The NASPP Blog

May 19, 2009

Section 16 Updates

SEC Simplifies Authentication of Form ID
Any NASPP members that have had to submit Form ID for a new Section 16 insider know that a notarized authentication (usually a copy of the Form ID) is required to complete the submission.  Although Form ID has been submitted electronically for many years now, until recently, the authentication document had to be faxed to the SEC.

Now, the SEC will accept a scanned PDF of the notarized authentication that can be submitted along with the electronic filing.  The SEC even has a fill-in PDF of Form ID that filers can use for this purpose.  Using this new form changes the steps involved in submitting Form ID slightly:

  1. Fill out the PDF of Form ID and print it out. 
  2. Have the Form ID manually signed and notarized.
  3. Scan the notarized Form ID and save it as a PDF. (If you don’t have a scanner readily available, an efax number works great for this purpose. Just fax the document to your efax number and viola, a “scan” of the document is emailed to you.  If you are only receiving a few efaxes per year, you can even obtain an efax number for free.)
  4. Submit the electronic Form ID and include the PDF of the notarized Form ID. 

Hopefully this will streamline the process of obtaining a CIK for new insiders.  Under the old system, matching the electronic Form ID submissions with the faxed notarized versions has been time-consuming for the SEC. Including the notarized authentication with the electronically submitted Form ID eliminates this step and hopefully shortens the SEC’s response time.

The SEC does still permit the notarized authentication to be faxed for those that prefer that method. 

Aggregate Reporting of Sale Transactions
It has recently come to my attention that some folks still aren’t aware of last summer’s no action letter on aggregate reporting of purchase and sale transactions by insiders.  When insiders buy or sell stock, the orders are often executed in a series of small transactions at many different prices. This is because the number of shares involved in the order exceeds the amount for which the insider’s broker can find a single buyer or seller.  And, until last summer, the SEC required that each individual transaction be reported on a separate line on Form 4.

In a no action letter issued last June, the SEC Staff indicated that it is permissible to report multiple open-market transactions in aggregate (e.g., on a single line) on Form 4, provided that the following conditions are met:

  1. The transactions are either all purchases or all sales (reported with code P or S). 
  2. The transactions all involve the same security owned in the same manner (e.g., directly owned common stock).
  3. The transactions all occur on the same day.
  4. The transactions are all executed within a $1 price range.

When reporting the transactions, the weighted average execution price should be reported in the appropriate column on Form 4, with a footnote disclosing the range of prices involved in the transactions.  In addition, the footnote should undertake to provide full information on the transactions upon request.

For more information on aggregate reporting, see the NASPP alert “SEC Staff Reverses Itself and Allows Aggregate Reporting.”

Answers to All Your Section 16 Questions
I read about both of these developments in Peter Romeo and Alan Dye’s quarterly Section 16 Updates newsletter, which is part of what you get with a Section 16 Annual Service subscription.  Your subscription also includes the full “Section 16 Forms and Filing Handbook”–subscribe now to get the 2009 edition as soon as it is published–and the “Section 16 Deskbook.”  Subscribers are also entitled to discounts on other Section 16 poducts, such as the newly updated “Section 16 Treatise” and the Section 16 Filer.  These are all must-have resources for anyone responsible for Section 16 compliance. Subscribe today at Section16.net.  

Reason #25 to Renew Your NASPP Membership: The International Stock Plan Design and Administration Survey
The NASPP’s International Stock Plan Design and Administration Survey, co-sponsored by Deloitte Tax, is easily the industry’s most comprehensive report of trends and practices in stock plans for non-US employees. Catch a sneak preview of the most recent edition of the survey this Thursday, when we highlight the survey results during the webcast “Top Trends in Stock Plans for Overseas Employees.”

NASPP Conference 2-for-1 Rate Ends Next Week
If you haven’t yet registered for the Conference, make sure you do so by this Friday, May 22.  NASPP members from the same company and location can receive 2-for-1 registrations and members that register on an individual basis also qualify for a substantial discount. But don’t wait to register any longer–we won’t be able to offer these discounts after this Friday.

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara