Legislation Applies to Commercial Contracts, not SEC Filings

Asset managers who have begun eliminating paper copies of certain records in light of recent electronic storage legislation, may have to start sorting through their wastebaskets.

Just two months after releasing its final rules regarding the Electronic Signatures in Global and National Commerce Act (E-SIGN), which governs electronic storage as well as electronic signatures, the Securities and Exchange Commission said in a new interpretative release that not all hard copies can be stored electronically. That specifically refers to documents filed with the SEC itself.

Most of the interpretive releases that the SEC publishes are triggered by confusion and frequent questioning within the industry, and this is likely no exception, said an SEC spokesperson. The release is brief, but clarifies SEC opinion that E-SIGN should not be interpreted too liberally by companies lest they find themselves in violation of regulatory policies.

'Several of our disclosure rules require issuers to retain records related to the documents filed with us or distributed to investors,' according to the release. 'Of principal concern to us is the provision in Regulation S-T that requires issuers to retain manually-signed signature pages or other documents that signatories must execute…that appear in typed form within electronically filed documents.'

According to Regulation S-T, these signature pages must be executed before or at the same time an issuer makes an electronic filing to the SEC. Filers are required to keep the documents for five years and be able to furnish it to the SEC upon request. Despite E-SIGN, hard copies of these records must still be retained.

While E-SIGN does apply to most pre-existing requirements for commercial transactions, such as contracts between a company and an investor, if the record is generated principally for governmental purposes, E-SIGN does not apply. A filing with the SEC is considered a government filing.

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