PATRICK A. REARDON
210 West Sixth Street
Fort Worth, Texas 76102
Telephone: (817) 348-8801
Fax: (817) 348-8804
Web Site: www.parfwlaw.com
April 15, 2002
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street
Washington, DC 20549
File No.: S7-08-02
Dear Mr. Katz:
I am writing to you in response to rule changes proposed in the Commission's release dated April 12, 2002, titled "Acceleration of Periodic Report Filing Dates and Disclosure Concerning Website Access to Reports." I am a corporate and securities attorney in private practice. Although I periodically represent clients with securities registered with the Commission under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, these comments are my own.
I have comments on both topics outlined in the release.
The release proposes to decrease the period for preparation and filing of Forms 10-K and Form 10-Q for entities having a public float of $75 million or more.
Although the release does not state the motivation for its issuance, the Commission obviously made these proposals in response to the collapse of Enron Corp. There have been countless pieces written on the problems uncovered in this unfortunate debacle. Among the suggestions for improvement, the following have currency:
Decreasing the period of time for completing and filing these reports is counterintuitive to achieving the first four ideals above. Unfortunately, hastily prepared filings are less likely to be accurate and to tell the full story. A shorter filing period also suggests that the appropriate emphasis should be upon short-term information rather than long-term trends (item 5).
Because recent lessons indicate that the highest priority has to be the accuracy of periodic filings, I urge the Commission to reject the suggestion for shorter filing periods and instead focus on the quality of the disclosures. If the Commission feels that something should be done in this area, I recommend that expansion of the mandatory disclosure requirements in Form 8-K be considered. That form is the better vehicle if speed is required.
The release also suggests that these same companies (public float of $75 million or more) be required to post their public filings on their websites on the same day the filings are made.
Frankly, this is the role that the EDGAR system is supposed to fill. Instead of having duplicate systems and the resulting waste, the EDGAR system should be streamlined so that filings are available on the schedule suggested in the release. Presumably this is what is meant when the release states that the present 24-hour delay will be replaced by "real-time posting."
Instead of adopting rules mandating posting of periodic filings on corporate webpages, a better idea is to require a permanent statement on the webpage referring to the EDGAR system or a standing hyperlink to the database.
Also, EDGAR should be revised to accept commonly used document formats (e.g., MSWord and Excel, WordPerfect, Lotus and Adobe Acrobat). This would reduce the time and expense now devoted to "EDGARizing" filings. This simplification would be especially needed if the Commission persists with its proposal to reduce filing deadlines for Forms 10-K and 10-Q.
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I respectfully submit these comments with the hope that they are helpful to the Commission's consideration of the proposed rule changes.
S/ Patrick A. Reardon
Patrick A. Reardon