New SEC Rule Accelerates Financial Reporting Deadlines

"We believe that periodic reports contain valuable information for investors," the SEC officials write. "Shortening the due datesaccelerates the delivery of information to investors and the capital markets, enabling them to make more informed investment and valuation decisions more quickly. This helps the capital markets function more efficiently."

Similarly, the SEC officials write, the Web information requirements should improve market efficiency by giving investors and others quicker, easier access to important financial information.

The SEC published an initial draft of the rule in April, while the financial markets were reeling from disclosures of serious problems with financial reports filed by several large energy companies, telecommunications companies and conglomerates.

The SEC ended up with more than 300 public comments on the draft, including letters from the American Council of Life Insurers, Washington, and several life insurers. SEC officials refer repeatedly in their discussion of the final rule to letters submitted by the ACLI; the Teachers Insurance and Annuity Association-College Retirement Equities Fund, New York; and AFLAC Inc., Columbus, Ga.

TIAA-CREF sided with consumer groups and investors groups that supported the new reporting deadlines, agreeing with proponents at the SEC that the changes would improve the efficiency of the capital markets.

The ACLI and AFLAC joined with other financial services companies and accounting firms that worried that the changes might weaken the quality of financial reports, by leading to heavier use of estimates and boilerplate.

But SEC officials concluded that the changes would help investors and add less than $1 million per year to the $1.5 billion that U.S. public companies already spend on SEC filings.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 23, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.