From: perico [pericodsl@directvinternet.com] Sent: Monday, July 15, 2002 9:29 PM To: rule-comments@sec.gov Subject: File No. S7-16-02 Subject: Requiring standard formats and financial terms in the filing of SEC 10-K, 10-Q and similar documents. SEC: These are my comments on SEC Proposed rules listed Monday, May 20, 2002, Federal Register Vol. 67, No. 97 That the Securities Acts are intended, among other things, to protect the public by providing clarity in financial reporting is a theme throughout these Acts. For example, the Act of 1934, Section 13, Item 4 states, "Commission shall take such steps as are within its power...(A) to achieve uniform, centralized reporting of information... " There are also numerous references to the "public interest." It is with this in mind that I submit this request for the promulgation of an SEC rule, described here. As background, in the true American spirit of entrepreneurship, several years ago I conceived of a business I wanted to start up involving making financial more readily available data at low cost via the Internet to the American public. The business plan calls for downloading financial data directly from SEC's EDGAR database, and making the data available through the Internet in a meaningful and organized format. The problem is the EDGAR database file, and more specifically, the manner in which companies submit their data to the EDGAR database. When an investor downloads 10-Q or 10-K files from the SEC, those files reveal many inconsistencies in formatting and a complete lack of uniformity between filings in how the data is presented and described. For example, some filers will call an income statement an "Income Statement." Others may call it a "Consolidated Statement of Earnings." There are no rules governing the vocabulary of descriptive words and phrases to use in the submission of these documents. Nor is there a consistent location within the documents where the income statement, balance sheet or statement of cash flow, or other comparative financials may appear. Without required descriptive phrases for the line items, or any given order or format in which these line items must appear, the document is nigh impossible to scan into a database and is very cumbersome for the public to use as a basis of comparison when evaluating a company. Clearly, the public would benefit from a rule issued by the SEC, if not by the Congress, to require that 10-K and 10-Q data files submitted to the SEC for consumption by the investing public bear some standards so that these files can be efficiently and easily downloaded into a database. As they exist now these files are next to impossible to what we computer programmers call "parse", meaning taking the data and putting it into appropriate fields in databases. Today a highly inefficient manual labor system picks out the data to make if useable for firms ultimately like Value Line.com, WSRN.com, SectorBase.com or NASDAQ.com to use. These firms then must pass on these exorbitant costs in their subscription fees, making efficient and affordable access to real time financial data only available only to wealthy clients and corporations. The purpose then of my letter is simply to request that you adopt a rule requiring that the SEC, in making financial data of publicly traded companies available to the public, mandate that those companies filing 10-Q and 10-K reports comply with the following: 1.. Incorporate key descriptive terms and a specified vocabulary of financial expressions, as adopted by the SEC (perhaps with FASB input) so that there is uniformity among filings; 1.. Mandate that the income statement, balance sheet and statement of cash flow contained in the 10-K and 10-Q be submitted on as separate respective pages from the rest of the 10-K and 10-Q, thereby making them easier to scan into databases and spreadsheets more efficiently by the public, financial analysts, and government agencies. Requiring the presentation of data in a comprehensible format - and today in a format that can be readily digested electronically - is nothing novel. When I was involved in railroad ICC Law, ICC (now STB) had very strict filing guidelines governing various kinds of submissions in order to make otherwise complex subject matter relatively easy to find, read, digest, index and understand. These elements are no less important with respect to the filing of publicly traded company documents that are the underpinning of our economy and therefore our nation. With a skeptical public demanding clear, comprehensible financial information on companies in which many have poured their life savings and retirement investments, requiring implementation of these all too basic standards in SEC filings can only serve the public interest. There has to be uniformity in the presentation of this data to the SEC. Without it, disclosure is only an illusion, and the public's tolerance of illusions has worn thin. A meaningful start will be to require the SEC in the distribution of publicly traded 10-Q's and 10-K's to adopt uniform standards in the presentation of the data so that it is easily retrievable electronically. The cost savings alone in avoiding having to pour over inconsistent formats and document presentations makes this a valuable effort. In speaking with TRW personnel, they indicate this requirement should have been made long ago. I hope that you send a strong signal to the public by promulgating these two simple rules for further adoption and development by the SEC. Thank you for the opportunity to present my views. You are referred to Robert Eccles' book, Building Public Trust, which I believe supports the standardization of formats for submission of data to the SEC. Bruce Feld -------------------------------------------------------------------------------- [1] Securities Exchange Act of 1934, Section 13, Items a. and b..