AMERICAN CORPORATE COUNSEL ASSOCIATION

August 19, 2002

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20459
E-mail address: rule-comments@sec.gov

Re: File No. S7-31-02
Release No. 34-46313 (August 6, 2002)

Dear Mr. Katz:

The Corporate and Securities Law Committee of the American Corporate Counsel Association ("ACCA") is pleased to respond to the SEC's request for comments on its proposed revisions to the rules and forms adopted under Section 16(a) of the Securities Exchange Act of 1934. ACCA is the only global bar association exclusively serving the professional needs and interests of in-house counsel to corporations and other private sector organizations. ACCA has more than 13,000 individual members who act as in-house counsel to more than 6,000 business entities. The Corporate and Securities Law Committee is the largest of ACCA's committees, with over 4,000 attorney members, most of whom work in public companies subject to the Commission's disclosure requirements.

Commencing August 29, 2002, Section 403 of the Sarbanes-Oxley Act of 2002 (the "Act") requires insiders subject to Section 16(a) to report all changes in beneficial ownership by the end of the second business day following the day the subject transaction was executed except where the Commission determines by rule that the two-day period is not feasible. Also, the Act requires that no later than July 30, 2003, all Section 16(a) reports must be filed electronically. In light of the specific mandates of the Act and the short period of time before final rules must be effective, we are commenting only on certain filing mechanics and transition matters.

Filing Mechanics

Most insiders (or, more typically, issuers filing reports on their behalf) currently still prepare the required form in paper format and send the form to the Commission by mail or delivery service. Until such filers switch to electronic filing, they will have to gather the required information, prepare the appropriate form and send it by overnight delivery service no later than the day after the transaction, making timely filing even more difficult than under the two days contemplated by the Act. While many issuers are rushing to become able to file electronically on behalf of their insiders, it will take time for these issuers to establish procedures, obtain appropriate software and obtain EDGAR codes for each insider, which presumably is one reason the Act gives up to a year's grace period for electronic filing. In order to give filers the ability to take the full two days permitted by the Act while they establish electronic filing capability, we suggest the Commission consider allowing insiders to use the EDGAR code of the company whose securities were traded. We also suggest the Commission consider permitting, during the transition period, filing methods other than under the EDGAR system, such as filing reports by e-mail or directly by fax (instead of the existing alternative of faxing the report to a filing service that then hand carries the report to the Commission).

Transition Issues

We have comments on a number of transition issues:

We assume, but request that the Commission confirm, that transactions that take place prior to August 29 will continue to be reported under the rules that existed prior to that date. For example, a pre-August 29 transaction currently reportable on Form 5 may continue to be reported on that form even if the same transaction would be reportable on a Form 4 if it took place on or after August 29, and a Form 4 transaction taking place prior to August 29 could still be reported by September 10.

Many employee benefit plans are not currently able to report to filers the specifics of certain transactions in time for a two-day filing. Such transactions include purchases of company stock under deferred compensation and non-exempt stock purchase plans and discretionary transactions under various types of plans. The same issue may arise with respect to purchases of additional shares under dividend reinvestment plans. In some cases, issuers may need some time to develop arrangements for the plans to provide immediate information. 1 We urge the Commission to allow such transactions to be reported within 30 days of the transaction date for at least for the remainder of this calendar year and preferably for a one-year period. 2

If Rule 10b5-1 plans will become reportable on a Form 4 instead of in a Form 8-K as originally proposed, a transition rule should cover how pre-existing Rule 10b5-1 plans should be reported.

Finally, in light of the difficulties that filers will have in switching to the new system, there may be instances in which filers will miss the two-day deadline despite their good faith attempts to comply. We suggest that, for a transition period of several months, filers who file within ten calendar days of a transaction not be subject to Item 405 disclosures for late filings.

We appreciate the opportunity to comment on the Commission's proposals, and would be pleased to provide additional information to the Staff upon request.

Very truly yours,

Michael D. Cahn, Chair
Corporate & Securities Law Committee
American Corporate Counsel Association

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1 For many companies, the first such reportable transactions will occur on a Friday, August 30 payroll date, just a day after the August 29 effective date, and many plans simply may not be able to provide the required information in time for a two-day filing by such date.
2 Deferred compensation and stock purchase plans that provide for purchases of stock or stock units to be made from a portion of the executive's salary for each pay period would necessitate as many as 26 filings per year. We urge the Commission to consider permitting filers to aggregate such filings, perhaps by reporting elections under such plans within a specified period of time and reporting the actual purchases on a Form 5.