Securities and Exchange Commission Guidelines for Electronic Signatures
U.S. SECURITIES AND EXCHANGE COMMISSION (SEC)
The United States Securities and Exchange Commission is the agency of
the federal government that establishes policy for, administers, and
coordinates most federal assistance to education. Congress passed the
Securities Act of 1933 and the Securities Exchange Act of 1934 and
established the Securities and Exchange Commission (SEC) in 1934 to
enforce the newly-passed securities laws, to promote stability in the
markets and, most importantly, to protect investors.
The mission of the U.S. Securities and Exchange Commission is to
protect investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation. To fulfill its mission, the Securities
and Exchange Commission will:
- Enforce compliance with federal securities laws;
- Sustain an effective and flexible regulatory environment;
- Encourage and promote informed investment decision making; and
- Maximize the use of SEC resources.
The SEC's Office of Information Technology operates the Electronic Data Gathering Analysis and Retrieval (EDGAR)
system, which electronically receives, processes, and disseminates more
than 500,000 financial statements every year. This is a proprietary
electronic record submission system.
The United States Securities and Exchange Commission is regulated by
the Code of Federal Regulations (17 CFR Chapter II). The SEC
regulations concerning electronic signatures can be found in 17 CFR
Chapter II. These can be found in HTML.
17 CFR II § 232.302 Signatures
a) Required signatures to, or within, any electronic submission
(including, without limitation, signatories within the certifications
required by §§240.13a–14, 240.15d–14 and 270.30a–2 of this chapter) must be in typed form
rather than manual format. Signatures in an HTML document that are not
required may, but are not required to, be presented in an HTML graphic
or image file within the electronic filing, in compliance with the
formatting requirements of the EDGAR Filer Manual. When used in
connection with an electronic filing, the term “signature”
means an electronic entry in the form of a magnetic impulse or other
form of computer data compilation of any letters or series of letters
or characters comprising a name, executed, adopted or authorized as a
signature. Signatures are not required in unofficial PDF copies
submitted in accordance with §232.104.
A electronic signature capturing process can create a Signature Confirmation Receipt that is presented in "typed form" from a printed digital file.
(b) Each signatory to an electronic filing (including, without
limitation, each signatory to the certifications required by
§§240.13a-14, 240.15d–14 and 270.30a–2 of this chapter) shall manually sign a signature page
or other document authenticating, acknowledging or otherwise adopting
his or her signature that appears in typed form within the electronic
filing. Such document shall be executed before or at the time the
electronic filing is made and shall be retained by the filer for a
period of five years. Upon request, an electronic filer shall furnish
to the Commission or its staff a copy of any or all documents retained
pursuant to this section.
A esign system can comply with (b) as it refers to internal
processes that can be used in conjuction with any electronic signature
service. Each company filing certifications required by Sarbanes-Oxley
( §§240.13a-14, 240.15d–14 and 270.30a–2) must have a physical copy of
a physical signature from each officer, board member and other
qualified personnel on file for at least a period of 5 years.
When the company submits the required certifications to the SEC a copy of the physical signature should accompany any materials that have been electronically signed through the system.
(c) Where the Commission's rules require a registrant to
furnish to a national securities exchange or national securities
association paper copies of a document filed with the Commission in
electronic format, signatures to such paper copies may be in typed form.
§ 240.19b-4 Filings with respect to proposed rule changes by self-regulatory organizations.
(j) Filings with respect to proposed rule changes by a self-regulatory organization submitted on Form 19b–4 (17 CFR 249.819) electronically shall contain an electronic signature.
For the purposes of this section, the term electronic signature means
an electronic entry in the form of a magnetic impulse or other form of
computer data compilation of any letter or series of letters or
characters comprising a name, executed, adopted or authorized as a
signature. The signatory to an electronically submitted rule filing shall manually sign a signature page or other document,
in the manner prescribed by Form 19b–4, authenticating, acknowledging
or otherwise adopting his or her signature that appears in typed form
within the electronic filing. Such document shall be executed before or
at the time the rule filing is electronically submitted and shall be
retained by the filer in accordance with §240.17a–1.
Again each company filing Form 19b-4 must have a physical copy of
the physical signature of the signatory along with an acknowledgement
that the signatory has adopted the signature into an electronic format.
Securities And Exchange Commission: Use Of Electronic Media (covering 17 CFR Parts 231, 241, 271, and 276) section D(II)(A)
The interpretation in this release is intended to cover all
optional and required communications under the Exchange and Advisers
Acts between broker-dealers, transfer agents, and investment advisers,
and customers, securities holders, and clients. This interpretation is
intended to provide broker-dealers,
transfer agents, and investment advisers with guidance in using
electronic media to satisfy delivery requirements under the
federal securities laws.
A(2). "Access ...the use of a particular medium should not be
so burdensome that intended recipients cannot effectively access
the information provided.
This portion is very important as most esign solutions work only
with one file format (MS Word or Adobe PDF) and usually only on Windows
operating systems. This limitation occurs when a software solution is
developed to be installed on a individual computer. Electronic
signature solutions that are web based can easily handle mulitple
operating systems and file types.
This becomes crutial to esign compliance because the courts could
look unfavorably on systems that limit user's access to signed files.
Requiring a user to purchase an expensive operating system rather than
a free alternative that they may already own might be defined as
A(3). Evidence to Show Delivery ...reasonable assurance that the delivery requirements of the federal securities laws have been satisfied.
Unlike traditional email or faxes, ESIGN solutions can capture the
exact time that the message was viewed and when the attached file was
Broker-dealers, transfer agents, and investment advisers may be
able to evidence satisfaction of delivery obligations, for example, by:
(1) obtaining the intended recipient's informed consent to delivery through a specified electronic medium (2) obtaining evidence that the intended recipient actually received the information, such as by an electronic mail return-receipt or by confirmation that the information was accessed, downloaded, or printed;
B(1) Confidentiality and Security ...should take reasonable
precautions to ensure the integrity, confidentiality, and security of that information, regardless of whether it is delivered through electronic means or in paper form.
The Securities and Exchange Commission also addressed the
permissibility of using various electronic media that was originally
covered by the 1934 Securities Exchange Act and the 1940 Investment Advisers Act. These clarifications were discussed in section D(II)(A) and stated, "Such
communications are permissible, subject to the same requirements and
restrictions that apply to such communications in paper."
Application of the Electronic Signatures in Global and National Commerce Act to Record Retention Requirements (06/14/2001) , located here,
gives agency interpretation on the obligations of issuers to maintain
certain records under the Securities Act of 1933 ("Securities Act"),
Securities Exchange Act of 1934 ("Exchange Act") and Regulation S-T in
light of the Electronic Signatures in Global and National Commerce Act
II. E-SIGN's Record Retention Provision - ...requirement is
met by retaining an electronic record of the information in the
contract or other record if the electronic record:
- accurately reflects the information set forth in the contract or other record; and
- remains accessible to all persons who are entitled to access
Final Rule: Mandated Electronic Filing and Website Posting for Forms 3, 4 and 5" (05/13/2003), available here
The SEC adopted ...rule and form amendments to mandate the
electronic filing, and website posting by issuers with corporate
websites, of beneficial ownership reports filed by officers, directors
and principal security holders...
The admendments affected the following:
- Rules 12, 13, 101, 104 and 201 under Regulation S-T
- Rule 16a-3(h) and Forms 3, 4 and 5 under the Securities Exchange Act of 1934
- Form 144 contained in the Code of Federal Regulations
- Rule 21under the Public Utility Holding Company Act of 1935
- Rule 0-5 under the Trust Indenture Act of 1939
In the SEC's "Guide to Broker-Dealer Registration", guidelines for the use of electronic media and signatures are discussed.
VII part D - Use of Electronic Media by Broker-Dealers
The Commission has issued two interpretive releases discussing
the issues that broker-dealers should consider in using electronic
media for delivering information to customers. These issues include the
- Will the customer have notice of and access to the communication?
- Will there be evidence of delivery?
- Did the broker-dealer take reasonable precautions to ensure the
integrity, confidentiality, and security of any personal financial
VII part E - Electronic Signatures (E-SIGN)
Broker-dealers should also consider the impact, if any, that
the Electronic Signatures in Global and National Commerce Act (commonly
known as E-SIGN), Pub. L. No. 106-229, 114 Stat. 464 (2000) [15 U.S.C.
§7001], has on their ability to deliver information to customers