Succeeding in Your Business: Tried to file anything lately? It’s time for a tech update at the SEC

As readers of this column know, one of my biggest headaches in dealing with our federal government agencies is that their technology is often stuck in the 1990s, if not the 1980s.

As a lawyer representing startup companies, I frequently have to file documents with the U.S. Securities and Exchange Commission. Since about 10 years ago, all filings with the SEC must be made electronically.

All electronic filings with the SEC must be made on a database called EDGAR; the acronym — what would our government be without acronyms? — stands for “Electronic Data Gathering, Analysis and Retrieval.”

In order to file documents on EDGAR, one must first register the company with EDGAR using Form ID, which also must be filed electronically. Once Form ID is filed, the company is issued three separate usernames (a Central Index Key — CIK for short — and two “access codes”), which companies and their attorneys can use to file documents securely on EDGAR.

Filing Form ID requires three steps. First, you have to fill out an online application form with the company’s information. Then, you have to print out the application form, have the company president sign it before a local notary public and create a PDF file of it. Finally, you have to go back to EDGAR, fill out the application form a second time, attach the PDF of the first application form as an exhibit to the second application form and submit the final application consisting of both forms. After a delay of several days, you usually get your CIK and access codes to file documents electronically on EDGAR.

Are you exhausted already? If you are a tech professional or otherwise familiar with computers, you are probably shaking your head in amazement that in 2021, we have to go through all the above steps to do something as simple as register with a government agency.

But wait. It gets better.

I went through the above process recently for one of my tech clients that was raising capital from angel investors and needed to file a sales report (called Form D) with the SEC. As the client was a newly formed company, I first had to file Form ID to register the client with EDGAR.

Everything went smoothly until the final step, when the EDGAR software rejected my application because it did not recognize the PDF attachment with the signed and notarized registration form. I checked multiple times to make sure I attached the document properly, and each time was informed that I had done so correctly, but the software kept rejecting the application.

After checking EDGAR’s “help” section for advice — totally useless — I gave up and called EDGAR’s tech support hotline (to the SEC’s credit, I have to say that getting through to a tech representative was relatively quick and painless). I explained the process to the rep, who told me the problem was that I saved the PDF using Adobe Reader, a streamlined version of Adobe Acrobat. The rep assured me that if I saved the PDF using the full version of Adobe Acrobat, I would be able to attach the PDF to the Form ID submission and it would go through.

So, I went online, subscribed to Adobe Acrobat DC (for $180/year), had my client overnight the paper application form he originally signed and notarized, scanned it as a PDF using Adobe Acrobat DC, filled out the second application form, attached the PDF and hit “submit.”

The EDGAR software rejected the filing, again claiming the PDF was not properly attached.

Rather than waste any more time, I called EDGAR’s tech support hotline and asked for a supervisor. I explained the situation to her step by step and was told that the problem was not that I had used the wrong version of Acrobat, but that I was using Firefox as my web browser when I submitted the application. Apparently, the EDGAR database is programmed to accept filings only from Internet Explorer and Google Chrome.

Need I say that this was explained nowhere during the online application process or EDGAR’s online “help” section?

I opened Google Chrome and resubmitted the second application form with the PDF I created on Adobe Acrobat, and it was accepted.

The good news is that after going through all this, when I received the CIK and access codes the next day, I was able to file the client’s Form D sales report on EDGAR with a minimum of hassle. But I spent several hours and wasted $180 on a version of Acrobat I did not need (and no, I couldn’t ethically bill any of it to the client).

I totally understand that the SEC wants to ensure that the EDGAR database is never tainted by bogus filings or fictitious companies. But the current “user vicious” registration process needs to be fixed, as I’m sure many companies that want to comply with the law just give up in frustration and never register with EDGAR as they should.

Let’s hope the massive infrastructure bill currently wending its way through Congress allocates a few bucks to the SEC to upgrade EDGAR’s technology. Or at least make it available to Firefox users.

Cliff Ennico (crennico@gmail.com) is a syndicated columnist, author and former host of the PBS television series “Money Hunt.”

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