August 7, 1992
TO: EDGAR FILER GROUP
SEC RULES MEMBERS NO. 34-92
SMALL FUNDS MEMBERS NO. 15-92
OPERATIONS COMMITTEE NO. 22-92
UNIT INVESTMENT TRUST COMMITTEE NO. 42-92
ACCOUNTING/TREASURERS COMMITTEE NO. 35-92
RE: SEC ISSUES PROPOSALS TO REQUIRE MANDATORY ELECTRONIC FILING
ON THE EDGAR SYSTEM
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I. INTRODUCTION
Enclosed are proposed new rules and proposed amendments of
existing rules and forms issued for public comment by the
Securities and Exchange Commission to implement the operational
phase of the Commission’s Electronic Data Gathering, Analysis,
and Retrieval ("EDGAR") system. Also enclosed are hard copies of
slides presented at an August 5, 1992 SEC-sponsored EDGAR
Conference that summarize the main aspects of the EDGAR system
and filing process. The proposed rules would require all SEC
registrants, including registered investment companies and
publicly held investment advisory firms, to submit in electronic
format virtually all of their SEC disclosure filings, related
exhibits and associated correspondence. Not subject to the
proposed rules are filings under the Investment Advisers Act of
1940, applications for exemptive relief, and requests for no-
action or interpretive positions.
The proposed rules are contained in four separate releases.
One applies to filings processed by the Division of Investment
Management and addresses matters unique to investment companies,
business development companies and institutional investment
managers reporting securities holdings under management (Release
Nos. 33-6945; 34-30952; IC-18863) (the "IM Release"). Another
addresses matters relevant to all electronic filings on EDGAR,
but applies primarily to filings processed by the Division of
Corporation Finance, and to a lesser extent, to filings processed
by the Division of Investment Management (Release Nos. 33-6944;
34-30951; 35-25587; 39-2285; IC-18862) (the "General Release").
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A third discusses instructions for filing fees and proposes the
mandatory use of a U.S. Treasury designated lockbox depository in
Pittsburgh, Pennsylvania for the remission of filing fees for
both paper and EDGAR filings (Release Nos. 33-6947; 34-30954; 35-
25589; 39-2286; IC-18864) (the "Filing Fee Release"). The fourth
release, which is not relevant to Institute members, relates only
to aspects of the EDGAR system unique to filings of public
utility holding company systems.
The releases propose the adoption of new Regulation S-T to
govern electronic submissions and amendments to many of the
existing SEC rules, regulations, schedules and forms that are
needed to accommodate electronic filing.
The IM Release includes a phase-in schedule in Appendix A
listing all registered investment companies by complex (open-end
and closed-end funds by adviser and unit investment trusts by
sponsor) and combining complexes into six discrete groups. Each
group would be required to begin mandatory electronic filing
through EDGAR on a designated date, with the first group
scheduled for April 1, 1993 and the sixth and final group
scheduled for November 1, 1995. Appendix A of the General
Release contains a similar timetable for non-investment company
registrants.
II. BACKGROUND
Beginning in 1984, the Commission operated a pilot EDGAR
program (the "Pilot") to determine the feasibility of an
electronic disclosure system. The Pilot contractor was Arthur
Andersen & Co. A group of Corporation Finance registrants
volunteered for the Pilot and began submitting electronic filings
in September 1984. At the request of the Commission, the
Institute in 1985 organized a volunteer group of seven fund
complexes and four unit investment trust sponsors from the ICI
membership to join the Pilot. This group, which initially
consisted of approximately 250 management investment companies
and 87 unit investment trusts, began filing electronically in
October 1985. The fund complexes were Federated Investors, IDS
Financial Services, Putnam Management Company, T. Rowe Price
Associates, Unified Corporation, The Vanguard Group and Waddell &
Reed. The UIT groups were John Nuveen & Co, Dean Witter
Reynolds, Merrill Lynch and PaineWebber.
During the operation of the EDGAR Pilot, the Commission
received over 116,000 electronic filings, including more than
80,000 from investment company participants. Over 1300 invest-
ment companies filed their semi-annual and annual reports on Form
N-SAR electronically during the Pilot, as both Pilot and non-
Pilot investment companies were permitted to submit these filings
through EDGAR. In addition, more than 60 portfolio managers
filed their Form 13F reports electronically during the Pilot.
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Development and implementation of the operational EDGAR
system was authorized in the Securities and Exchange Commission
Authorization Act of 1987 (the "EDGAR Authorization Act").
Benefits of EDGAR expected by the Commission include the improved
dissemination of public information of interest to investors and
other parties, the introduction of efficiencies for SEC
registrants resulting from direct electronic transmission of
filings, and the introduction of efficiencies for the Commission
resulting from the electronic receipt, storage and processing of
filings.
In 1989, in accordance with the EDGAR Authorization Act, an
eight-year operational EDGAR contract was awarded to BDM
International, Inc. ("BDM"), a systems engineering firm. Other
parties to the Contract include Mead Data Central, Bowne & Co.,
Disclosure Information Services and Compuserve. BDM began
operating the Pilot and working with the Commission on the design
and construction of the operational EDGAR system. On July 14,
1992, the Pilot was closed and on July 15, 1992, EDGAR began to
accept filings from Pilot participants electing to file
electronically on the operational EDGAR system prior to mandatory
electronic filing. Pilot filers participated in the EDGAR Pilot
under temporary rules, which were amended on April 20, 1992 to
permit the voluntary conversion of Pilot participants to the
operational EDGAR system. The attached proposed rules would
replace the temporary rules, govern electronic filing for the
operational EDGAR system, and provide for phase-in of mandatory
electronic filing.
III. THE IM RELEASE
A. Phase-In
The phase-in schedule in Appendix A of the IM Release sets
forth the proposed timetable for investment companies to begin
mandatory electronic filing. The first group, which consists of
the Pilot participants, is scheduled to begin mandatory
electronic filing on April 1, 1993. This group is scheduled to
be joined on July 1, 1993 by a second group of approximately 500
additional investment companies associated with eight additional
fund complexes and ten additional unit investment trust sponsors.
This second group will be the first non-Pilot filers to be phased
in to mandatory electronic filing. These first two groups
together will constitute a "significant test group" required by
Congress in the EDGAR Authorization Act to file successfully for
at least six months before the Commission can adopt final
mandatory filing rules.
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The rules proposed in the enclosed releases would be
adopted on an interim basis for application in the early stages
of mandatory electronic filing. After the "significant test
group" has filed successfully for six months, permanent EDGAR
rules will be adopted by the Commission, based on the interim
rules as modified appropriately in light of the significant test
group’s experience with EDGAR.
Following adoption of the final EDGAR rules, the remaining
investment company registrants will be brought onto EDGAR in
designated groups at six month intervals. The phase-in schedule
is designed to require complexes with the largest number of
registrants to begin filing electronically first. A newly
created investment company that is part of a phased in complex
will be required to submit its filings electronically.
Investment companies that are not associated with a phased in
complex or are not listed in Appendix A will be phased in with
the last group. The proposed rules provide the Division of
Investment Management with delegated authority to act on requests
by registrants to be assigned to a different phase-in group than
initially assigned for the purpose of rectifying any
inappropriate assignments.
The proposed rules provide that each registrant is
responsible for ascertaining its phase in date from the phase-in
schedule, or if not listed in the schedule, with reference to
paragraph (b) of proposed Rule 305 of proposed Regulation S-T,
which sets out the factors for registrants to consider in
determining their phase-in dates. Each registrant must file a
Form ID (described in Section VI.A of the General Release) prior
to phase-in, supplying basic identifying information required for
the Commission to issue a registrant’s EDGAR access codes. Form
ID should be filed three to six months in advance of a
registrant’s scheduled phase-in date to allow time for a
registrant to receive its access codes and submit test filings on
EDGAR in preparation for mandatory electronic filing.
The Commission has specifically requested comments from
registrants on the investment company phase-in approach and on
whether Appendix A in the IM Release appropriately reflects
registrants’ investment company complex association.
B. Required Electronic Filings
A phased in investment company would be required to submit
electronically its registration statements and amendments
thereto, its prospectus filings and proxy materials, its
shareholder and Form N-SAR reports and various notices and
elections. A complete list of filings required to be filed
electronically is included as Appendix B in the IM Release. All
documents associated with a required electronic filing, including
exhibits, correspondence and any supplemental information, would
also be required to be filed electronically.