New, more rigorous requirements for filing some documents with the Securities and Exchange Commission may be the spark that eventually results in a user-friendly version of Edgar, the SEC's electronic filing system. Meanwhile, to meet the speedier deadlines and electronic filing mandates imposed by this year's Sarbanes-Oxley Act, companies might want to consider a crop of new compliance product offerings.
Before Sarbanes-Oxley, companies had until the 10th day of the next month to notify the SEC about an insider transaction using Form 3, 4 or 5, known collectively as Section 16 forms. Section 16 forms are among the few that the SEC has still been accepting on paper, and companies took advantage of that fact: In 2001, more than 90% of Form 4s were filed on paper. The new law not only cuts the filing time to two days, it requires that by July 2003 at the latest, all Section 16 forms be filed via Edgar.
Even under the old rules, many companies turned to law firms and financial printers to handle their Edgar filing headaches. In response to the tighter deadlines, financial printers and software companies are stepping up with a variety of solutions, many accessible via the Web, that speedily convert Section 16 forms to the Edgar format and file them.
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The financial printing companies are offering Web-based templates, already coded for Edgar. All a company has to do is fill in the blanks and hit a button. Some software solutions require more expertise on the part of the user, and some, like Transcentive's, are part of larger solutions that will pre-populate forms for companies that use the entire solution.
Although the SEC has committed to simplifying Edgar, the sellers of the new products see a lucrative niche. Brok Romanek, editor of R.R. Donnelley's RealCorporateLawyer.com, questions whether the SEC will follow through on promises to improve Edgar. "They don't have the funding." Even if SEC improvements supersede his company's product for Section 16 forms, Romanek says R.R. Donnelley is planning to expand its self-service option to allow companies to use it to file other types of SEC forms. And with the current appetite for financial disclosure, that marketplace is almost certain to grow.
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