SEC Votes To Mandate Electronic Filing of Ownership Reports

On April 24, the Securities and Exchange Commission voted to require that reports by insiders disclosing their securities holdings be filed electronically with the SEC.

Filing and Posting

The Commission voted to mandate the electronic filing of beneficial ownership reports filed by officers, directors and principal security holders under Section 16(a) of the Securities Exchange Act of 1934.

The Commission also voted to require issuers with corporate Web sites to post these reports.

According to the SEC, "electronic filing and Web site posting of these reports will result in earlier public notification of insiders' transactions and wider public availability of information about those transactions."

The rules implement the requirements of Section 16(a)(4), as amended by Section 403 of the Sarbanes-Oxley Act of 2002.

Details

Under the new rules and amendments:

Mandated electronic filing will apply to Forms 3, 4 and 5. To facilitate this, a new on-line filing system for these forms has been created.

Forms 3, 4 and 5 submitted by direct transmission on or before 10 p.m. Eastern time will be deemed filed on the same business day. In light of these extended filing hours, temporary hardship exemptions will not be available for these forms.

An issuer that maintains a corporate Web site will be required to post on that website all Forms 3, 4 and 5 filed with respect to its equity securities by the end of the business day after filing. An issuer will be able to satisfy this requirement by providing direct access, or by hyperlinking to a third-party website (such as EDGAR) if certain conditions are satisfied.

In addition, the new rule amendments will eliminate magnetic cartridges as a means of filing any form electronically.

These new rules and amendments will become effective on June 30, 2003.

NOTE: Please note that this is a summary of a proposed SEC rule, and should not be construed to be a complete or final rule, nor should it be construed to be legal guidance. Please refer to the SEC's Web site for updated and final rule information.