Scott Snyder: Hello, I’m Scott Snyder, and I’m pleased to be joined again by Jennifer Froberg from Toppan Merrill’s SEC Compliance team.
Jen, thank you for joining me today for this On The Dot episode and the first of two conversations on the EDGAR Filer Access and Account Management proposed rule, more commonly known as EDGAR Next.
Jennifer Froberg: Thanks, Scott. It’s good to be here.
Scott: Jen, as you have been closely monitoring, the SEC released proposed amendments designed to improve filer access, authorization and management of accounts on the SEC’s EDGAR system.
Can you start with giving our listeners a brief history of what is EDGAR Next and the evolution of the proposed rule?
Jen: Absolutely, Scott. In 2021, the SEC issued a request for comment and that included technical and process changes to how EDGAR filings are submitted, and approved, and those changes are collectively known as EDGAR Next.
Toppan Merrill engaged with the SEC and others in the filing community to provide feedback. The SEC then engaged in dialogue with the filing community, including Toppan Merrill, to refine their proposal and their process.
Then in September 2023, the SEC issued the proposal that we’re discussing today.
Scott: So, the SEC has been working on this for a couple of years at this point.
Based on what you’ve heard from them at this point in, and what you know, are there two or three things that the SEC is really trying to accomplish by introducing this, what seems like a rather comprehensive change?
Jen: Absolutely, Scott. Integral to this change is improved EDGAR security, accuracy and accountability.
The SEC wants to be able to identify the individual who submits a filing on the EDGAR system is approved to do that. That’s a core component of this proposal.
Scott: Jen, the SEC has been working on this for a couple of years. Obviously not only Toppan Merrill but other filing agents, maybe other people, have been engaging in conversations with the SEC because this is such a comprehensive change to the EDGAR filing system.
Can you tell us a little bit about the conversations maybe you’ve had or the team at Toppan Merrill has had with the SEC, maybe from that 2021 timeline up until here late in 2023.
Jen: The SEC had requested comment, and Toppan Merrill and other filing agents, and filers, have directly engaged with the SEC to provide specific comments about what they need to be able to log into EDGAR, what they need to be able to do to access a filing and improve that process.
We provided specific feedback, and the SEC has refined their proposal through that loop and feedback dialogue back and forth to come up with a proposal that’s really shaped and designed to help filers as well as the SEC implement their goals.
Scott: So, we’ve arrived here in the latter parts of 2023. We see the proposed rule has changed a little bit along the way based on those comments.
But there must be two or three things now that you’ve seen and the SEC has published this proposed rule in new format, there must be some things that filers should be concerned about, or maybe at least aware of at this point as they think about that rule going final sometime here in the near term.
Can you highlight what those two or three things might be that filers should be concerned about?
Jen: Filers need to start preparing for a final rule, which we expect probably to be sometime in the first quarter of 2024.
This is a very significant change. So, filers should look at accessing the EDGAR system and ensuring that they can manage their account.
They will need to be able to designate account administrators, so they’ll need to think about that.
Then they will need to delegate authority to file to any user that they want to be able to submit a filing on their behalf.
Scott: So those are key points. Obviously, every filer should be aware of those.
But those must have surfaced for you and you’ve learned about those through what I understand the SEC has done new this time with this rule is to actually open up a Beta environment for companies like Toppan Merrill and filers to go in and look at EDGAR Next and what this is going to be.
What exactly, if you were a filer, would you log into EDGAR Next and go look at?
Jen: Part of our feedback, actually, during the comment process was that the SEC should design a Beta environment. The SEC has been receptive to that for the first time and created this Beta environment, which helps filers and the filing community be able to log in and see what those proposed changes will look like.
We’ve logged in. First of all, you need to access something called login.gov, which is a government maintained, secure, access method. And login.gov is utilized for other federal agencies as well.
So, users would need to create an account with login.gov and then be able to access EDGAR through that utilizing MFA, multi-factor authentication. That’s a new experience for most filers, and they will need to be able to create that account first and prepare for that.
We’ve logged into that Beta environment, and we really encourage filers to do so as well because it shows you what the proposals will look like in reality, and it’s very helpful.
It will help you be able to see what the account looks like and how you will be able to create users, create administrators, delegate authority to file, and perform all of the actions that will be required under a future rule.
Scott: So, a really good move then by the SEC to open this up so that you, your group and filers get a sneak peek, if you will, of what’s coming with EDGAR Next.
Jen: Exactly. And that process has been incredibly helpful for us and others to refine our comments to the SEC about the proposal and request things that would make that proposal even better in reality when it is final.
Scott: So Jen, I’m hearing complexities. I’m hearing major impact across the filing community.
Can you give us some sense of how big this change is really going to be for filers?
Jen: This rule may seem inconsequential because it’s mostly technical and it’s process related. And so I’m not certain that filers are aware of the full extent of the impact. This is one of the most significant changes to EDGAR filing since HTML has been introduced or since Inline XBRL was adopted.
There are over 220,000 active CIKs that are filing on EDGAR. Imagine that number of CIKs who all need to create login.gov accounts for every individual who will need to create their administrators, to delegate authority, to create functional pieces that they need in order to continue to file.
Scott: Let’s close with this timing question. It seems to come up all the time with the SEC. It’s a proposed rule. The Beta environment is closing in March, if I understand correctly.
Read the tea leaves for us. When might filers need to actually log in to EDGAR Next and do these things we’ve talked about today.
Jen: Because the proposal has been percolating around the SEC for two years, roughly, the SEC is very serious about moving toward an implementation soon.
So, we expect in 2024 probably a final rule in the first quarter. Maybe January or February. Based on the proposal, that final rule would then implement a one-month cooling off period, essentially, from the time that the rule was adopted and effective, and then a six-month transition frame.
Because there are so many, over 200,000 CIKs, the SEC couldn’t enroll everyone single handedly. So, they would have a process of that six month where people could adopt in over that transition time period.
Scott: Jen, thanks for joining me today. Great information on the background of EDGAR Next, the history, and sort of what brought us to today. Sounds like there’s a lot coming here for filers to be concerned about or to take action upon for sure. We sure appreciate your insights. So, thanks for joining us.
Jen: Thank you, Scott.
Scott: For those of you listening, stay tuned for a future EDGAR Next On The Dot episode, which will be out shortly. Gordon Ruckdeschel from Toppan Merrill’s SEC Compliance team will share his insights on exactly what filers can do now to start preparing for the EDGAR Next final rule.