At long last, meet EDGAR! (Electronic Data Gathering, Analysis and Retrieval system of the SEC) (Corporate Reporting)

• Author: O'Neil, James P.

Are you prepared for electronic filing? You better be, because the SEC's EDGAR project is up and running. Here are some last-minute tips for the uninitiated.

At long last, EDGAR, the Securities and Exchange Commission's electronic filing project, is a reality. As a CFO who has filed documents electronically since the inception of the Electronic Data Gathering, Analysis and Retrieval system, I can confirm that electronic filing will not initially make our work easier--in fact, the learning curve can be a bit steep--and it won't reduce filing costs. However, it does become mandatory for many filers beginning in 1993.

Some companies will elect to "EDGARize" and file in-house; others will use a filing agent. The majority are likely to make that determination on a case-by-case basis, depending on the complexity of the filing and then factoring in time pressure, staff availability, competing priorities, and their systems readiness. Whichever approach you take, as a financial executive with SEC compliance obligations, you'll have to familiarize yourself with the concepts and, to some extent, with the mechanics of electronic filing.

Why EDGAR? The SEC simply must dig itself out from under an ever-growing mountain of paper filings--a conservative estimate is 10 million pages per year--that is slowly clogging the regulatory gears and making the Commission's oversight task increasingly difficult to perform.

EDGAR will accept electronically, via modem or physical delivery of diskettes or tape, all required SEC filings, absorb the periodic crush of 10-Qs and 10-Ks, protect the confidentiality of nonpublic portions of filings, and rapidly release the balance to the public via electronic data bases. EDGAR is arguably the biggest change in the way the SEC conducts its business since its formation, and yet Corporate America is largely unprepared for electronic filing.

WHERE DO WE STAND?

The SEC's July 23 "EDGAR Notice of Proposed Rulemaking" was the wake-up call. The proposal included the filer phase-in schedule, which calls for those presently filing as volunteers to be mandated electronic fliers beginning in April 1993, with three waves of new filers in July, October and December 1993, so that more than 2,500 corporations and 800 investment management companies will be in the system by January 1994. Congress ordered this "significant test group" to successfully file for six months before the next groups are phased in, in batches of 1,500 to 2,250 issuers each quarter, until the process is completed in 1996.

For the first year, this significant test group will have to file a hard-copy backup to each electronic filing. This backup copy will be due several days after the official filing. This is a new requirement for participants in the pilot program, who have not been required to file a paper copy for several years.

Ultimately, the more than 11,000 companies that file annual reports with the SEC will file electronically, as will investment management companies, public utility holding companies, and others making filings for EDGAR registrants, e.g., a law firm filing a Form 13-D on behalf of a client that has acquired 5 percent of a company that files electronically.

The Commission is scheduled to adopt interim EDGAR rules in February, with new EDGAR Filer Manuals and version 3.0 of the EDGARlink software available in late March. The target date for starting the test filings with version 5.0 is April 12 as this...