AMERICA'S
COMMUNITY BANKERS
June
10, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429
Re: Securities of Nonmember Insured Banks
RIN 3064-AC79; 69 FR 19085 (April 12, 2004)
Dear Mr. Feldman:
America’s
Community Bankers (“ACB”)1 is pleased
to comment on the interim final rule issued by the Federal Deposit
Insurance Corporation (“FDIC”) to implement for state
non-member banks section 403 of the Sarbanes-Oxley Act of 20022mandating
the electronic filing of beneficial ownership reports.3
The FDIC proposal
requires that all notices of stock ownership and trading by corporate
insiders
of publicly held banks filed on or
after June 11, 2004 be submitted electronically through the FDICconnect
Business Center. The rule follows a pilot program run by the FDIC
and mirrors the requirements imposed on other public companies by
the Securities and Exchange Commission (the “SEC”).
ACB Position
The SEC rules
provide that an individual filing beneficial ownership reports
electronically
would not be subject to the liability and
the anti-fraud provisions of the federal securities laws with respect
to an error or omission in an electronic filing resulting solely
from electronic transmission errors beyond the control of the filer
if the filer corrects the error or omission by filing an amendment
in electronic format as soon as reasonably practicable after the
electronic filer becomes aware of the error or omission.4 The
FDIC believes that this protection from liability is a reasonable
approach
to transmission errors and that it applies to electronic filings
of beneficial ownership reports made with the FDIC because of a cross-reference
to SEC regulations in section 335.101(b) of the FDIC’s Part
335 regulations. The FDIC has requested comment on whether it is
necessary or appropriate for the FDIC to add a similar provision
to its own rule, and if so, the appropriate scope of such a provision.
ACB believes that protection from liability for transmission errors
and omissions in electronic filings that are beyond the control of
the filer is reasonable and appropriate for corporate insiders of
public banks. We believe that the FDIC should include specific language
to this effect in its Part 335 for public bank insiders because it
is not clear that the cross-reference in section 335.101(b) would
provide complete protection.
The cross-reference
in section 335.101(b) is a general cross-reference to SEC regulations
issued under sections 12, 13, 14(a), 14(c), 14(d),
14(f) and 16 of the Securities Exchange Act. While insider reporting
requirements are addressed in section 16 of the Securities Exchange
Act, and SEC rules 16a-1 through 16e-1, the protection against liability
for electronic submission errors and omissions is contained in the
SEC’s regulation S-T, which is a general regulation that deals
with a variety of electronic filing matters involving the SEC’s
Electronic Data Gathering, Analysis and Retrieval system (popularly
known as “EDGAR”). It is not clear that corporate insiders
of public banks who file beneficial ownership reports under section
16 of the Securities Exchange Act would be covered by the protections
in regulation S-T through the cross-reference in section 335.101(b).
Therefore, the FDIC should include in Part 335 specific language
protecting these insiders from liability for transmission errors
and omissions to the same degree that protection is accorded insiders
of other public companies in section 103 of regulation S-T.
ACB appreciates the opportunity to comment on this important matter.
If you have any questions, please contact the undersigned at (202)
857-3121 or via e-mail at cbahin@acbankers.org, or Diane Koonjy at
(202) 857-3144 or via e-mail at dkoonjy@acbankers.org.
Sincerely,
Charlotte M. Bahin
Senior Vice President, Regulatory Affairs
_______________________________________________
1 ACB
represents the nation's community banks. ACB members, whose aggregate
assets total more than $1 trillion, pursue progressive, entrepreneurial
and service-oriented
strategies in providing financial services to benefit their customers and communities.
2
Pub. L. 107-204 (2002).
3 69
Fed. Reg. 19085 (April 12, 2004).
4
Section 103 of Regulation S-T, 17 C.F.R. § 232.103.
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