Speech by SEC Chairman:
Remarks at the Commission Open Meeting
Chairman Harvey L. Pitt
U.S. Securities and Exchange Commission
December 18, 2002
This is an open meeting of the U.S. Securities and Exchange Commission on December 18, 2002.
It is also our last open meeting of the calendar year. So, I think it's appropriate to take a moment to convey my profound thanks to the men and women of this agency for their incredible efforts this past year.
Today we will consider two recommendations from the Division of Corporation Finance that speak to the staff's ongoing efforts to make our processes more efficient, eliminate unnecessary regulatory disparities, and make information more readily available to investors.
Exemptions from the Registration Requirements for Standardized Options
For the first item, the Division of Corporation Finance recommends that we exempt most standardized options from the provisions of the Securities Act (other than the antifraud provisions) and from the registration requirements of the Exchange Act.
When buying or selling an option, an investor is concerned primarily with the financial condition of the issuer of the underlying security. The current registration regime for standardized options does not provide this information. Instead, investors obtain this information from the registration statements and periodic reports of the issuers of the underlying securities. Elimination of the registration requirements for standardized options would eliminate costs without sacrificing investor protection.
An exemption also would harmonize the regulatory treatment of standardized options and security futures products, which just started trading in the U.S. this month. Both are used for similar financial purposes, but Congress exempted security futures products from the registration requirements when it passed the Commodity Futures Modernization Act in 2000.
Electronic Filing of Insider Ownership Reports
For our second item, the Division recommends that we propose rule changes to require the electronic filing and Web site posting of information about corporate insiders' ownership of, and transactions in, their company's securities. The proposals are designed to implement Section 403 of the Sarbanes-Oxley Act and complement the accelerated reporting of this information that we mandated in August of this year.
Insiders are required to file ownership and transaction information on Forms 3, 4, and 5. Many investors believe that these reports provide useful information regarding management's views on the performance or prospects of a company.
Currently these forms may be filed either electronically or in paper. The Staff's proposals today would require all insiders to file electronically, giving investors across the country more timely and transparent access to these reports through our EDGAR system, which is available in real-time and at no cost on our Web site.
In addition, requiring issuers to post these reports on their Web sites would provide investors with another convenient source to access this information.