Securities Regulation Daily SEC refines EDGAR procedures to advance reliability and stability
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Friday, December 11, 2020

SEC refines EDGAR procedures to advance reliability and stability

By John M. Jascob, J.D., LL.M.

A new rule sets forth certain actions the Commission may take to correct, prevent or remove filings that may compromise the integrity of the EDGAR system.

The SEC has adopted a new rule specifying actions that the Commission may take in administering the EDGAR system to promote the reliability and integrity of submissions. In addition, the rule establishes a process for the SEC to notify filers and other relevant persons of the agency’s actions under the rule as soon as reasonably practicable. The SEC also adopted amendments to delegate authority to the Director of the Commission’s EDGAR Business Office to take actions under the new rule and two current rules relating to filing date adjustments and the continuing hardship exemption (Administration of the Electronic Data Gathering, Analysis, and Retrieval SystemRelease No. 33-10901, December 11, 2020).

Separately, the SEC adopted revisions to the EDGAR Filer Manual and related rules, including changes to provisions regarding electronic notarizations and remote online notarizations, which include electronic signatures. The Commission is also soliciting comments on the Form ID collection of information under the Paperwork Reduction Act (Adoption of Updated EDGAR Filer Manual, Proposed Collection and Comment Request for Form IDRelease No. 33-10902, December 11, 2020).

Administration of EDGAR. In the adopting release, the SEC notes that the growth in the volume of EDGAR filings has resulted in an increasing number of issues impacting the agency’s administration of the system which are not easily addressed by existing rules or filer corrective disclosure, potentially creating confusion for filers, investors, and EDGAR users.

Accordingly, new Rule 15 under Regulation S-T provides that the SEC may take the following actions in administering the EDGAR system in order to promote reliability and integrity:

  • The SEC may redact, remove or prevent dissemination of sensitive personally identifiable information (Sensitive PII) that may result in financial or personal harm if released.
  • The Commission may prevent submissions that pose a cybersecurity threat, including submissions containing any malware or virus.
  • The SEC may correct or prevent public dissemination of a submission in order to correct system or staff errors.
  • The SEC may remove or prevent public dissemination of a submission if the Commission determines that a submission was made under an incorrect EDGAR unique identifying number.
  • In the case of a dispute concerning the authority to make submissions, the SEC may prevent a filer’s ability to make submissions until the dispute is resolved by the parties or by a court of competent jurisdiction.
  • The SEC may prevent acceptance or dissemination of a submission if the SEC believes that an attempted submission may be misleading or manipulative.
  • The SEC may prevent any further submissions by a filer or remove a filer’s EDGAR access if the agency believes that the filer has made or attempted an unauthorized submission.

In cases where the SEC believes that filer corrective disclosure or any of the above actions will not address a submission issue, the Commission may take appropriate further steps to address the matter and communicate with the filer regarding the submission. The SEC may act without providing advance notice but must provide as soon as practicable written notice and a brief factual statement of the basis for the action to the filer and any other relevant person via email. If necessary, the Commission may also send the notice and factual statement by registered, certified, or express mail.

Amendments to delegation of authority. The SEC also adopted new Rule 30-19 of the Rules of Organization and Program Management to delegate authority to the Director of the EDGAR Business Office to take action under Rule 15 and two other rules in Regulation S-T: (1) Rule 13(b), to adjust the filing date of an electronic filing; and (2)) Rule 202, to grant or deny continuing hardship exemptions from the electronic submission requirements. The delegated authority is designed to conserve SEC resources by permitting staff to carry out the efficient administration of EDGAR

Effective date. Rule 15 and Rule 30-19 are effective upon the date of publication on the Federal Register.

The releases are No. 33-10901 and No. 33-10902.

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