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Jonathan G. Katz, Esq.
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Re: File No. S7-11-00; Releases Nos. 33-7856, 34-42728 and IC-24426
Ladies and Gentlemen:
I reviewed your recent release regarding Use of Electronic Media because of a professional interest in the subject, but my strongest reactions to several points were as an individual who is significantly reliant upon marketable securities for daily sustenance. Therefore I send these comments in that capacity. They relate to two technical concepts, your items II (D)(1), Access Equals Delivery, and II(D)(3), Implied Consent.
II (D)(1), Access Equals Delivery
Your sentence under the Access Equals Delivery section:
Assuming that this data exists, how will investors know when disclosure information has been posted on an issuer's web site?
rings loud in my ears. If anyone believes that I, or anyone in my employ or on my behalf, will daily check the more than 100 sites of issuers with whom my money is parked to see if they have released any information, I have a nice bridge to sell to them! (Actually, I don't even know how many sites I'd have to check, and that is significant, since I could not disclaim the tag of a "sophisticated investor.") I have assumed until now that one of the perks that is granted to one investing with or loaning money to an enterprise is the right to be sent all applicable notices regarding the investment.
Although new technology is springing up daily to help one manage the information flood that other new technology augments hourly, a basic difference exists between information that is sent and information that must be secured. The simplest example that comes to mind is the daily newspaper. When one lands in the driveway or on the front porch every day, it must be taken in and dealt with, whether or not one is in the mood to be informed. However, if one must go out to the newsstand or remember to pick up a paper on the way to work, some days will get missed. And where delivery is involved, the mere fact of the delivery will remind you of myriad obligations, opportunities, interests and activities that your current pursuits may have crowded out of your mind. Probably even unsolicited mail or e-mail, that has been delivered, gets scanned for relevance more thoroughly than an intraday market report caught on the fly.
Current information technology does help. My present software can alert me to press releases, earnings reports and price changes relating to chosen companies or issuers and, essentially, puts me on inquiry notice that something important is out there. But it is a crude instrument at best and it can not make the essential distinction between information that may be of interest to a market watcher and information to which an investor in that enterprise is entitled. Although it is conceivable that a program to make such a distinction might be written, even such a program should not deny the investor personal notice of required information. Sending such notice is a small cost for the enterprise to pay for use of the investor's money.
II(D)(3), Implied Consent
I would strongly agree with requiring explicit consent to electronic delivery , rather than being able to infer consent to electronic delivery from an investor's prior use of electronic communication.
Personal experience (an unscientific resource) indicates to me that electronic communication is not nearly as reliable as the U.S. Postal Service (hereinafter "snail mail"). During a long professional career and my concurrent personal affairs, I can recall only about a half dozen incidents in which an item sent by snail mail failed to arrive. I feel reasonably assured of the accuracy of that estimate because the event in each case was so unusual. On the other hand, electronic failures are so common that I have trouble recalling accurately the number in the last six months. For example, within the past ten days, when checking e-mail on a personal computer, six or eight messages downloaded and then mysteriously disappeared from the screen before even the first one was read and closed. Only the fleeting memory of the names of several senders allowed us to call them and ask them to re-send what turned out to be significant communications. Even with pretty sophisticated hardware and software, such incidents seem unavoidable. In daily office work, it is common to require messages to be re-sent to complete them, to phone the sender to confirm a message as authentic or accurate, or to find out if any message has been sent. Although I am a frequent user of electronic communication, probably more than the average, and have been an early and strong advocate of most new technology and alternative means of communication, I am almost embarrassed to say that, when I want reliable, don't-think-about-it communications, I rely on stamps.
One troubling aspect of using electronic media is reference. It is often difficult to revisit information to which one has been exposed. Unless one is willing to download and store in a personal file documents and information as soon as received, one may be required to use only memory as the support for accuracy and currency of one's information. For this reason, I prefer to file paper reports that I can find when needed.
Because I do not want to rely on e-mail for long and complex corporate documents, I want them mailed to me, and my lack of consent to electronic delivery has been deliberate. Merely because I am willing to use electronic means for some communications I should not be condemned to use them for all communications.
Thank you for your efforts to extend rational regulation and investor protection to this new area of growth and promise.
In keeping with my prejudices expressed herein, I will send these comments both electronically and by snail mail.
Yours truly,
Fred Bunker Davis