Transcript

Scott Snyder: Hello, I am Scott Snyder, and I’m pleased to be joined today by my Toppan Merrill colleagues, Jennifer Froberg, Senior SEC Product Specialist; Gordon Ruckdeschel, Vice President of Compliance Services and Funds; and Jon Regan, Director of the Center of Excellence. Thank you all for joining me for this On The Dot episode, discussing the EDGAR Next enrollment and delegation process.

Jen, let’s begin with you. EDGAR Next has been on the minds of filers for many months now, and while the SEC has mandated compliance beginning September 15, I think it’s always good to remind everyone what the SEC really set out to accomplish with EDGAR Next. Can you give us a quick history lesson?

Jennifer Froberg: Absolutely. Thanks, Scott. So, EDGAR Next is the culmination of a three-year process from the SEC requesting public comment to the final rule that was adopted on September 27. And Toppan Merrill and others in the filing community
have engaged with the SEC to really refine EDGAR Next so that it benefits all participants while achieving the SEC’s goals.

Scott: Was there something in particular that prompted the SEC to go down this path to create EDGAR Next?

Jen: Absolutely. So, if you think about the EDGAR system today, it is fairly outdated. And the SEC’s goal, they have three primary goals when you look at EDGAR Next.

The first is really enhancing the security of the EDGAR system. So, the EDGAR system as it is needs to be modernized. And EDGAR Next will implement some safety and authorization features that are part of all modern websites such as MFA.

Their second goal is to improve the ability of filers to manage their own EDGAR accounts and maintain those. Some EDGAR accounts today have the same filing CIK and CCC that they’ve used for decades. That information is generic and it’s shareable. So, anyone could really submit a filing with that CIK and CCC. EDGAR Next will implement layers of validation and authorization that will ensure filers or their representatives who are authorized manage those EDGAR accounts. EDGAR account administrators will need to verify information annually for each CIK.

And finally, the SEC’s goal with EDGAR Next is to facilitate the responsible management of filer credentials. As I’ve mentioned, anyone with a valid CIK and CCC can submit a filing on behalf of anyone today. EDGAR Next will ensure that filer credentials are only available to approved individuals to file on that CIK’s behalf.

Scott: Jen, I hear a lot of words about security in the midst of that conversation, which is obviously the world that we live in today, making things more secure even for filers is a good move by the SEC. I know the SEC when they introduced the program, they talked about three phases – first preparing, second enrolling, and finally compliance which we talked about being September 15. We find ourselves now in the midst of the enroll phase. Is that correct? Is that what you’re hearing? And is the SEC making any moves particular related to the enroll phase?

Jen: Yes, we were in the prepare phase after the SEC adopted the final rule, and March 24 the SEC launched the EDGAR Next website live and that really had two key changes with the enroll piece. The first key change was that all Form IDs and any code management now needs to be performed through the new Filer Management website. Filers need to utilize Login.gov to access Filer Management and to submit a Form ID request now or to reset any of their existing codes.

The other key piece of the enroll of EDGAR Next launching live is that filers can enroll. Enrollment allows filers to actually enroll in EDGAR Next and they are then ready to be able to utilize EDGAR Next to file. Enrollment can be done manually, or it can be done through a bulk process.

Individual manual enrollment requires CIK, CCC and passphrase for a filer, and bulk enrollment requires similar information. But the SEC has made available a bulk enrollment template which is very helpful for related filers. So, for example, a company and all of their officers and directors who file Section 16 reports can be uploaded and enrolled simultaneously. EDGAR will require at least two account administrators unless an account is for an individual filer and then they only require one account administrator.

However, we really recommend that they have at least two, one from any public company that they report with. So, the enrollment phase will extend from March 24 through September 15. And those are really critical dates for companies to identify in that timeline when they need to enroll, and to prepare and gather all of the information that they need.

Scott: So, Jen, thanks for the quick history lesson for sure. Back from well when the rule was first introduced and now adopted. So, thank you very much.

Gordon, last time you and I spoke, you shared a lot of information about that prepare phase as well and what filers should be doing. But as Jen framed up, the SEC has launched now the EDGAR Next Filer Management website and preparers are clearly in that enrollment phase.

Could you take our listeners through the essential steps current filers really should be taking now to successfully enroll and be ready for that September 15 compliance date. And maybe perhaps you could spend a moment talking about the importance of, Jen mentioned it, that delegation of filing authority step during the enrollment process. Seems there’s been a little bit of confusion about the requirements of that or what filers should do.

Gordon Ruckdeschel: Sure, Scott, thanks. The good news is that even though we’ve moved into the enroll phase, there’s still plenty of time to prepare. So, as you are getting ready for that enrollment what you need to do is gather all of the CIKs that you have authority over, and that includes your corporate entities and any officers or directors that you have to file for and make sure you’ve got them gathered together.

Then find what’s called their CCCs, that CIK confirmation code that’s needed for filings and the passphrase. That passphrase is going to be the tricky part because even though the CCC should generally be available because you’re making filings today, the passphrase frequently hasn’t been used since a company first applied for codes. And so that’s where you’re really going to want to work with your filing agents and partners to make sure that you can get updated passphrases.

And once you have all three of those pieces together, everything else should kind of fall into place. You’ll need to identify, as Jen said, a couple of account administrators in order to be able to enroll. And there are a couple of other minor points, but once you have those pieces you’re essentially ready to go.

And of course, when you go and log on to the Filer Management website, you’re going to be taken through Login.gov. So, you’ll need to make sure that you set up a Login.gov account using a business email address and that’s the security system essentially that the federal government is using to let you into the front door of the filer management system. Then once you’re in and you have all the information gathered for those CIKs, you’ll be able to enroll either through manual enrollment or bulk enrollment.

Now the important thing as you mentioned is that once you’re enrolled, that’s not the end of the story. You’ll also then need to make sure that you delegate to anyone who is going to need to file for you. So that’s any third-party software system; that’s any third-party filing agent. You’ll need to make sure that you find those CIKs and delegate to them so that come September 15 when we move into the comply phase, they will be able to continue filing for you seamlessly.

Scott: So, Gordon, you talked about that for an existing filer, but what about new filers coming on now? We’ve got new companies, new officers, new directors, a little different for that group or what’s the nuance?

Gordon: It is a little bit different. In fact, there’s a bit of good news there as well that even though the Form ID has kind of moved into this new Filer Management website and it’s changed a bit, the benefit of this new Form ID is that it also doubles as your enrollment. So, the Form ID is that series of questions that you need to fill out when you want to initially get access to the EDGAR system. So, as you are filling out all that information now, you’ll also have to say these are going to be my account administrators, etc., so that when the SEC approves your Form ID, you are automatically already enrolled into the new EDGAR Next system. And then, remember, you do still need to delegate once you’re enrolled onto the system.

Scott: Great. Thanks for the clarification there, Gordon. Just before we move over to Jon, real quickly. Password. Passphrase. Confusion. They sound similar but they’re not. Can you talk about the differences?

Gordon: Absolutely, Scott. The SEC has been really fond of acronyms over the years and there’s just a whole salad bowl of codes that are related to the EDGAR system from CIK to CCC, the PMAC, passphrase, password.

The good news is that once EDGAR Next is fully in place in September, virtually all of that goes away. We’ll still have the CIK and CCC that will be used in filings. But the password, PMAC, passphrase, that all gets relegated to the dustbin of history, right?

So the password is currently a 12 character code that is used with the CIK to log onto the existing EDGAR system, versus a passphrase, which is an eight character code that was used when the Form ID was initially handled for that CIK. And it’s also used currently to regenerate codes.

So, it gets very confusing as registrants look to get onto EDGAR Next because they think, oh, I have my password so I’m in good shape. And unfortunately, that’s not the case because what the SEC is requiring is the passphrase.

Scott: Great. Thanks for the clarification. Love the alphabet soup that the SEC publishes for everybody to follow for sure.

So, Jon, let’s finally turn to you. Your Center of Excellence team is on the front lines with filers as they begin enrolling. What are you hearing? What are the questions that are coming at your team?

Jon Regan: Yeah, thanks Scott. It’s certainly been busy with clients reaching out to us, asking questions and looking for some clarification around the rule.

I’d say our observation is that there’s been a very wide range of rule knowledge, understanding and preparation across our client base. And I would break down those questions we’re getting into two key themes. The first one is enrollment. Enrollment, and I should probably also add delegation to that. Everybody wants to get enrolled; they want to know the mechanics of how to do that and they want to know if it impacts them.

So, we’ve seen on one end of the spectrum customers who aren’t even sure if EDGAR Next applies to them. So maybe they saw a reference on a website or on a blog and they’re wondering what’s this EDGAR Next thing? What does it mean to us?

On the far other end of the spectrum, you have some of your law firms and maybe your larger companies who are all over this. They are already very well-informed as to the rule and the impact it will have to them and maybe just have a few clarifying questions with which they want to tie up some loose ends before they go ahead and move forward with the enrollment and delegation process.

So, we’ve already started to see delegations trickling in, but it’s been a little bit slow. We expect from speaking to our clients that a lot of them are going to really focus on EDGAR Next once they’re through with their Q1 reporting obligations. So, we expect over the summer months to really see an increase in the number of our clients who are focused on EDGAR Next and going ahead with their enrollment and delegation process.

Secondly, regarding deadlines and timelines, we’re continuing to communicate with our customers the SEC’s deadline of September 15 for all filers to be enrolled in EDGAR Next. For filers who have not enrolled in EDGAR Next, they do have a grace period until December 19, 2025, after which they’re going to have to file an amended Form ID application.

Scott: Jon, let’s take a quick second because as Jen talked about earlier, there are tens of thousands of CIKs out there that are going to have to be touched. I presume a lot of those are related to officers and directors specifically.

Is there guidance that you’re sharing with maybe those law firms that handle a lot of the ownership filings for those officers and directors, something you’re sharing with them specifically about EDGAR Next?

Jon: That’s right, Scott. We’re certainly seeing a lot of questions around beneficial ownership filings and reporting obligations, specifically Section 16 filings.

One of the things we’re encouraging issuers to do upfront, or law firms, is to identify and document all the CIKs for which they’re going to be responsible for. Creating a spreadsheet is something we would recommend they do to track those CIKs. We’re also recommending that individual filers have an account administrator, as Gordon had said, related to each public company for which they are affiliated, and that’s going to require some coordination across companies.

So, once an officer or director CIK has been enrolled in EDGAR Next, the first account administrator can then go ahead and add those additional account administrators and then decide who’s going to be responsible for the delegation of those CIKs to the filing agents.

Scott: So, John, busy would be maybe a good way to describe your group at the moment with an expected very busy summer.

Jon: Yeah, I think right now we’re definitely seeing a steady uptick in inquiries week over week. We have a support team that’s fielding questions out of our [email protected] mailbox. There’s also a whole lot of resources up on the ToppanMerrill.com website where our customers can self-service, where they can get all the resources they need to have a successful EDGAR Next enrollment period.

Scott: John, thanks very much. Great insight, and it sounds like you guys are busy not only now, but certainly anticipating that as we get closer to September 15.

As we wrap up this episode of On The Dot, Jen, Gordon, Jon. Let me come back to each of you individually. A single piece of advice or something you would share with folks today about EDGAR Next and readiness.

Jon, maybe let’s start with you.

Jon: Sure, Scott. I think the important key to remember right now is that collaboration and communication are imperative for the enrollment of directors that sit on multiple boards.

Now’s the time as we enter the summer and as we go through the enrollment period, and we look towards that September 15 deadline that companies and law firms are thinking about those lists of CIKs and figuring out who’s going to own the account administration and the delegation pieces.

Scott: John, thanks. That sounds complex. Even as you describing it, I can’t imagine what it will be for some of those law firms to coordinate all those permutations and combinations you mentioned.

Gordon, how about from your perspective?

Gordon: Thanks, Scott. Yeah, I think Jon’s got it spot on with the collaboration and communication. And I would extend that to collaborating with your partner, your filing agent, because we expect to have enrolled and delegated to us tens of thousands of CIKs.

So even with the trickle that started to come through, we’re already seeing various issues come up and we’re able to help our clients troubleshoot those. So really important to just utilize all those resources so that you can get into the new EDGAR Next system prior to September 15.

Scott: Never too early to get started on something like this, Gordon, it sounds like.

Jen, from your perspective, why don’t you get the last word?

Jen: Thanks, Scott. I would certainly echo that collaboration and communication is key. EDGAR Next appears complicated. There are many different moving parts.
It’s not as daunting as it seems. Focus on each phase, ensure that you have all your CIKs and the information you need gathered and enrolled, the administrator set up and delegate filing authority.

And then you are on your way. Reach out to us if you have any questions. We have helpful documentation on every aspect of the process on our website, ToppanMerrill.com, and we have internal experts who are able to help ease the process. Thank you.

Scott: Thanks, Jen.

Jon, Gordon, Jen. Thank you all for joining me today and certainly keep us posted as your teams work towards the summer and work towards that September 15 full SEC compliance deadline.