April 1, 1993
TO: EDGAR FILER GROUP
OPERATIONS COMMITTEE NO. 9-93
UNIT INVESTMENT TRUST COMMITTEE NO. 13-93
ACCOUNTING/TREASURERS COMMITTEE NO. 13-93
MEMBER - ONE PER COMPLEX NO. 23-93
SEC RULES COMMITTEE NO. 26-93
SMALL FUNDS COMMITTEE NO. 7-93
RE: SEC ADOPTION OF RULES REQUIRING MANDATORY ELECTRONIC FILING
ON THE EDGAR SYSTEM
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I. INTRODUCTION
Enclosed are new rules adopted by the Securities and
Exchange Commission to implement the operational phase of the
Commission's Electronic Data Gathering, Analysis, and Retrieval
("EDGAR") system. The rules require all SEC registrants,
including registered investment companies and publicly held
investment advisory firms, to file virtually all of their SEC
disclosure filings, related exhibits and associated
correspondence in electronic format. Applications for exemptive
relief, no-action requests and filings under the Investment
Advisers Act of 1940 are not subject to the rules. Mandated
electronic filing is scheduled to begin on April 26, 1993, for
selected filers. Phase-in of all registrants onto the EDGAR
system is expected to be completed by November, 1995.
The rules are contained in four separate releases. One
release 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. 33-6978; 34-31906; IC-19284) (the "IM
Release"). Another addresses matters relevant to all electronic
filings on EDGAR (Release Nos. 33-6977; 34-31905; IC-19283) (the
"General Release"). The General Release 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. A third release discusses payment of
filing fees on electronic filings through a U.S. Treasury
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designated lockbox depository in Pittsburgh, Pennsylvania
(Release Nos. 33-6980; 34-31908; 35-25747; 39-2301; IC-19285)
(the "Filing Fee Release"). The fourth release, which is not
relevant to Institute members, pertains to aspects of the EDGAR
system which are unique to public utility holding companies.
The rules were originally proposed in August of 1992,
(See Institute Memorandum to SEC Rules Members No. 34-92, Small
Funds Members No. 15-92, Operations Committee No. 22-92, Unit
Investment Trust Committee No. 42-92, and Accounting/Treasurers
Committee No. 35-92). The following summarizes several of the
more significant changes made to the rules as originally
proposed.
II. THE IM RELEASE
A. Phase-In
Mandated electronic filing will begin on April 26, 1993,
with seven investment company complexes (approximately 300
registrants) and four unit investment trust sponsors who
participated in the EDGAR pilot program. The second phase-in
group, which contains eight investment company complexes
(approximately 500 registrants) and ten unit investment trust
sponsors, will begin mandatory filing on July 19, 1993. These
first two groups will constitute a "significant test group" which
Congress has stated must file successfully for at least six
months before the Commission can adopt final mandatory filing
rules.
After the significant test group has filed successfully
for a six month period, the Commission will adopt final rules for
the EDGAR system. After final rules are adopted, all remaining
investment companies will be phased into EDGAR in four groups,
each containing approximately 600 companies, in six month
intervals. The phase-in schedule is contained in Appendix A to
the IM Release.
The phase-in schedule is designed to bring those
investment company complexes having the largest number of
registrants on to the EDGAR system first. It is also designed to
allow complexes that make electronic submissions to do so for all
of the funds they advise, even if those funds are organized after
the initial phase-in dates, avoiding the need to maintain both
electronic and paper filing systems.
Each registrant must file a Form ID with the SEC at
least three to six months prior to its phase-in date. Form ID
contains basic identifying information required for the
Commission to issue the access codes that enable a registrant to
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make electronic filings. After a registrant receives its access
codes, it may then make test filings until its scheduled phase-in
date. Registrants are encouraged to make test filings in order
to become familiar with the EDGAR system.
B. Exhibits
The rules as initially proposed would have required that
all documents associated with a filing, including exhibits be
filed electronically. The rules would have permitted an
investment company to incorporate by reference into an electronic
filing only those exhibits that were filed electronically. This
would have required all existing investment companies to refile
in electronic form all exhibits previously filed on paper at the
time they were phased-in.
In response to comments, the rules as adopted provide
investment companies with a "grace period" before all documents
incorporated by reference into an electronic filing will be
required to be filed electronically. During the first three
years subsequent to a registrant's phase-in date, the rules
require electronic filing of any amendments to a previously filed
paper exhibit, unless the exhibit is the articles of
incorporation, the by-laws or the investment advisory agreement,
in which case the previously filed paper exhibit will have to be
refiled electronically in its entirety. After three years has
elapsed from a registrant's phase-in date, the registrant may
incorporate by reference only those documents which have been
filed electronically.
C. Financial Data Schedule
Registrants that are phased-in to the EDGAR system will
be required to file a financial data schedule as an exhibit to
certain registration statements, reports and proxy materials.
The schedule will be comprised of specified financial information
from the financial statements, per share table and Form N-SAR.
The financial data schedule is intended to facilitate automated
review of financial information and to enable Commission staff to
screen selected filings for additional review.
The effective date of the provisions relating to the
financial data schedule has been delayed. Registrants will be
required to comply with the financial data schedule provisions
for filings on or after November 1, 1993. The financial data
schedule will not be deemed a "filed" document for purposes of
liability under the federal securities laws.
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D. Rule 497 Filings
Rule 497(c) of Regulation C under the 1933 Act generally
requires investment companies to file ten copies of the final or
definitive form of prospectus with the Commission within five
days after the commencement of a public offering. Registrants
phased-in to the EDGAR system will be able to comply with rule
497(c) by making an electronic filing. In response to comment,
rule 497 has been amended to provide that in lieu of a complete
filing under rule 497(c), electronic filers may file a
certification stating that the prospectus and statement of
additional information that would have been filed under rule
497(c) does not differ from that contained in the most recently
filed registration statement.
III. THE GENERAL RELEASE
A. Signatures
The rules as adopted allow required signatures for
electronic filings to be submitted in typed form. The required
use of personal identification numbers (PINs), which were
mandatory in the EDGAR Pilot has been eliminated. The proposing
release requested comments on the necessity of requiring filers
to maintain a manually signed signature page. The rules as
adopted mandate the retention of a manually signed signature page
or other document authenticating, acknowledging or otherwise
adopting the signatures that appear in typed form within an
electronic filing. The manually signed signature page will be
required to be made available to the Commission or its staff upon
request, for a period of five years. Further, the signature
authorization must be executed before or at the time the
electronic filing is made.
B. Hardship Exemptions
The rules as initially proposed allowed filers to apply
for either temporary or continuing hardship exemptions from
electronic filing. The temporary exemption is intended to
provide relief for unanticipated technical difficulties
preventing the timely preparation and submission of an electronic
filing such as a power outage or equipment failure. The proposed
rules would have required SEC staff to grant a request made by an
electronic filer after determining that the request was
appropriate and consistent with the public interest. The rules
as adopted provide that an electronic filer may obtain the
exemption simply by filing the subject document under cover of
Form TH, Notification of Reliance on Temporary Hardship
Exemption. SEC staff approval of the exemption request will not
be required. However, the electronic filer will be required to
file a paper copy of the document for which the exemption is
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sought no later than one business day after the date the filing
was to be made. To assure completeness of the EDGAR database,
the rule requires the filer to submit a copy of the document in
electronic format within six business days of submitting the
filing in paper format.
An electronic filer may apply in writing for a
continuing hardship exemption from the electronic filing
provisions if the filer is unable to submit all or part of a
filing because of undue burden, expense or impracticability.
Unlike the temporary hardship exemption, the continuing hardship
exemption does not require that the paper filing be followed by
an electronic copy. The adopting release indicates that the
Commission will not be inclined to grant continuing hardship
exemptions except under extreme circumstances.
C. Schedules 13D and 13G
It should be noted that notwithstanding the fact that an
investment company complex has not yet been phased-in to the
EDGAR system, the complex will nevertheless be required to
electronically file Schedules 13D and 13G if the subject company
has been phased-in to EDGAR. For example, an investment company
complex which is included in the final Investment Management
phase-in group will be required to file Schedule 13G
electronically prior to its EDGAR phase-in if the funds for which
it serves as investment adviser own in the aggregate more than 5%
of the outstanding voting securities of a company which has been
phased-in to the EDGAR system. If the subject company has not
been phased-in to EDGAR, then the Schedule 13G would be filed in
paper.
IV. ICI EDGAR CONFERENCE
The Institute held a special one-day EDGAR Conference on
March 25, 1993 in Washington, D.C. The conference focused on the
preparation and submission of an electronic filing on the EDGAR
system. Representatives of the investment company complexes who
participated in the EDGAR Pilot as well as SEC staff from the
Office of Information Technology, Technical Filer Support, and
the Division of Investment Management made presentations to more
than 300 attendees. The Institute will be offering a recording
of the conference proceedings and the conference materials. For
further information, please call the Institute.
Gregory M. Smith
Director - Operations/Compliance
Enclosures