SEC proposes updates to filing fees systems

By Lene Powell, J.D.

The SEC has issued proposed rule amendments designed to make filing fee systems more efficient. The amendments would automate some aspects of the currently highly manual systems for filing fee preparation and payment processing by companies and investment companies, with the aim of making processes faster, easier, and less error-prone. The proposal would make fee data machine-readable by requiring it to be presented in eXtensible Business Reporting Language (XBRL). The proposal would also allow fees to be paid via Automated Clearing House (ACH) and eliminate the option for payment via paper checks and money orders (Filing Fee Disclosure and Payment Methods Modernization, Release No. 33-10720, October 24, 2019).

Improved efficiency. Currently, filers and Commission staff must process and validate EDGAR filing fee information within the filing by highly manual and labor-intensive methods. Filing-fee related information is generally not machine-readable, and the underlying components used for the calculation are not always required to be reported, sometimes resulting in calculation and re-keying errors. In addition, complexity and number of transactions can make fee calculation difficult.

Proposed changes. The proposal would make changes to the following forms to require disclosure and structuring of all information necessary to calculate the fee in Inline XBRL format:

• Forms S-1, S-3, S-8, S-11, S-4, F-1, F-3, F-4, and F-10 under the Securities Act;
• Schedules 13E-3, 13E-4F, 14A, 14C, TO, and 14D-1F under the Exchange Act; and
• Forms N-2, N-5, and N-14 under the Investment Company Act.

The proposal would also add an option for fee payment via ACH, which offers faster and more accurate fee payment processing through standardized fee payment identification fields, and eliminate the option for fee payment via paper checks and money orders.

Cost to implement. The SEC said that costs to implement the changes will vary across filers, depending how much of their data is already in structured format, but should be minimal because the information is already required to be gathered. The SEC believes that 266 filers would be newly subject to Inline XBRL requirements as a result of the proposed amendments and would therefore incur costs to develop processes and potentially license software or engage a third party to comply with the proposed requirements.

Request for comment. The SEC asked for comments on costs and benefits of the proposed rules from the point of view of filers, investors, and other market participants, as well as on reasonable alternatives. The SEC asked 47 specific questions, including whether the amendments should be phased in over time.

The release is No. 33-10720.