Advisory Committee on Smaller Public Companies, 45446-45449 [E5-4232]
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45446
Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 / Notices
Great-West Variable Annuity Account
A
[File No. 811–1737]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On April 18,
2005, at a meeting of the fewer than onehundred Account A participants eligible
to vote, approval was granted to file an
application to terminate the registration
of Account A. Applicant states that,
over 20 years ago it ceased issuing new
contracts funded by Account A, and
that, since May 1, 1989, Applicant has
not accepted additional contributions
under existing contracts. Applicant
further states that it is not making and
does not presently propose to make a
public offering of its securities.
Filing Dates: The application was
filed on May 19, 2005; and an amended
application was filed on July 25, 2005.
Applicant’s Address: 8515 East
Orchard Road, Greenwood Village, CO
80111.
Strong Variable Insurance Funds, Inc.
[File No. 811–6553]
Summary: As part of the merger of
Strong Funds family into Wells Fargo
Advantage Funds family, a series of the
Strong Funds, Strong Variable Insurance
Funds, Inc., (‘‘Fund or Applicant’’) will
be merged into two series of the Wells
Fargo Variable Trust, Wells Fargo
Variable Trust Discovery fund and
Wells Fargo Variable Trust Multi Cap
fund. Applicant seeks an order
declaring that is has ceased to be an
investment company. On August 13,
2004, the board of directors of the
Strong Variable Insurance Funds, Inc.
(the ‘‘Fund’’) approved the merger of the
Fund. On December 10, 2004,
shareholders approved the merger.
Expenses of approximately $104,205.20
were incurred in connection with the
merger of the Strong Funds family into
the Wells Fargo Advantage Funds
family. All expenses incurred in
connection with the merger were paid
by Wells Fargo Funds Management, LLC
and Strong Financial Corporation.
Certain contingent rights, claims and
liabilities of each applicant relating to
shareholder class actions and derivative
actions involving late trading and
market timing allegations were
transferred to a liquidating trust for the
benefit of each applicant’s former
shareholders. Upon resolution of these
claims by the liquidating trust, the
trustees will distribute any net proceeds
to former shareholders in a manner
consistent with applicable law and the
fiduciary duties of the trustees. In
addition, each applicant’s former
shareholders may be entitled to certain
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amounts paid pursuant to regulatory
settlements of market timing and related
investigations. An independent
distribution consultant was retained by
Strong Capital Management, Inc.,
applicants’ investment adviser, to
oversee the distribution of these
amounts to shareholders.
Filing Dates: April 21, 2005 and
amended June 21, 2005.
Applicant’s Address: 100 Heritage
Reserve, Menomnee Falls, Wisconsin
53051.
Strong Opportunity Fund II, Inc.
[File No. 811–6552]
Summary: As part of the merger of the
Strong Funds family into the Wells
Fargo Advantage Funds family, a series
of the Strong Funds, Strong Opportunity
Fund II, Inc., (‘‘Fund or Applicant’’) will
be merged into the Wells Fargo Variable
Trust Opportunity Fund. Applicant
seeks an order declaring that is has
ceased to be an investment company.
On August 13, 2004, the board of
directors of the Strong Variable
Insurance Funds, Inc. approved the
merger of the Fund into the Wells Fargo
Variable Trust Opportunity Fund. On
December 10, 2004, shareholders
approved the merger. Expenses of
approximately $104,205.20 were
incurred in connection with the merger
of the Strong Funds family into Wells
Fargo Advantage Funds family. All
expenses incurred in connection with
the merger were paid by Wells Fargo
Funds Management, LLC and Strong
Financial Corporation. Certain
contingent rights, claims and liabilities
of each applicant relating to shareholder
class actions and derivative actions
involving late trading and market timing
allegations were transferred to a
liquidating trust for the benefit of each
applicant’s former shareholders. Upon
resolution of these claims by the
liquidating trust, the trustees will
distribute any net proceeds to former
shareholders in a manner consistent
with applicable law and the fiduciary
duties of the trustees. In addition, each
applicant’s former shareholders may be
entitled to certain amounts paid
pursuant to regulatory settlements of
market timing and related
investigations. An independent
distribution consultant was retained by
Strong Capital Management, Inc.
applicants’ investment adviser, to
oversee the distribution of these
amounts to shareholders.
Filing Dates: April 21, 2005, and
amended June 21, 2005.
Applicant’s Address: 100 Heritage
Reserve, Menomnee Falls, Wisconsin
53051.
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For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–4196 Filed 8–4–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release Nos. 33–8599; 34–52189; File No.
265–23]
Advisory Committee on Smaller Public
Companies
Request for public input by
Advisory Committee on Smaller Public
Companies.
AGENCY: Securities and Exchange
Commission.
ACTION: Issuance of Request.
SUBJECT:
SUMMARY: The SEC Advisory Committee
on Smaller Public Companies is
soliciting public input on issues related
to the current securities regulatory
system for smaller companies, including
the impact of the Sarbanes-Oxley Act of
2002 on the system. The Advisory
Committee is doing this by publishing a
series of questions and asking interested
parties to respond to the questions.
DATES: Answers to the questions should
be received on or before August 31,
2005.
The questions may be
answered in either of the following
ways:
ADDRESSES:
Online Submissions
• Answer the questions online at
(https://www.sec.gov/cgi-bin/acspcquestions) and follow the instructions
for submitting your answers; or
Paper Submissions
• Send your paper submission, in
triplicate, to Jonathan G. Katz,
Committee Management Officer,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303. You may also fax your
submission to (202) 772–9324, Attn:
Committee Management Officer. All
paper submissions should refer to File
Number 265–23.
FOR FURTHER INFORMATION CONTACT:
Questions about this request should be
referred to William A. Hines, Special
Counsel, at (202) 551–3320, Office of
Small Business Policy, Division of
Corporation Finance, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–3628.
SUPPLEMENTARY INFORMATION: The
questions below are being published at
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Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 / Notices
the request of the SEC Advisory
Committee on Smaller Public
Companies to solicit public input on the
issues raised. All interested parties are
invited to submit their answers to any
or all of these questions in the manner
described above. The text of the
solicitation of public input is as follows:
Provide Input to the Advisory Committee
The SEC Advisory Committee on Smaller
Public Companies is seeking input from the
public on ways to improve the current
regulatory system for smaller companies
under the securities laws of the United
States, including the Sarbanes-Oxley Act of
2002 (‘‘SOX’’). The Advisory Committee is
especially interested in hearing from smaller
companies and their managements about
their experiences with the existing regulatory
framework. The Advisory Committee is also
very interested in hearing from investors. The
questions set forth below have been prepared
by the Advisory Committee. The questions
and statements set forth below have not been
prepared by and do not reflect any position
or regulatory agenda of the Commission.
You should not assume that there is a set
cut-off in size of smaller companies in
responding to the Advisory Committee’s
request. For example, answers reflecting
experiences of management or investors
regarding companies with sales or market
capitalization of $100 million, or $750
million, or even more are appropriate where
answers provide a basis for considering the
company to be a smaller company. You
should indicate in your answers the size of
the company or companies and the basis of
measurement (e.g., sales, market
capitalization, number of employees) to
which your answers relate.
Answers should be received on or before
August 31, 2005. Questions about this
request should be referred to William A.
Hines, Special Counsel, at (202) 551–3320,
Office of Small Business Policy, Division of
Corporation Finance, Securities and
Exchange Commission, 100 F Street, NE.,
Washington, DC 20549–3628.
The Advisory Committee welcomes
responses that answer any or all of the
questions, and that provide answers in
whatever order or format the responder
chooses. Responders that prefer to provide
general responses rather than responses to
specific questions may prefer to respond in
paper rather than online at this Web site
address. Paper submissions should be sent,
in triplicate, to Jonathan G. Katz, Committee
Management Officer, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–9303. You may also
fax your submission to 202–772–9324, Attn:
Committee Management Officer. All paper
submissions should refer to File Number
265–23.
The Advisory Committee intends to keep
individual identifying information (such as
names, personal phone numbers and e-mail
addresses) confidential and publish only a
compendium of answers given in response to
these questions, without individual
identifying information. However, you
should submit only answers that you would
not object to becoming publicly available.
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You are encouraged but not required to
provide the following information:
Name: lllllllllllllllll
Organization: llllllllllllll
Street Address: lllllllllllll
lllllllllllllllllllll
City: llllllllllllllllll
State/Province/Country: lllllllll
Zip or Postal Code: lllllllllll
Telephone Number: lllllllllll
E-Mail Address: lllllllllllll
And for those responses that relate to a
specific company:Company:
Street Address: lllllllllllll
lllllllllllllllllllll
City: llllllllllllllllll
State/Province/Country: lllllllll
Zip or Postal Code: lllllllllll
Company Market Capitalization: lllll
Other Company Size and Basis of Measurement: llllllllllllllllll
General Impact of Sarbanes-Oxley Act
1. Has SOX changed the thinking of
smaller companies about becoming or
remaining a public company? If so,
how?
2. Has SOX affected the relationship
of smaller companies with their
shareholders? If so, how?
3. Do you believe SOX has enhanced,
or diminished, the value of smaller
companies? Please explain.
4. Has the current securities
regulatory system, including SOX,
increased or decreased the
attractiveness of U.S. capital markets
relative to their foreign counterparts for
companies? For investors? Please
explain.
5. Does the current securities
regulatory system adversely impact or
enhance this country’s culture of
entrepreneurship? Has the current
system impaired or enhanced the ability
of American companies to compete on
a global basis? If so, how?
6. Has SOX resulted in a diversion of
the attention of company management
away from operational activities, or
otherwise imposed an opportunity cost
on the management of smaller public
companies? If so, have the benefits of
SOX justified the diversion or
opportunity cost? Please explain.
7. Does the current securities law
disclosure system properly balance the
interests of investors in having access to
complete and accurate information for
making investment decisions with the
need for companies to protect
information for competitive reasons?
Please explain.
8. Has the current securities
regulatory system had an impact on the
amount and type of litigation to which
smaller companies are subject? Has the
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45447
overall impact on companies, investors
and markets taken as a whole been
positive or negative? Please explain.
9. Has SOX changed the capital
raising plans of smaller companies? If
yes, how have those plans changed? Has
SOX affected the thinking of smaller
companies about buying or being
acquired by other companies or looking
for merger partners or acquisition
targets? Explain your answer and
indicate any way in which SOX has
changed a smaller company from a
buyer to a seller of a business, or vice
versa.
SOX Section 404/Internal Controls
10. In developing a ‘‘risk-based’’
approach for assessing and auditing
internal control over financial reporting
for smaller companies under SOX
Section 404, what criteria would you
use to categorize internal controls from
the highest risk to the lowest risk
controls?
11. Do you believe that at least some
SOX Section 404 internal controls for
smaller companies can be appropriately
assessed less often than every year? If
so, what controls do you think need to
be assessed by management every year?
What controls do you think need to be
assessed at least every two years? What
controls do you think could be assessed
only once every three years?
12. Current standards require that the
auditor must perform enough of the
testing himself or herself so that the
auditor’s own work provides the
principal evidence for the auditor’s
opinion. Are there specific controls for
smaller companies for which the auditor
should appropriately be permitted to
rely on management’s testing and
documentation? Are there specific
controls for smaller companies where
this is particularly not the case?
13. Is the cost and timing of SOX
Section 404 certification a deterrent to
smaller companies going public? Are
there companies where this deterrent is
appropriate? (I.e., are there companies
that should not go public and is SOX
Section 404 one appropriate control on
the process?) If there is such a deterrent,
would it be appropriate to provide some
exemption or special consideration to
companies that have recently gone
public, and for how long would you
extend this special treatment?
14. Do the benefits of SOX Section
404 outweigh its costs for smaller
companies? Please explain. Would you
support a total exemption from SOX
Section 404 requirements for smaller
companies? Why or why not? Would
such an exemption have a negative
effect on investors’ interests or
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Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 / Notices
perception regarding smaller
companies? Why or why not?
Corporate Governance/Listing
Requirements
Accounting/Auditing
22. Are the listing standards of the
New York Stock Exchange, the
American Stock Exchange, other
exchanges or Nasdaq that require a
majority of independent directors and
independent audit, nominating and
compensation committees (or in the
alternative, in the case of Nasdaq, that
nomination and executive
compensation decisions at a minimum
be recommended or determined by a
majority of the independent directors)
creating a hardship for smaller
companies? Are there benefits to
companies and investors of these listing
standards in the context of smaller
companies? Do the hardships outweigh
the benefits in the case of smaller
companies? If so, should these
standards be revised for smaller
companies, and, if so, how? In each case
please explain. Are smaller companies
experiencing difficulty finding
independent directors to satisfy these
listing standards (including
independent directors with the required
level of financial literacy and
sophistication for audit committee
service)? What steps are being
undertaken to meet these requirements?
23. Other than director independence
and concerns related to SOX Section
404-mandated internal controls, do you
believe other aspects of governance and
disclosure reform are unduly
burdensome for smaller companies,
taking into account the benefits they
provide to investors and markets? If so,
please explain which items are unduly
burdensome and the extent of such
burden. How could the burdens be
appropriately ameliorated?
24. Is the loan prohibition contained
in SOX creating a hardship for smaller
companies? If so, explain the manner in
which this hardship is being created. Do
the benefits to companies and investors
outweigh the hardships? Should the
prohibition be narrowed for smaller
companies to exempt certain types of
transactions where conflicts of interest
or a likelihood of abuse may not be
present?
15. Has SOX affected the relationship
of smaller companies with their
auditing firms? If yes, how? Is the
change positive or negative?
16. Are the current accounting
standards applied to all U.S. companies
appropriate for smaller companies? If
not, please explain what revisions to
existing standards might be appropriate.
17. For smaller companies, would
extended effective dates for new
accounting standards ease the burden of
implementation and reduce the costs in
a desirable way? How would such
extensions affect investors or markets?
Would allowing a company’s
independent auditors to provide more
implementation assistance than they are
able to currently reduce such burdens or
costs? Would such a step positively or
negatively affect the quality of audits?
Please explain.
[The Advisory Committee is particularly
interested in responses to questions 18–
20 from companies with a market
capitalization of $100 million or less.]
18. Would auditors providing
assistance with accounting and
reporting for unusual or infrequent
transactions impair the auditors’
independence as it relates to smaller
companies? Would providing such
assistance reduce the cost of compliance
for smaller companies? What would be
the impact on the quality of audits,
investors or markets? Please explain.
19. Is the quarterly Form 10–Q or
Form 10–QSB information valuable to
users of the financial statements of
smaller companies? Would a system
that required semi-annual reporting
with limited revenue information
provided in the other quarters reduce
costs of compliance without decreasing
the usefulness of the reported
information to investors? Please explain.
20. Is segment information useful for
smaller companies? Please explain.
21. Should accounting standards
provide smaller companies with
different alternatives for measuring
accounting events that would reduce the
amount of time that would otherwise be
spent by smaller companies to comply
with those accounting standards? If
these alternatives were available to
smaller companies, would smaller
companies take advantage of them even
if the results of the measurements
obtained from the alternatives were less
favorable to them in the short term?
Why or why not?
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Disclosure System
25. Is the relief provided by SEC
Regulation S–B meaningful? Why or
why not? Should the SEC provide an
alternative disclosure framework for
smaller companies in the context of
securities offerings and periodic
reporting? Should the alternative
framework be available to a broader
category of companies than Regulation
S–B is currently? Should the alternative
framework be based on Regulation S–B
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or on a different approach? Could these
steps be taken without impairing
investor protection?
26. Are the costs of preparing and
distributing printed paper versions of
proxy statements and annual reports to
shareholders unduly costly for smaller
companies? Describe the extent of such
costs, and the amount that could be
saved if the SEC allowed complete
electronic delivery of documents.
27. Will the phase-down to the final
accelerated reporting deadlines for
periodic reports under the 1934 Act for
companies with $75 million market
capitalization (ultimately 60 days for
Form 10–K and 35 days for Form 10–Q)
be burdensome for smaller companies?
If so, please explain the manner and
extent of this burden. Does the burden
outweigh benefits to investors and
markets for smaller companies?
28. Should the current limit on the
amount of securities that may be sold
under Securities Act Rule 701 or the $5
million threshold that triggers an
additional disclosure obligation under
that rule be increased or modified in
any way? Please explain.
Miscellaneous
29. Is there any other matter relating
to the securities laws applicable to
smaller companies that you wish to
comment on or to bring to the Advisory
Committee’s attention?
Privacy Act Disclosure: Pursuant to
subsection (f) of the Privacy Act, 5
U.S.C. 552a(f), the Commission, on
September 24, 1975, promulgated rules
relating to records maintained by the
Commission concerning individuals (40
FR 44068). The rules as amended (17
CFR 200.301 et seq.) address an
individual’s rights to know what
information the Commission has in its
files concerning the individual; to have
access to those records; to petition the
Commission to have inaccurate or
incomplete records amended or
corrected; and not to have personal
information disseminated to
unauthorized persons. The full text of
the Commission’s rules implementing
the Privacy Act can be found in 17 CFR
200.301 et seq.
Authority: In accordance with section 10(a)
of the Federal Advisory Committee Act, 5
U.S.C. App. 1, section 10(a), Alan L. Beller,
Designated Federal Officer of the Committee,
has approved publication of this release at
the request of the Committee. The action
being taken through the publication of this
release, the solicitation of public input on
various issues, is being taken solely by the
Committee and not by the Commission.
The Commission is merely providing
its facilities to assist the Committee in
taking this action.
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Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 / Notices
Dated: August 2, 2005.
Jonathan G. Katz,
Committee Management Officer.
[FR Doc. E5–4232 Filed 8–4–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
In the Matter of Sure Trace Security
Corporation; Order of Suspension of
Trading
August 3, 2005.
It appears to the Securities and
Exchange Commission (‘‘Commission’’)
that there is a lack of current and
accurate information concerning the
joint ventures and contract negotiations
of Sure Trace Security Corporation
(‘‘Sure Trace’’). The securities of Sure
Trace are quoted on the Pink Sheets
under the symbol SSTY. Information
has been provided to the Commission
raising concerns as to the adequacy and
accuracy of Sure Trace’s publicly
disseminated information concerning,
among other things, the status of Sure
Trace’s negotiations to sell its
technology to other entities.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of Sure Trace.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the
securities of Sure Trace is suspended for
the period from 9:30 a.m. EDT, August
3, 2005, through 11:59 p.m. EDT, on
August 16, 2005.
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 28,
2005, the American Stock Exchange LLC
(‘‘Amex’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in items I, II, and III below, which Items
have been prepared by the Amex. On
July 6, 2005, the Amex filed
Amendment No. 1 to the proposed rule
change.3 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Amex proposes to amend Amex
Rules 940 and 943 to amend the ‘‘tradethrough’’ and ‘‘locked’’ markets rules to
allow specialists and registered options
traders (‘‘ROTs’’) to ‘‘trade and ship’’ or
‘‘book and ship’’ an order. The text of
the proposed rule change is available on
the Amex’s Web site (https://
www.amex.com), at the Amex’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Amex included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in item IV below. The Amex has
prepared summaries, set forth in
sections A, B, and C below, of the most
significant aspects of such statements.
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 05–15596 Filed 8–3–05; 11:36 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8010–01–P
1. Purpose
The purpose of this proposed rule
change is to implement proposed
Amendment No. 15 to the Plan for the
Purpose of Creating and Operating an
Intermarket Option Linkage (‘‘Plan’’).
Amendment No. 15, together with this
proposed rule change, will provide that
an Amex member may (i) trade an order
at a price that is one-tick inferior to the
national best bid or offer (‘‘NBBO’’) if
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52172; File No. SR–Amex–
2005–046]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing of Proposed Rule Change and
Amendment No. 1 Thereto Relating to
Amendments to the Exchange’s TradeThrough and Locked Markets Rules
July 29, 2005.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Form 19b–4 dated July 5, 2005
(‘‘Amendment No. 1’’). In Amendment No. 1, the
Amex revised the rule text to use terms consistent
with Amex’s current rules and made clarifying
changes in the purpose, statutory basis and burdens
sections.
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2 17
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45449
the member contemporaneously
transmits to the market(s) disseminating
the NBBO, Linkage Order(s) 4 to satisfy
all interest at the NBBO price (‘‘trade
and ship’’) and (ii) book an order that
would lock another exchange if the
member contemporaneously sends a
Linkage Order to such other exchange to
satisfy all interest at the lock price
(‘‘book and ship’’). Under the trade and
ship proposal, any execution the
member receives from the NBBO market
must (pursuant to agency obligations) be
reassigned to any customer order
underlying the Linkage Order that was
transmitted to trade against the market
disseminating the NBBO. Below are
examples illustrating the application of
these concepts:
Trade and Ship Example. Exchange A
is disseminating an offer of $2.00 for
100 contracts. Exchange B is
disseminating the national best offer of
$1.95 for 10 contracts. No other market
is at $1.95. Exchange A receives a 100contract customer buy order to pay
$2.00. Under this proposal, Exchange A
could execute 90 contracts (or 100
contracts) of the customer order at $2.00
provided Exchange A simultaneously
transmits a 10-contract P/A Order to
Exchange B to pay $1.95. Assuming an
execution is obtained from Exchange B,
the customer would receive the 10contract fill at $1.95 and 90 contracts at
$2.00 (if the customer order was
originally filled in its entirety at $2.00,
an adjustment would be required to
provide the customer with the $1.95
price for 10 contracts reflecting the P/A
Order execution). As proposed, this
would not be deemed a trade-through.
Book and Ship Example. Exchange A
is disseminating a $1.85–$2.00 market.
Exchange B is disseminating a $1.80–
$1.95 market. The $1.95 offer is for 10
contracts. No other market is at $1.95.
Exchange A receives a customer order to
buy 100 contracts at $1.95. Under this
proposal, Exchange A could book 90
contracts of the customer buy order at
$1.95 provided Exchange A
4 A ‘‘Linkage Order’’ is defined in Amex Rule
940(b)(10) to mean an immediate or cancel order
routed through the Linkage as permitted under the
Plan. The three types of Linkage Orders are: (i)
‘‘Principal Acting as Agent (‘‘P/A’’) Order,’’ which
is an order for the principal account of a specialist
(or equivalent entity on another Participant
Exchange that is authorized to represent Public
Customer orders), reflecting the terms of a related
unexecuted Public Customer order for which the
specialist is acting as agent; (ii) ‘‘Principal Order,’’
which is an order for the principal account of an
Eligible Market Maker (or equivalent entity on
another Participant Exchange) and is not a P/A
Order; and (iii) ‘‘Satisfaction Order,’’ which is an
order sent through the Linkage to notify a
Participant Exchange of a Trade-Through and to
seek satisfaction of the liability arising from that
Trade-Through.
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]]>Agencies
[Federal Register Volume 70, Number 150 (Friday, August 5, 2005)]
[Notices]
[Pages 45446-45449]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4232]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release Nos. 33-8599; 34-52189; File No. 265-23]
Advisory Committee on Smaller Public Companies
subject: Request for public input by Advisory Committee on Smaller
Public Companies.
AGENCY: Securities and Exchange Commission.
ACTION: Issuance of Request.
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SUMMARY: The SEC Advisory Committee on Smaller Public Companies is
soliciting public input on issues related to the current securities
regulatory system for smaller companies, including the impact of the
Sarbanes-Oxley Act of 2002 on the system. The Advisory Committee is
doing this by publishing a series of questions and asking interested
parties to respond to the questions.
DATES: Answers to the questions should be received on or before August
31, 2005.
ADDRESSES: The questions may be answered in either of the following
ways:
Online Submissions
Answer the questions online at (https://www.sec.gov/cgi-
bin/acspc-questions) and follow the instructions for submitting your
answers; or
Paper Submissions
Send your paper submission, in triplicate, to Jonathan G.
Katz, Committee Management Officer, Securities and Exchange Commission,
100 F Street, NE., Washington, DC 20549-9303. You may also fax your
submission to (202) 772-9324, Attn: Committee Management Officer. All
paper submissions should refer to File Number 265-23.
FOR FURTHER INFORMATION CONTACT: Questions about this request should be
referred to William A. Hines, Special Counsel, at (202) 551-3320,
Office of Small Business Policy, Division of Corporation Finance,
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-3628.
SUPPLEMENTARY INFORMATION: The questions below are being published at
[[Page 45447]]
the request of the SEC Advisory Committee on Smaller Public Companies
to solicit public input on the issues raised. All interested parties
are invited to submit their answers to any or all of these questions in
the manner described above. The text of the solicitation of public
input is as follows:
Provide Input to the Advisory Committee
The SEC Advisory Committee on Smaller Public Companies is
seeking input from the public on ways to improve the current
regulatory system for smaller companies under the securities laws of
the United States, including the Sarbanes-Oxley Act of 2002
(``SOX''). The Advisory Committee is especially interested in
hearing from smaller companies and their managements about their
experiences with the existing regulatory framework. The Advisory
Committee is also very interested in hearing from investors. The
questions set forth below have been prepared by the Advisory
Committee. The questions and statements set forth below have not
been prepared by and do not reflect any position or regulatory
agenda of the Commission.
You should not assume that there is a set cut-off in size of
smaller companies in responding to the Advisory Committee's request.
For example, answers reflecting experiences of management or
investors regarding companies with sales or market capitalization of
$100 million, or $750 million, or even more are appropriate where
answers provide a basis for considering the company to be a smaller
company. You should indicate in your answers the size of the company
or companies and the basis of measurement (e.g., sales, market
capitalization, number of employees) to which your answers relate.
Answers should be received on or before August 31, 2005.
Questions about this request should be referred to William A. Hines,
Special Counsel, at (202) 551-3320, Office of Small Business Policy,
Division of Corporation Finance, Securities and Exchange Commission,
100 F Street, NE., Washington, DC 20549-3628.
The Advisory Committee welcomes responses that answer any or all
of the questions, and that provide answers in whatever order or
format the responder chooses. Responders that prefer to provide
general responses rather than responses to specific questions may
prefer to respond in paper rather than online at this Web site
address. Paper submissions should be sent, in triplicate, to
Jonathan G. Katz, Committee Management Officer, Securities and
Exchange Commission, 100 F Street NE., Washington, DC 20549-9303.
You may also fax your submission to 202-772-9324, Attn: Committee
Management Officer. All paper submissions should refer to File
Number 265-23.
The Advisory Committee intends to keep individual identifying
information (such as names, personal phone numbers and e-mail
addresses) confidential and publish only a compendium of answers
given in response to these questions, without individual identifying
information. However, you should submit only answers that you would
not object to becoming publicly available.
You are encouraged but not required to provide the following
information:
Name:-----------------------------------------------------------------
Organization:---------------------------------------------------------
Street Address:-------------------------------------------------------
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City:-----------------------------------------------------------------
State/Province/Country:-----------------------------------------------
Zip or Postal Code:---------------------------------------------------
Telephone Number:-----------------------------------------------------
E-Mail Address:-------------------------------------------------------
And for those responses that relate to a specific
company:Company:
Street Address:-------------------------------------------------------
-----------------------------------------------------------------------
City:-----------------------------------------------------------------
State/Province/Country:-----------------------------------------------
Zip or Postal Code:---------------------------------------------------
Company Market Capitalization:----------------------------------------
Other Company Size and Basis of Measurement:--------------------------
General Impact of Sarbanes-Oxley Act
1. Has SOX changed the thinking of smaller companies about becoming
or remaining a public company? If so, how?
2. Has SOX affected the relationship of smaller companies with
their shareholders? If so, how?
3. Do you believe SOX has enhanced, or diminished, the value of
smaller companies? Please explain.
4. Has the current securities regulatory system, including SOX,
increased or decreased the attractiveness of U.S. capital markets
relative to their foreign counterparts for companies? For investors?
Please explain.
5. Does the current securities regulatory system adversely impact
or enhance this country's culture of entrepreneurship? Has the current
system impaired or enhanced the ability of American companies to
compete on a global basis? If so, how?
6. Has SOX resulted in a diversion of the attention of company
management away from operational activities, or otherwise imposed an
opportunity cost on the management of smaller public companies? If so,
have the benefits of SOX justified the diversion or opportunity cost?
Please explain.
7. Does the current securities law disclosure system properly
balance the interests of investors in having access to complete and
accurate information for making investment decisions with the need for
companies to protect information for competitive reasons? Please
explain.
8. Has the current securities regulatory system had an impact on
the amount and type of litigation to which smaller companies are
subject? Has the overall impact on companies, investors and markets
taken as a whole been positive or negative? Please explain.
9. Has SOX changed the capital raising plans of smaller companies?
If yes, how have those plans changed? Has SOX affected the thinking of
smaller companies about buying or being acquired by other companies or
looking for merger partners or acquisition targets? Explain your answer
and indicate any way in which SOX has changed a smaller company from a
buyer to a seller of a business, or vice versa.
SOX Section 404/Internal Controls
10. In developing a ``risk-based'' approach for assessing and
auditing internal control over financial reporting for smaller
companies under SOX Section 404, what criteria would you use to
categorize internal controls from the highest risk to the lowest risk
controls?
11. Do you believe that at least some SOX Section 404 internal
controls for smaller companies can be appropriately assessed less often
than every year? If so, what controls do you think need to be assessed
by management every year? What controls do you think need to be
assessed at least every two years? What controls do you think could be
assessed only once every three years?
12. Current standards require that the auditor must perform enough
of the testing himself or herself so that the auditor's own work
provides the principal evidence for the auditor's opinion. Are there
specific controls for smaller companies for which the auditor should
appropriately be permitted to rely on management's testing and
documentation? Are there specific controls for smaller companies where
this is particularly not the case?
13. Is the cost and timing of SOX Section 404 certification a
deterrent to smaller companies going public? Are there companies where
this deterrent is appropriate? (I.e., are there companies that should
not go public and is SOX Section 404 one appropriate control on the
process?) If there is such a deterrent, would it be appropriate to
provide some exemption or special consideration to companies that have
recently gone public, and for how long would you extend this special
treatment?
14. Do the benefits of SOX Section 404 outweigh its costs for
smaller companies? Please explain. Would you support a total exemption
from SOX Section 404 requirements for smaller companies? Why or why
not? Would such an exemption have a negative effect on investors'
interests or
[[Page 45448]]
perception regarding smaller companies? Why or why not?
Accounting/Auditing
15. Has SOX affected the relationship of smaller companies with
their auditing firms? If yes, how? Is the change positive or negative?
16. Are the current accounting standards applied to all U.S.
companies appropriate for smaller companies? If not, please explain
what revisions to existing standards might be appropriate.
17. For smaller companies, would extended effective dates for new
accounting standards ease the burden of implementation and reduce the
costs in a desirable way? How would such extensions affect investors or
markets? Would allowing a company's independent auditors to provide
more implementation assistance than they are able to currently reduce
such burdens or costs? Would such a step positively or negatively
affect the quality of audits? Please explain.
[The Advisory Committee is particularly interested in responses to
questions 18-20 from companies with a market capitalization of $100
million or less.]
18. Would auditors providing assistance with accounting and
reporting for unusual or infrequent transactions impair the auditors'
independence as it relates to smaller companies? Would providing such
assistance reduce the cost of compliance for smaller companies? What
would be the impact on the quality of audits, investors or markets?
Please explain.
19. Is the quarterly Form 10-Q or Form 10-QSB information valuable
to users of the financial statements of smaller companies? Would a
system that required semi-annual reporting with limited revenue
information provided in the other quarters reduce costs of compliance
without decreasing the usefulness of the reported information to
investors? Please explain.
20. Is segment information useful for smaller companies? Please
explain.
21. Should accounting standards provide smaller companies with
different alternatives for measuring accounting events that would
reduce the amount of time that would otherwise be spent by smaller
companies to comply with those accounting standards? If these
alternatives were available to smaller companies, would smaller
companies take advantage of them even if the results of the
measurements obtained from the alternatives were less favorable to them
in the short term? Why or why not?
Corporate Governance/Listing Requirements
22. Are the listing standards of the New York Stock Exchange, the
American Stock Exchange, other exchanges or Nasdaq that require a
majority of independent directors and independent audit, nominating and
compensation committees (or in the alternative, in the case of Nasdaq,
that nomination and executive compensation decisions at a minimum be
recommended or determined by a majority of the independent directors)
creating a hardship for smaller companies? Are there benefits to
companies and investors of these listing standards in the context of
smaller companies? Do the hardships outweigh the benefits in the case
of smaller companies? If so, should these standards be revised for
smaller companies, and, if so, how? In each case please explain. Are
smaller companies experiencing difficulty finding independent directors
to satisfy these listing standards (including independent directors
with the required level of financial literacy and sophistication for
audit committee service)? What steps are being undertaken to meet these
requirements?
23. Other than director independence and concerns related to SOX
Section 404-mandated internal controls, do you believe other aspects of
governance and disclosure reform are unduly burdensome for smaller
companies, taking into account the benefits they provide to investors
and markets? If so, please explain which items are unduly burdensome
and the extent of such burden. How could the burdens be appropriately
ameliorated?
24. Is the loan prohibition contained in SOX creating a hardship
for smaller companies? If so, explain the manner in which this hardship
is being created. Do the benefits to companies and investors outweigh
the hardships? Should the prohibition be narrowed for smaller companies
to exempt certain types of transactions where conflicts of interest or
a likelihood of abuse may not be present?
Disclosure System
25. Is the relief provided by SEC Regulation S-B meaningful? Why or
why not? Should the SEC provide an alternative disclosure framework for
smaller companies in the context of securities offerings and periodic
reporting? Should the alternative framework be available to a broader
category of companies than Regulation S-B is currently? Should the
alternative framework be based on Regulation S-B or on a different
approach? Could these steps be taken without impairing investor
protection?
26. Are the costs of preparing and distributing printed paper
versions of proxy statements and annual reports to shareholders unduly
costly for smaller companies? Describe the extent of such costs, and
the amount that could be saved if the SEC allowed complete electronic
delivery of documents.
27. Will the phase-down to the final accelerated reporting
deadlines for periodic reports under the 1934 Act for companies with
$75 million market capitalization (ultimately 60 days for Form 10-K and
35 days for Form 10-Q) be burdensome for smaller companies? If so,
please explain the manner and extent of this burden. Does the burden
outweigh benefits to investors and markets for smaller companies?
28. Should the current limit on the amount of securities that may
be sold under Securities Act Rule 701 or the $5 million threshold that
triggers an additional disclosure obligation under that rule be
increased or modified in any way? Please explain.
Miscellaneous
29. Is there any other matter relating to the securities laws
applicable to smaller companies that you wish to comment on or to bring
to the Advisory Committee's attention?
Privacy Act Disclosure: Pursuant to subsection (f) of the Privacy
Act, 5 U.S.C. 552a(f), the Commission, on September 24, 1975,
promulgated rules relating to records maintained by the Commission
concerning individuals (40 FR 44068). The rules as amended (17 CFR
200.301 et seq.) address an individual's rights to know what
information the Commission has in its files concerning the individual;
to have access to those records; to petition the Commission to have
inaccurate or incomplete records amended or corrected; and not to have
personal information disseminated to unauthorized persons. The full
text of the Commission's rules implementing the Privacy Act can be
found in 17 CFR 200.301 et seq.
Authority: In accordance with section 10(a) of the Federal
Advisory Committee Act, 5 U.S.C. App. 1, section 10(a), Alan L.
Beller, Designated Federal Officer of the Committee, has approved
publication of this release at the request of the Committee. The
action being taken through the publication of this release, the
solicitation of public input on various issues, is being taken
solely by the Committee and not by the Commission.
The Commission is merely providing its facilities to assist the
Committee in taking this action.
[[Page 45449]]
Dated: August 2, 2005.
Jonathan G. Katz,
Committee Management Officer.
[FR Doc. E5-4232 Filed 8-4-05; 8:45 am]
BILLING CODE 8010-01-P
