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Law360 (April 17, 2020, 8:49 PM EDT) -- Three Silicon Valley-based law firms are asking the U.S. Securities and Exchange Commission to allow broader use of electronic signatures so securities filings such as registration statements can be processed more quickly given obstacles caused by the coronavirus pandemic.
Attorneys from Wilson Sonsini Goodrich & Rosati PC, Cooley LLP and Fenwick & West LLP in a petition posted Thursday on the SEC's website urged the agency to amend rules under Regulation S-T, which governs securities documents that are filed electronically. Under current rules, signatories must provide manual signatures on separate pages to authenticate electronically filed documents in which their names appear in typed form.
The SEC normally requires signature pages to be submitted before or at the time a filing is submitted electronically. But on March 24, the SEC relaxed rules to allow signatories to provide manual authentication "as promptly as reasonably practicable" in light of the COVID-19 pandemic.
The law firms want the SEC to go further and permit electronic signatures, saying that modern software makes it possible to securely and accurately confirm the authenticity of such signatures. The firms said they were seeking the changes "on behalf of registrants and potential registrants we collectively represent."
"We and many of our clients believe the [March 24 SEC] staff statement could be of greater effectiveness to registrants, with no compromise to the integrity of the document signing process, if registrants were permitted to use existing, proven electronic signature processes with respect to filing documents with the commission," the law firms wrote in a letter dated April 15.
The SEC did not immediately return a request for comment on Friday.
Any change would apply to electronically filed documents such as registration statements for initial public offerings and follow-on offerings as well as quarterly and annual reports. The firms are specifically asking the SEC to amend Rules 11 and 302 of Regulation S-T.
The law firms argued that Delaware corporate law allows registrants to use electronic signatures to execute merger agreements and obtain written consent actions from their boards of directors. SEC registrants also use electronic signatures for underwriting agreements and other components of registered offerings, the firms said.
"Every day, registrants use electronic signatures to enter into commercial agreements with customers, suppliers and vendors, as well as contracts and equity compensation agreements with consultants, employees, and directors," the firms wrote. "Our clients have indicated to us that the current COVID-19 situation has only accelerated these trends and significantly increased the difficulties associated with obtaining manual 'wet' signatures."
The firms added that they believe the "massive transition to remote and disparate and work environments during these unprecedented times will increase the business trends we were already witnessing and change the way commerce is conducted towards more virtual interactions, including executing transactions and agreements."
The SEC has taken several actions recently to provide market participants relief in an effort to keep markets running smoothly amid the pandemic, including extending deadlines and temporarily allowing certain documents to be filed electronically instead of on paper.
The petition was signed by Wilsoni Sonsini partners Steve Bochner and Richard Blake, Fenwick partners James Evans and David Bell and Cooley partners David Peinsipp and Charlie Kim.
--Editing by Alanna Weissman.
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