TheCorporateCounsel.net

Last fall, the SEC proposed changes to Edgar with the laudable goal of improving security & reliability for filings. Given all of the other new SEC rules and other things on their plates, corporate secretaries probably haven’t had a lot of time to focus on this proposal. The comment file reflects fewer than 30 comments received to-date. The official comment period has closed, but since the proposal would affect the process for D&O and company codes, it might be worth your while to skim through and contact your filing agent if you see any problems. Or, you can watch this 58-minute demo.

Here’s one insightful observation (full disclosure, it is from our wonderful CCRcorp team):

Noting page 51 of the proposed rule where it is stated:

“A user API token would remain valid for up to one year provided that the user associated with the token logged into the dashboard or one of the EDGAR filing websites at least every 30 days. If the user did not log in at least every 30 days, the user API token would be deactivated”.

As a provider of Section 16 filing software, we believe this requirement will cause frustration and become a roadblock when users are already stressed and focused on the filing and deadline. Our users have no reason to regularly log into the EDGAR website. If implemented as proposed, they will at the very least be required to update the user token annually. Requiring monthly logins to login.gov in addition to resetting user tokens annually seems unnecessary and burdensome.

DFIN submitted this 8-page comment letter. Here are a few of the issues it flags:

– DFIN is concerned with the notion that only account administrators would be able to submit a Form ID, because the administrator(s) might be busy, unavailable, or decide it’s a menial task. DFIN notes that the person filling out the form and submitting doesn’t necessarily need to be the account administrator, as long as the two authorized account administrators are designated in the Form ID.

– It will be problematic to wipe an account of its authorized individuals if there is a failure to satisfy the proposed annual confirmation requirements. DFIN supports a two-week temporary suspension after a two-week grace period.

– Requiring filing agents to maintain client passphrases doesn’t align with current practices and would be time consuming.

– The rule has benefits; it also will create new costs relating to filing agents needing to update or create an application to manage delegations.

– DFIN suggests that the Form ID should be revised to indicate a rush service and provide guidance for what filing scenarios could prompt a rush.

– DFIN supports making the filer dashboard available even when Edgar is closed.

– DFIN supports a bulk delegation function, where account administrators can delegate filing authority to any Edgar filer.

– For bulk enrollment, DFIN cautions against resetting the CCC for filers, where there may be multiple filing agents. DFIN suggests that the filers must confirm which filing agent is managing their bulk enrolment to eliminate any conflict.

The proposal also includes changes to the Form ID that require information about any criminal convictions or administrative suspensions as a result of a securities law violation – not just for the applicant, but also for each authorized individual, account administrator, anyone signing the Form ID pursuant to a Power of Attorney, and billing contact. Individuals that disclose the existence of these “bad actor” issues may be contacted by the SEC Staff to determine their eligibility for Edgar access.

– Liz Dunshee