[Federal Register Volume 68, Number 183 (Monday, September 22, 2003)]
[Rules and Regulations]
[Pages 54981-54985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24057]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 11

[Docket No. 03-23]
RIN 1557-AC75


Electronic Filing and Disclosure of Beneficial Ownership Reports

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Interim rule with request for comments.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is issuing 
this interim rule, with a request for comments, to amend our rules, 
policies, and procedures to require the electronic filing of beneficial 
ownership reports by officers, directors, and major shareholders of 
national banks that have equity securities registered under the 
Securities Exchange Act of 1934 (registered national banks).
    This interim rule also requires that all reports required to be 
filed with the OCC under section 16(a) of the Securities Exchange Act 
of 1934 (Exchange Act) must be filed electronically and posted on a 
registered national bank's Web site, if it has one, as soon as 
practicable. This rule clarifies procedures for officers, directors, 
and principal shareholders of registered national banks to comply with 
these mandated electronic filing requirements.

DATES: Effective Date: This rule is effective on September 22, 2003.
    Compliance Date: To provide for an orderly transition to using a 
new interagency electronic filing system, FDICconnect, for section 
16(a) filings, the OCC will not enforce the mandatory filing 
requirement or the Web-site posting requirement until beginning with 
reports required to be filed on or after January 1, 2004. Until that 
date, the OCC expects that persons filing 16(a) reports will, as 
instructed by the OCC, begin making electronic filings, as soon as 
practicable, and any such electronic filings will be posted on a 
registered national bank's Web site, if it has one.
    Comment Date: Comments must be received by November 21, 2003.

ADDRESSES: You should direct comments to the Public Information Room, 
Office of the Comptroller of the Currency, Mailstop 1-5, Attention: 
Docket No. 03-23, 250 E Street, SW., Washington, DC 20219. Due to 
delays in paper mail delivery in the Washington, DC, area, commenters 
are encouraged to submit comments by fax or e-mail. Comments may be 
sent by fax to (202) 874-4448, or by e-mail to 
[email protected]. You can inspect and photocopy the comments 
at the OCC's Public Information Room, 250 E Street, SW., Washington, DC 
20219. You can make an appointment to inspect the comments by calling 
(202) 874-5043.

FOR FURTHER INFORMATION CONTACT: Asa Chamberlayne, Counsel, Securities 
and Corporate Practices Division, 202-874-5210, or Martha Vestal 
Clarke, Counsel, Legislative and Regulatory Activities Division, 202-
874-5090.

SUPPLEMENTARY INFORMATION:

Background

    The Exchange Act seeks to protect investors by requiring accurate, 
reliable, and timely corporate securities disclosures. Generally, 
companies with equity securities that are subject to the

[[Page 54982]]

registration requirements under section 12 of the Exchange Act (15 
U.S.C. 78l) must register these securities with the Securities and 
Exchange Commission (SEC). Section 16(a) of the Exchange Act (15 U.S.C. 
78p(a)) requires directors, executive officers, and direct or indirect 
beneficial owners of more than 10 percent of a class of securities that 
are registered under the Exchange Act (insiders) to file beneficial 
ownership reports regarding their ownership and transactions in the 
company's securities.\1\ Section 12(i) of the Exchange Act (15 U.S.C. 
78l(i) vests the OCC, rather than the SEC, with the power to issue 
regulations implementing certain Exchange Act requirements with respect 
to registered national banks, including section 16, and with the 
authority to administer and enforce these requirements.\2\
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    \1\ Section 16(a) also requires an entity that has registered 
its securities under the Exchange Act to file initial and 
transactional reports with any national securities exchange on which 
it has listed its securities.
    \2\ Under section 12(i), the other Federal banking agencies have 
the same authority with respect to the registered depository 
institutions that they supervise.
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    As amended by the Sarbanes-Oxley Act of 2002, Public Law 107-204, 
section 16(a) requires that insiders of a registered company, including 
a registered national bank, must file beneficial ownership reports (1) 
at the time the company registers its securities pursuant to section 12 
of the Exchange Act, (2) within 10 days after becoming an insider of a 
registered national bank, and (3) within two business days after an 
insider consummates a transaction resulting in a change in ownership, 
or resulting in the purchase or sale of a security-based swap 
agreement,\3\ in the registered securities. These provisions became 
effective on August 29, 2002.
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    \3\ The term ``security-based swap agreement'' is defined in 
section 206(b) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note).
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    Section 16(a)(4) also requires that, beginning July 30, 2003, 
insiders must file their change-in-ownership reports electronically. 
Moreover, the SEC, and the OCC in the case of registered national 
banks, must make these filings available to the public on the Internet 
not later than the end of the business day following the filing. Also, 
a registered company, including a registered national bank, must post 
its insiders' change-in-ownership reports on its Web site, if it has a 
Web site, not later than the end of the business day following the 
filing.
    The SEC's final rules implementing these requirements for other 
public companies mandate that all beneficial ownership reports filed 
under section 16(a), not only the change-in-ownership reports, must be 
filed electronically and posted on a public company's Web site (if the 
company has a Web site).\4\ In addition, the SEC will provide Internet 
access to all such filings that are filed with the SEC. The SEC's rules 
are effective for all section 16(a) filings that are made on or after 
June 30, 2003.
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    \4\ See 68 FR 25788 (May 13, 2003).
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    The SEC's rulemaking also amended 17 CFR 240.16a-3 which applies to 
registered national banks through the OCC's regulations at 12 CFR 
11.2(b)(2). As recently amended by the SEC, 17 CFR 240.16a-3 provides 
that any issuer that has a corporate Web site must post any section 
16(a) report on that Web site by the end of the business day after the 
filing and the filing must remain accessible on the Web site for at 
least 12 months. These same requirements apply to registered national 
banks.
    The OCC is imposing similar requirements to those adopted by the 
SEC and is requiring that all section 16(a) reports must be filed 
electronically by the required due dates. To provide for the electronic 
filing of insiders' reports under section 16(a) of the Exchange Act, 
the Federal Deposit Insurance Corporation, the Board of Governors of 
the Federal Reserve System, and the OCC have created an electronic 
filing system utilizing the FDICconnect secure Web platform. This 
filing system became operational beginning July 30, 2003.
    In order to assure that this new system is fully functional, the 
OCC will not require compliance with the electronic filing and Web site 
posting requirements until January 1, 2004. To the extent practicable, 
however, registered national banks should post the section 16(a) 
filings on their Web sites and their insiders should file their section 
16(a) reports electronically before January 1, 2004.
    This short delay will give registered national banks' insiders a 
transition period for using the new electronic filing system so as to 
ensure that the new system is fully functional and accessible to the 
public before requiring that it be used as the only form of filing 
section 16(a) reports. Moreover, there will be no delay in the due date 
of any insider's section 16(a) report and all such reports must still 
be filed with the OCC within the required time frame and will continue 
to be publicly available as provided by the OCC's current rules.\5\ In 
addition, the impact of the short transition period is further 
minimized because we expect that insiders will begin using FDICconnect 
and registered national banks will begin posting these filings on their 
Web sites (if the bank maintains a Web site) as soon as practicable and 
will not wait until the compliance deadline.
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    \5\ During the transition period, paper copies of any section 
16(a) reports that are not filed electronically still may be 
obtained as provided under the OCC's current rules. See 12 CFR 
11.2(b).
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Description of Rule

    The interim rule revises section 11.3(a), which relates to filing 
requirements and the inspection of documents filed with the OCC 
pursuant to the Exchange Act. The rule contains a new paragraph 
11.3(a)(2), which provides that statements required to be filed 
electronically pursuant to section 16(a) of the Exchange Act shall be 
filed electronically. New paragraph 11.3(a)(4) clarifies that the 
electronic filing and Web site posting requirements are mandatory for 
section 16(a) statements required to be filed on or after January 1, 
2004.
    The rule also adds a new subparagraph 11.3(a)(3)(ii) which provides 
that, an electronic filing pursuant to section 16(a) of the Exchange 
Act submitted by direct transmission on or before 10 p.m. eastern 
standard time or eastern daylight savings time, whichever is currently 
in effect, shall be deemed filed on the same business day. This aspect 
of the rule is consistent with the SEC's rules applicable to electronic 
filings that apply to other registered companies. See 17 CFR 
232.13(a)(4).
    The OCC's current rule 11.2(b)(2) incorporates by reference the 
requirements in the SEC's rules that a public company that has a Web 
site must post any filings on Forms 3, 4, or 5--the forms for filing 
beneficial ownership reports under section 16(a) of the Exchange Act--
by the end of the business day after the filing and continue to make 
that form accessible on its Web site for at least 12 months. See 17 CFR 
240.16a-3. Under the OCC's current rules, a registered national bank is 
required to post these filings on its Web site, if it has one, in 
accordance with the 17 CFR 240.16a-3.

Transition Period for Compliance

    This interim final rule is effective on September 22, 2003. 
National bank insiders should begin to file reports electronically as 
soon as practicable. Section 16(a) reports must be filed electronically 
beginning with reports due to be filed on or after January 1, 2004. 
Insiders will file their section 16(a) reports on FDICconnect by 
submitting completed SEC Form 3 (Initial Statement of Beneficial 
Ownership of Securities), Form 4

[[Page 54983]]

(Statement of Changes in Beneficial Ownership), or Form 5 (Annual 
Statement of Changes in Beneficial Ownership of Securities), as 
recently amended by the SEC's rules.\6\ The OCC already has provided 
instructions for using FDICconnect to affected national banks. When the 
forms are electronically filed on FDICconnect, the forms will be made 
available immediately on the FDIC's external public Web site (http://www2.fdic.gov/efr). Filings will be retrievable by bank name, insider 
name,\7\ bank state, and filing date.
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    \6\ See supra note 4.
    \7\ The ability to be able to retrieve the filing by insider 
name will be delayed but it is expected to be functional on or about 
January 1, 2004 if all applicable regulatory requirements are 
satisfied.
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    To assure that these reports continue to be publicly accessible 
until such time as we are confident that the electronic filing system 
is fully functional, insiders should continue to submit these reports 
on paper within the required time frames during the transition period 
and, as soon as practicable, also file their reports electronically. 
The paper filing requirement can be met by simply completing the on-
line version of the report, then printing and faxing the electronic 
filing system confirmation screen (which contains the completed 
report). Paper reports may be faxed to the OCC at (202) 874-5279 and 
filed electronically with FDICconnect as of July 30, 2003.
    During this transition period, a registered national bank whose 
insiders choose to file electronically (in addition to making a paper 
filing) may satisfy the requirement to post the report on its Web site 
by providing a link on its Web site to the FDIC's public Web site 
(http://www2.fdic.gov/efr). The OCC also will have a link on its Web 
site to the FDIC's Web site to make it easier for interested persons to 
retrieve FDICconnect filings.

Notice and Comment; Effective Date

    Under the Administrative Procedure Act (APA), the requirement that 
an agency provide public notice and an opportunity for comment does not 
apply to ``rules of agency organization, procedure, or practice.''\8\ 
This exemption applies to a rule that does not itself affect the 
substantive rights of those affected, even though the rule ``may alter 
the manner in which the parties present themselves or their viewpoints 
to the agency.'' JEM Broadcasting Co., Inc. v. FCC, 22 F.3d 320, 326-27 
(D.C. Cir. 1994).
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    \8\ 5 U.S.C. 553(b)(A).
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    The interim rule has no effect on the substantive rights of 
registered national banks or their insiders who are filing section 
16(a) reports. Amendments to section 16(a)(4) of the Exchange Act 
require the electronic filing of change-in-ownership reports and the 
posting of these reports on a registered national bank's Web site. The 
electronic filing requirements and Web-site posting requirements 
imposed under this interim rule implement the statutory requirements 
and require the electronic filing and Web site posting of other section 
16(a) reports, as well. These requirements pertain only to the form in 
which an insider submits his or her information to the OCC or the form 
in which it is publicly accessible. The electronic filing and Web-site 
posting requirements do not modify the substantive information in the 
filing, the deadlines for the filing, or the public availability of the 
section 16(a) reports. For these reasons, we conclude that this interim 
rule is not subject to the notice and comment requirements of the APA.
    An agency may dispense with the delayed effective date requirement 
of the APA for ``good cause.'' \9\ As we have described, we expect that 
the interim rule, which itself imposes no new substantive requirements, 
will help produce efficiencies for and reduce burden on national banks 
by enabling them to save time and money in the preparation and 
processing of certain required filings. The rule clarifies that 
insiders have a transition period for compliance and, thus, provides 
for an orderly transition to the electronic filing requirement. For 
these reasons, we conclude that the benefits of the interim rule 
outweigh any burdens imposed by the rule and that there is good cause 
to dispense with the 30-day delayed effective date prescribed by the 
APA.
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    \9\ Id. at 553(d)(3).
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    The OCC is seeking public comment on all aspects of this interim 
rule and will consider those comments when promulgating the final rule. 
The OCC will publish in the Federal Register a response to any 
significant adverse comments received, along with modifications to the 
rule, if any.
    Finally, subject to certain exceptions, 12 U.S.C. 4802(b)(1) 
provides that new regulations and amendments to regulations prescribed 
by a Federal banking agency that impose additional reporting, 
disclosure, or other new requirements on an insured depository 
institution must take effect on the first day of a calendar quarter 
that begins on or after the date on which the regulations are published 
in final form. Because the OCC will not enforce the mandatory 
electronic filing requirement and the Web site posting requirement 
until beginning with section 16(a) reports due to be filed on or after 
January 1, 2004, the requirements in 12 U.S.C. 4802(b)(1) are 
satisfied.

Comment Solicitation

    Although notice and comment are not required, we are nonetheless 
interested in receiving any comments that may improve this rule before 
it is adopted in final form. We therefore request comment on all 
aspects of this interim rule. We invite insiders to submit feedback on 
their use of this system.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, the OCC may 
not conduct or sponsor, and a respondent is not required to respond to, 
an information collection unless it displays a currently valid Office 
of Management and Budget (OMB) control number. The collections of 
information requirements in 12 CFR part 11 are approved under OMB 
Control Number 1557-0106. The information collection requirements 
contained in this interim rule with request for comments have been 
submitted to the OMB for review as a revision of a currently approved 
collection. The OCC is also soliciting public comments on the 
information collection requirements contained in this interim rule for 
60 days.
    12 CFR part 11 incorporates by reference the applicable SEC 
regulations. The OCC does not maintain its own forms for collecting 
information and instead requires reporting banks to file SEC forms. 
Part 11 ensures that publicly owned national banks provide adequate 
information about their operation to current and potential 
shareholders, depositors, and to the public. The OCC reviews the 
information to ensure that it complies with Federal law and makes 
public all information required to be filed under these rules. 
Investors, depositors, and the public use the information to make 
informed investment decisions.
    The OCC is revising 12 CFR part 11 to reflect amendments to section 
16(a)(4) of the Exchange Act made by the Sarbanes-Oxley Act of 2002 
and, like the SEC, is also requiring insiders of registered national 
banks to file all of their section 16(a) reports electronically in the 
future.
    Section 11.3(a)(2) requires that beneficial ownership reports by 
officers, directors, and major shareholders of national banks with 
equity securities that are subject to registration and disclosure 
requirements of the Exchange Act must be filed electronically, as 
directed by the OCC. The FDICconnect secure Web platform electronic 
filing

[[Page 54984]]

system will accept beneficial ownership reports that are designated as 
Forms 3, 4, and 5. These forms contain the same information as 
currently required on SEC Forms 3, 4, and 5. National banks currently 
file these SEC forms in paper form with the OCC.
    The FDICconnect secure Web platform became operational on a 
voluntary basis beginning July 30, 2003. However, 12 CFR 11.3(a)(4) 
clarifies that the electronic filing requirement will become mandatory 
for section 16(a) statements required to be filed on or after January 
1, 2004.
    National banks will continue to file SEC forms 8-K, 10, 10-K, 10-Q, 
Schedules 13D, 13G, 14A, 14B, and 14C, as required by part 11, in paper 
form.
    Title: (MA)-Securities Exchange Act Disclosure Rules (12 CFR 11).
    OMB Number: 1557-0106.
    Form Numbers: Forms 3, 4, 5, SEC Forms 8-K, 10, 10-K, 10-Q, 
Schedules 13D, 13G, 14A, 14B, and 14C.
    Estimated number of respondents (Forms 3, 4, and 5): 65.
    Estimated number of responses (Forms 3, 4, and 5): 185.
    Average hours per response (Forms 3, 4, and 5): Ranges from \1/2\ 
hour to one hour.
    Estimated total annual burden hours (Forms 3, 4, and 5): 97.5 
hours.
    The likely respondents are national banks and individuals.

Comments

    The OCC invites comments on:
    (1) Whether the collection of information contained in the interim 
rule is necessary for the proper performance of the OCC's functions, 
including whether the information has practical utility;
    (2) The accuracy of the OCC's estimate of the burden of the 
information collection, including the validity of the methodology and 
assumptions used;
    (3) Ways to enhance the quality, utility, and clarity of the 
information to be collected:
    (4) Ways to minimize the burden of the information collection on 
respondents, including the use of automated collection techniques or 
other forms of information technology; and
    (5) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    Comments should be sent to the OCC and to the OMB Desk Officer:
    Office of the Comptroller of the Currency, Public Information Room, 
Mailstop 1-5, Attention: Docket No. 03-23, 250 E Street, SW., 
Washington, DC 20219. Due to delays in paper mail delivery in the 
Washington, DC, area, commenters are encouraged to submit comments by 
fax or e-mail. Comments may be sent by fax to (202) 874-4448, or by e-
mail to [email protected].
    Joseph F. Lackey, Jr., Desk Officer, Office of Information and 
Regulatory Affairs, Attention: 1557-0106, Office of Management and 
Budget, Room 10235, Washington, DC 20503. Comments may also be sent by 
e-mail to [email protected].

Community Bank Comment Request

    In addition, we invite your comments on the impact of this proposal 
on community banks. The OCC recognizes that community banks operate 
with more limited resources than larger institutions and may present a 
different risk profile. Thus, the OCC specifically requests comments on 
the impact of this proposal on community banks' current resources and 
available personnel with the requisite expertise, and whether the goals 
of the proposed regulation could be achieved, for community banks, 
through an alternative approach.

Solicitation of Comments on Use of Plain Language

    The OCC also requests comment on whether the interim rule is 
written clearly and is easy to understand. On June 1, 1998, the 
President issued a memorandum directing each agency in the Executive 
branch to write its rules in plain language. This directive applies to 
all new proposed and final rulemaking documents issued on or after 
January 1, 1999. In addition, Public Law 106-102 requires each Federal 
agency to use plain language in all proposed and final rules published 
after January 1, 2000. The OCC invites comments on how to make this 
rule clearer. For example, you may wish to discuss:
    (1) Whether we have organized the material to suit your needs;
    (2) Whether the requirements of the rule are clear; or
    (3) Whether there is something else we could do to make the rule 
easier to understand.

Regulatory Flexibility Act

    The Regulatory Flexibility Act applies only to rules for which an 
agency publishes a general notice of proposed rulemaking pursuant to 5 
U.S.C. 553(b).\10\ Because the OCC has determined for good cause that 
the APA does not require public notice and comment on this final rule, 
we are not publishing a general notice of proposed rulemaking. Thus, 
the Regulatory Flexibility Act does not apply to this interim rule.
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    \10\ Id. at 553(d).
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Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-04 (Unfunded Mandates Act) requires that an agency prepare a 
budgetary impact statement before promulgating a rule that includes a 
Federal mandate that may result in expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule. The OCC has determined that 
the interim rule will not result in expenditures by State, local, or 
tribal governments or by the private sector of $100 million or more. 
Accordingly, the OCC has not prepared a budgetary impact statement or 
specifically addressed the regulatory alternatives considered.

Executive Order 12866

    The OCC has determined that this rule does not constitute a 
``significant regulatory action'' for the purposes of Executive Order 
12866.

List of Subjects in 12 CFR Part 11

    Confidential business information, National banks, Reporting and 
recordkeeping requirements, Securities.

Authority and Issuance

0
For the reasons set forth in the preamble, the OCC amends part 11 of 
chapter I of title 12 of the Code of Federal Regulations as follows:

PART 11--SECURITIES EXCHANGE ACT DISCLOSURE RULES

0
1. The authority citation for part 11 is revised to read as follows:

    Authority: 12 U.S.C. 93a; 15 U.S.C. 78l, 78m, 78n, 78p, 78w, 
7241, 7242, 7243, 7244, 7261, 7262, 7264 and 7265.


0
2. Section 11.3(a) is revised to read as follows:


Sec.  11.3  Filing requirments and inspection of documents.

    (a) Filing requirements. (1) General. Except as otherwise provided 
in this section, all papers required to be filed with the OCC pursuant 
to the 1934 Act or regulations thereunder shall be submitted in 
quadruplicate to the

[[Page 54985]]

Securities and Corporate Practices Division, Office of the Comptroller 
of the Currency, 250 E Street, SW., Washington, DC 20219. Material may 
be filed by delivery to the OCC through the mail, by fax (202-874-
5279), or otherwise.
    (2) Statements filed pursuant to section 16(a) of the 1934 Act. 
Statements required under section 16(a) of the 1934 Act shall be filed 
electronically, as directed by the OCC.
    (3) Date of filing. (i) General. The date on which papers are 
actually received by the OCC shall be the date of filing, if the person 
or bank filing the papers has complied with all applicable 
requirements.
    (ii) Electronic filings. An electronic filing of a statement 
required under section 16(a) of the 1934 Act that is submitted by 
direct transmission on or before 10 p.m. Eastern Standard Time or 
Eastern Daylight Savings Time, whichever is currently in effect, shall 
be deemed filed on the same business day.
    (4) Mandatory compliance date. Compliance with paragraph (a)(2) of 
this section and any applicable requirements that such statements must 
be posted on a registered national bank's Web site are mandatory for 
statements required to be filed on or after January 1, 2004.
* * * * *

    Dated: September 8, 2003.
John D. Hawke, Jr.,
Comptroller of the Currency.
[FR Doc. 03-24057 Filed 9-18-03; 12:01 pm]
BILLING CODE 4810-33-P