WASHINGTON: Many IR, corporate accounting, and legal execs expressed relief last week when the SEC announced it would phase in a plan to accelerate the filing deadlines for quarterly forms (10-Q) and annual forms (10-K) over a three-year period, with the first set of changes not beginning until late 2003.
The decision by the commission to add a "phase-in period marked a communications victory for the business, legal, and accounting groups who had been lobbying the SEC to find a way to mitigate the proposed regulation.
The original rule, which was first tabled in April, was touted as part of the SEC's move toward "current disclosure."
The decision came after the SEC received an unprecedented amount of negative reaction to the originally proposed rule from many in the business community. Among the chief complaints was that the proposed rule change was too onerous to thrust upon corporations within such a short period of time.
During a recent SEC meeting, chairman Harvey Pitt made light of the dissension generated by the rule when he addressed members of the SEC staff that had worked on new accelerated regulations.
"I must say you have established a new world record for the most negative comments received on a rule proposal, said a deadpan Pitt. "I ask that you not take it personally."
The deadline for filing annual reports following the close of a company's fiscal year will stay at 90 days for one year and change to 75 days in year two, then indefinitely change to 60 days in year three. Deadlines for quarterly reports similarly will remain at 45 days for the first year, changing to 40 days in the second year, and then 35 days in the third year. The first deadline contractions would occur for companies with fiscal years ending on or after December 15, 2003.
The SEC's original proposal would have accelerated annual reports from 90 to 60 days and quarterly reports from 45 to 30 days, with no phase-in periods.
In its announcement, the SEC conceded that it received a substantial amount of comment from business groups asking for a phase-in period.
"Most business associations, generally supported the Commission's objectives, and offered alternatives to reduce potential costs and burdens, read the SEC statement. "These included a more gradual phase-in or transition period, and a less extensive acceleration of deadlines."
Those who were involved in the informal lobbying effort say their work has been vindicated.
"I'm very gratified, as everyone in PR and IR should be, said John McInerney, senior director at Citigate Financial Intelligence. "I do think it shows that the commission will listen to companies when they make good points, and has now shown a willingness to compromise."
The new rules will apply to almost all public companies, with a few exceptions for some small firms.
The SEC also announced that it had approved a measure requiring most company insiders to disclose their trading of company stock within three days of the trade. Current rules allow insiders a period of 40 days to announce that they have traded company stock.