January 16, 2003
U.S. Securities and Exchange Commission
Re: Proposed Rule: Mandated Electronic Filing and Web Site
Dear Mr. Katz:
We provide legal services to a number of small issuers, many of which are SB issuers. The overwhelming majority of those issuers make every effort to assist their insiders with filing the required reports on Forms 3, 4, and 5.
In Release No. 33-8170, the SEC has requested comments addressing the possibility of deeming Forms 3, 4, and 5 as filed on the same business day if they are received before 10:00 p.m. Eastern Time, rather than the more standard 5:30 p.m. Eastern Time deadline. For the reasons stated below, we believe the SEC should amend the proposed rule in this manner.
The vast majority of insiders for the issuers we represent are natural persons. These persons will typically rely on the issuer and its counsel for assistance in filing reports on Forms 3, 4, and 5; we expect that reliance to be, if anything, increased by the requirement that these reports be filed electronically. Many of these issuers will not have substantial resources to allocate to such efforts. It is entirely likely that issuers of the size we represent may face substantial difficulties in, for example, preparing and filing a report on Form 4 on the same day a quarterly or annual report falls due. Extending the deadline from 5:30 p.m. Eastern time to 10:00 p.m. Eastern time would allow issuers and their respective officers, directors, and control persons to focus their efforts on these filings in sequence.
In addition to being smaller issuers with fewer resources, many of our issuer clients are located in the Mountain Time zone. Accordingly, under the proposed rule, their reports on Forms 3, 4, and 5 would be required to be filed by 3:30 p.m. local time. Given the already short, two-business-day timeline, the mid-afternoon deadline imposes an additional burden.
Finally, we believe the benefit to small issuers of using the later deadline would far outweigh the cost of the corresponding delay in making the information available to the investing public. Whether a report on Form 4 is filed at 5:30 Eastern time or at 10:00 Eastern time, it will be filed and available to the investing public on the morning of the following business day before the opening of the major markets.
The comments expressed above regarding Release No. 33-8170 are our own based on more than 30 years of experience in corporate and securities law, and do not necessarily represent those of our firm or any of its clients.
We appreciate the opportunity to submit these comments and hope that the SEC finds them helpful in its consideration of the deadline for filing reports on Forms 3, 4, and 5.