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[FundLaw] Re: Y2K Disclosures Still?

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  • Baker, John
    I think a lot of the Y2K overkill is for historical reasons. In 1997 and even 1998, large institutions were well under way with their Y2K remediation efforts,
    Message 1 of 8 , Jan 12, 2000
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      I think a lot of the Y2K overkill is for historical reasons. In
      1997 and even 1998, large institutions were well under way with their Y2K
      remediation efforts, but there was a perception (probably accurate in 1997,
      not in 1998) that there had been little public attention to the problem and
      that in some areas remediation was far behind or not really even started.
      Key congressmen started making noise about the need for corrective
      legislation. This had its intended effect of goading regulators to action.
      The SEC's initial issuance of a Staff Legal Bulletin did not satisfy the
      legislators, and the SEC felt forced to go further in its requirements.

      A number of Y2K problems, usually of a minor nature, have emerged,
      and more will come to light. On the other hand, public antennae are
      certainly up. Most companies, meanwhile, are attempting to minimize any
      perception of Y2K problems, even when they are forced to acknowledge the
      existence of a problem; there is an almost desperate effort to
      recharacterize any problem as non-Y2K, even if it is date-related. A key
      question is the extent to which problems would exist in the absence of Y2K
      concerns. After all, computer-related problems are not exactly a novelty.
      The Y2K remediation efforts missed some problems and likely caused new ones,
      but they also upgraded a lot of old systems.

      I expect that, for a while at least, investment companies will keep
      at least some Y2K disclosure, then drop it when they feel more comfortable.
      (John Carr made a good point about public companies needing to update their
      disclosures, perhaps along the lines of "the danger is past," but I don't
      think that applies to investment companies.) But I do think you could argue
      that, at this point, the risks are comparable to major systems upgrades,
      which most people wouldn't bother disclosing.

      John M. Baker <JBaker@...>
      Stradley, Ronon, Stevens & Young, LLP
      2121 K Street, N.W., Suite 800, Washington, DC 20037
      (202) 261-3512 Fax (202) 261-3581
      FundLaw Listowner

      > -----Original Message-----
      > From: David Thomas [SMTP:dcthomas@...]
      > Sent: Tuesday, January 11, 2000 7:55 PM
      > To: fundlaw@egroups.com
      > Subject: [FundLaw] Re: Y2K Disclosures Still?
      > "Baker, John" <JBaker@...> wrote:
      > >It seems to me that we'll need to continue disclosures until we're
      > >sure the danger has passed
      > Seems to me that for many companies there never was any danger other
      > than the SEC itself. Lemmings that we are, however, we lawyers
      > cheerfully jumped up to follow the SEC's pied piper and sing its tune.
      > For Chrissakes, I had one issuer (not a financial institution) adding
      > Y2k disclosre when its business consisted of two friends selling
      > dresses out of an apartment, and all of its electronic information
      > could easily have been kept on the back of an envelope.
      > Now that the Commission is getting off this particular toot and on to
      > its next one, we can perhaps make the kinds of judgements we would
      > have made if the pied piper had let us call the issuers' tunes in the
      > first instance. For financial institutions, that probably means at
      > least a passing mention of the possibility of creeping errors from Y2k
      > going undetected, but not much more.
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