yes it is. Leave it as is. The information provided is not that much different.
a) I think the current framework works fine as is.

08/08/2005 15:43:24   No comment
a) No comment

08/08/2005 21:39:10   It seems that Regulation SB attempted to reduce the burden to small companies, but subsequent regulations that apply to both SB and non-SB reporting make the difference somewhat meaningless. Our opinion is that if an active market for small companies to raise capital and to be a part of the U.S. securities system is desired, then regulation SB should be updated to provide true relieve, a common reporting platform for small companies, and that it could include SOX 404 compliance requirements as it relates to small companies.
a) There should be an alternative disclosure framework for smaller companies. This could be accomplished by dramatically changing regulation SB to be small business friendly. This could be accomplished without impairing investor protection as along as it was followed by all SB filers and the requirements were well known in the investing community.

08/09/2005 09:30:31   No. In the case of bank holding companies, who publicly file bank-only data with regulators each quarter, no filing with the SEC should be required.
a) same as above.

08/09/2005 16:26:34   I don't recoganize that designation.
a) Above.

08/09/2005 17:25:10   N/A
a) Leave as is.

08/10/2005 09:04:41   no comment
a) no comment

08/10/2005 16:00:18   No.

08/10/2005 17:18:15   No comment
a) No comment

08/11/2005 20:27:22   YES - the reduced disclosure does help smaller companies.
a) NO - I think the system is working fine. The worse thing that has happened recently is that the number of days to report quarterly earnings has decreased for accelerated filers. How dumb was that - we all need the extra time to make sure the finacial reports are sufficiently reviewed and the SEC has chosen to cut the review time. What rocket scientist make that decision.

08/12/2005 13:12:10   No opinion.
a) No opinion.

08/12/2005 14:46:45   Not applicable
a) Yes given the right structure the essence could be performed without impairing investor protestion

08/12/2005 16:35:01   Unknown
a) I believe the answer to all of these questions is an emphatic "yes".

08/13/2005 12:39:43   Don't know
a) Don't know

08/15/2005 14:27:30   It has not been in my experience. It is a time and space saver particularly in the area of management compensation but I think it has little actual economic or practical impact. Obviously, in a particular case (e.g. long history but short history of good financials) it could be very beneficial. My own experience with several qualifying companies is that it has not mattered much to them.
a) I would love to see something done about management compensation, which has at this point become essentially unreadable. I have no problem with the concept that investors should be told what management is making but the current rules for doing so create a stupefying mishmash of halfbaked valuations that no one takes seriously and almost no one can read. I have also spent a fair amount of time that I thought had little value dealing with exactly who (to the nth level) owns stock and has to be listed in a shareholder (selling or otherwise) table. I can understand why the SEC wants to know in some cases but I doubt the public cares in almost all cases. It seems to me that Section 13 of the Exchange Act pretty much takes care of what matters.

08/15/2005 15:10:05   not sure
a) not sure

08/15/2005 15:13:01   Not really familiar with the relief provided by S-B.
a) I think that this thinking is on the right track. Again, I don't think the disclosures need to change. I think the accelerated timing of 10-K's and 10-Q's is putting strains on internal staffing particularly in light of SOX.

08/15/2005 15:14:45   No, it is not a significant relief. It would be easier to adopt a phase-in standard of x years before SB reporting is not the standard.
a) Did not really think investor protection is substantively enhanced or removed by the imposition of SB reporting.

08/15/2005 16:33:43   no opinion
a) no opinion

08/15/2005 16:41:14   no opinion
a) no

08/16/2005 09:51:21   Unsure
a) No

08/16/2005 10:21:17   No opinion.
a) No opinion.

08/16/2005 10:26:28   no comment
a) yes, see earlier comments on frequency/relevance/materiality

08/16/2005 10:44:16   I think all public companies need to be subject to same rules.
a) I think all public companies need to be subject to same rules.

08/16/2005 11:18:54   It does not apply to us, therefore I can't comment.
a) Anything that would reduce the regulatory burden would be helpful and welcome.

08/16/2005 11:52:16   We do not use S-B so no comment.

08/16/2005 12:15:34   We are not under S-B
a) I would be open to extending S-B to larger entities in order to reduce the filing requirements.

08/16/2005 12:40:54   Somewhat

08/16/2005 13:04:14   Yes it is and I believe the definition of small business should be extended by increasing the market cap and revenue cap. We will be going from an S-B reporting company to an accelerated filer for 2005 even though I believe we are arguably still a small company with revenue of less than $12 million and only 45 employees. Our market cap is hovering around $40-45 million but was over $50 million at December 31, 2004.
a) I believe Regulation S-B is fine; the category should be expanded to include more small companies by simply increasing the revenue and market cap.

08/16/2005 13:12:04   Not sure
a) I really do not see the distinction between large and small here; SOX hits all ...and should be addressed in that context.

08/16/2005 13:19:29   No opinion.
a) No opinion.

08/16/2005 13:20:23   Not really. Its a "sub-tier" of companies who typically are using these forms
a) No. Bad idea. Have one set of rules that work and make everyone comply with it. Keep it simple.

08/16/2005 13:25:32   The relief is for first time filers. Once a system of gathering information for filing is established, the reduction of S-B is minimal.
a) The balance between cost of compliance and risk from inadequate disclosure has been tested for some time now in the market, and is generally OK. Periodic tweaking helps, but general overhaul is not needed, other than of the atrocity commited by Senators Sarbanes and Oxley.

08/16/2005 13:27:00   I don't know what S-B is.
a) No.

08/16/2005 14:08:05   It seems to be adequate.
a) The framework seems to work just fine.

08/16/2005 14:23:10   I have no opinion on the SEC Reg S-B. I generally believe that the reporting requirements should be the same for all companies.
a) I generally believe that the reporting requirements should be the same for all companies.

08/16/2005 15:15:12   I have insufficient experience with Regulation S-B to intelligently comment.
a) See above answer

08/16/2005 16:08:50   No.

08/16/2005 16:09:47   No opinion.

08/16/2005 16:16:04   Yes definitely as it requires less disclosure, overall.
a) Yes we would enbrace this framework.

08/16/2005 16:45:09   As noted above, the threshold is too low and those above the threshold are to diverse to be in a single grouping
a) An alternative disclosure should be developed for smaller companies and available to a much larger group than the current SB companies. The approach should be built on investor needs and therefor not impair investors.

08/16/2005 18:35:41   not applicable to us.
a) no opinion.

08/16/2005 21:29:07   Yes. Disclosures are adequate but can be produced at much lower cost.
a) Uncertain.

08/17/2005 10:59:57   a) Yes.

08/17/2005 12:28:22   unsure.
a) Unsure.

08/17/2005 12:36:00   We have taken advantage of this in teh past, but the savings in time and effort were fairly minor.
a) I don't see these as pressing issues.

08/17/2005 18:49:27   I don't know what thsi is
a) Generally I think disclosure is a good thing and relatively cheap and therefore good value to the stockholders

08/17/2005 19:31:08   Yes. It was fiings and compliance slightly easier for small business filers.
a) Yes. I believe there could be an alternative framework for reporting and that such framework would not impair investor protection.

08/17/2005 21:27:12   No.
a) Yes.

08/17/2005 22:55:14   No. There do not appear to be any significant differences in the disclosure requirements when comparing the Forms 10-QSB and 10-KSB to the Forms 10-Q and 10-K.
a) No.

08/18/2005 08:03:31   Not known to us.
a) Not known to us.

08/19/2005 02:56:12   Doesn't affect us much.
a) more meaningful disclosures and less volume of data would benefit both companies and investors.

08/19/2005 11:44:44   The differences in being a SB filer are helpful. It would be even more laborious to meet the full requirements.
a) I think it's okay as it is.

08/19/2005 13:49:01   No experience with this regulation.

08/19/2005 14:40:28   No comment.
a) No comment.

08/19/2005 14:50:07   No opinion.

08/19/2005 17:03:28   It is meaningful, but the SEC may want to consider providing additional relief through Reg S-B.
a) Basing such a disclosure framework on S-B makes sense.

08/22/2005 14:21:23   I will have to get input from others. Sorry.
a) I am not sure but I would think the framework should be the same. Without more information, I beleive protection might likely be reduced.

08/22/2005 15:20:23   Yes. I believe SB financials give investors an adequate level of information and ease the burden on small companies.
a) Seems ok as is

08/22/2005 15:47:02   Yes.
a) Yes.

08/22/2005 15:47:34   a) No.

08/22/2005 17:54:28   I don't have any experience with SEC Reg S-B.
a) I don't know enough about S-B to answer.

08/22/2005 17:56:59   a) no

08/22/2005 19:27:18   Not familar with it.
a) Not familar with it.

08/22/2005 20:10:17   Not knowledgable about S-B

08/23/2005 00:42:38   not really.
a) investor information is reasonable now.

08/23/2005 15:56:30   No opinion
a) No opinion

08/23/2005 16:06:08   While I always believe there is room for improvement I think the current S-B regulations provide a meaningful reduction of the regulatory burden (with the exception of SOX 404 internal control requirements).
a) I think the S-B rules are generally reasonable. If the rules are expanded to a broader category of companies it may be wise to require issuer to place a "Warning Label" at the front of the report to notify the user of the reduced level of disclosure.

08/23/2005 16:49:34   Yes
a) Anything to reduce the overall cost impact will help

08/23/2005 21:11:03   too little, too late
a) unknown, what are the proposals?

08/24/2005 16:19:27   Yes, slightly
a) Yes, don't require us to file and 8K every time we go to the bathroom. There are too many 8Ks and the timetable is too rigorous.

08/24/2005 16:26:56   No opinion.

08/24/2005 16:54:47   somewhat
a) ?

08/24/2005 20:16:09   a) SB should be extended to include a broader range of smaller companies and should be based on Reg S-B

08/25/2005 15:23:41   N/A
a) The criteria to be a small business filer is very limited. We are a very small corporation (47 employees) but with a larger market cap (more than $75 million) therefore we have met the accelerated filer criteria, however, we are a very efficient organization so the 404 compliance is cubersome. Because of the small business user requirements, I am not familiar with Regulation S-B and not qualified to comment on it.

08/25/2005 17:02:43   No. In fact, the lack of ability to incorporate by reference as much as non-S-B filers is often problematic and costly.
a) yes.

08/26/2005 12:41:42   There does not appear to be a significant decrease in the level of required disclosure.
a) Not sure.

08/26/2005 13:07:22   No Comment.
a) No Comment.

08/26/2005 15:31:29   Appears adequate
a) Appears adequate

08/26/2005 16:22:08   I'm not sure. I've never dealt with the rules.
a) No.

08/27/2005 11:21:03   Yes. The SB disclosures are appropriate. Adding a 3rd year of financial results wouldn't help. Small companies rise and fall on the assessment of their products or services viability, not on whether they can make money.
a) The eligibility for Reg S-B should be inflation adjusted annually - beginning with doubling the current size limit from $25 million to $50 million. Keep the Reg S-b framework because everyone understands it. Again, the best single thing that can be done from a regulatory standpoint to protect investors in small public companies is increased vigilance over stock trading abuses, which has nothing to do with financial reporting.

08/29/2005 10:21:15   We do not currently qualify under Regulation S-B, so we cannot speak as to its effectiveness in alleviating the burden.
a) We would welcome any alternatives that simplify SEC and accounting/reporting requirements without damaging small company value.

08/29/2005 10:21:25   We do not currently qualify under Regulation S-B, so we cannot speak as to its effectiveness in alleviating the burden.
a) We would welcome any alternatives that simplify SEC and accounting/reporting requirements without damaging small company value.

08/29/2005 11:21:29   Yes, but it should be expanded to companies with a market capitalization of $50 million.
a) No.

08/29/2005 14:18:47   I have no impression to share on this question.
a) See answer to Question 23.

08/29/2005 14:53:30   Yes.
a) Yes, similar to the current streamlined disclosure rules for companies with less than $25 million in sales. Should the alternative framework be available to a broader category of companies than Regulation S-B is currently? Yes, to small companies up to $300 million in market cap or preferably up to $200 million in sales. Should the alternative framework be based on Regulation S-B or on a different approach? Could these steps be taken without impairing investor protection? Yes.

08/29/2005 15:31:21   Do not know
a) Do not know

08/29/2005 16:20:53   Yes, because of manpower needed to comply with standards.
a) N/A

08/29/2005 17:12:26   The additional days for filing 90/45 are helpful and also the certain areas of reduced reporting.
a) I think SB rules are OK, but should raise the definition to 1% of market cap or currently about $100 million.

08/29/2005 17:36:32   Unable to comment
a) Unable to comment

08/29/2005 19:02:32   At present, I don't know what that is.
a) Same.

08/29/2005 21:00:01   The S-B only allows a few companies to take advantage to such relief. However, such relief would be meaningful due to less stringent guidelines.
a) I believe the SEC should allow for an alternative framework for smaller companies. The S-B framework is currently too narrow - if a new definition of a small company is agreed upon, such definition should be used for S-B filings as well. I believe the S-B guidelines are sufficient for investors and allow for sufficient investor protection.

08/30/2005 15:04:16   Yes, the reduced disclosure requirements provide smaller company's with some relief. However, many areas could still be reduced such as acquisitions, the pro-forma information requirements and need for continuous auditor consents in every update of a registration statement.

08/30/2005 15:07:00   Every bit of relief is helpful to smaller companies.
a) I would extend it to larger small companies. I don't believe it would impair investor protection.

08/30/2005 16:27:18   a) Include companies with float less than $100 million.

08/30/2005 17:08:46   We do not qualify for small business issuer status and hence are not familiar with the relief provided by Regulation S-B.
a) See previous response.

08/30/2005 17:23:36   No. We started out as an S-B filer, and I see very little difference in reporting requirements. It is more confusing than anything else.

08/30/2005 18:26:14   N/A
a) N/A

08/30/2005 18:48:02   Yes, Reg. S-B is meaningful. It's better than nothing.
a) The SEC must provide alternatives for smaller companies in order to allow them to remain public and progress with the business of developing new products and services which is so vital to our economy. Due to inflation, Reg. S-B is slowly being applied to smaller and smaller companies; therefore I do not see a pressing need to broaden the category of companies included at this point.

08/30/2005 21:39:41   Yes, we believe Regulation S-B should be expanded to match what the final definition of a small/smaller company is.
a) N/A

08/30/2005 23:57:28   Yes. it is a kind of benefit to employee.
a) No.

08/31/2005 08:31:59   We are not SB filers.

08/31/2005 10:19:14   No comment
a) No comment

08/31/2005 14:32:46   Regulation S-B does not contain proper relief for small companies. Other than fair market vaulations and market risk assessment, S-B filers, for the most part, fall under the same guidelines as regular filers. There needs to be a better system for classification as a small business filer. Market capitalization and/or sales volume don't provide enough distinction.
a) An alternate version should be investigated, but the question that needs to addressed first is "What constitues a small company?" As for basing it on Regulation S-B, if S-B doesn't provide adequate relief now, why should an alternate approach be derived from it?

08/31/2005 16:13:45   We have gone from being an S-B filer to nonS-B and the differences are significant.
a) An alternative disclosure framework should be avalible for smaller companies and should be available to a broader category of companies than Regulation S-B filers. These steps could be taken without impairing investor protection.

08/31/2005 16:16:33   No comment.

08/31/2005 17:16:33   No opinion
a) I have no opinion

08/31/2005 18:22:30   The concept is helpful, but the passage of time has reduced the relevance. We believe there should be distinct categories for companies by size with the size classification covering all elements of regulation, such as periods reported, depth and types of disclosures, auditor independence, filing deadlines, etc.

08/31/2005 18:23:08   Yes to those that meet the criteria; but the criteria for qualifying as a “small” business is too small.
a) Yes, and available to a broader group

08/31/2005 19:16:05   25. The quarterly financial filings, which were originally intended to be summary disclosures are becoming far more complex and lengthy. In many cases, they are becoming a rehash of data that was covered in the annual report and has not changed significantly. Does the investor want to inundated with repetitive detail or do they simply want to see the changes in direction, positive or negative of their investments?

09/01/2005 14:30:54   As an S-B filer, we feel that the relief provided in terms of disclosure to be useful, however more relief should be given.

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