SEC Extends Holding Period for Dormant Fee Accounts

By Cydney Posner

Here's some excitement to start your weekend off right: The SEC has just posted an amendment to its rules for holding funds in dormant filing fee accounts. Under Rule 3a of the SEC's Informal and Other Procedures, filing fees paid under the Securities Act or Exchange Act are sent to a Treasury-designated lockbox depository, where they are held in separate filing fee accounts maintained by the SEC for each EDGAR filer who submits a required or anticipated filing fee. Account holders must maintain a current account address with the SEC to ensure timely access to account statements that are sent out when a deposit, withdrawal or other change occurs. Currently, the SEC staff will initiate return to the account holder of any funds held in a filing fee account in which there has been no activity for more than 180 calendar days. To increase flexibility and reduce inefficiencies, the SEC is increasing the holding period for dormant accounts to three years. The SEC notes that adoption of a three-year inactivity period before account balances are returned will ensure that funds paid at the time a shelf registration statement is initially filed will remain available to issuers in their lockbox accounts for the life of the registration statement. In addition, issuers that review their capital-raising plans in connection with each required shelf renewal would be able to adjust the amounts on deposit in their lockbox accounts to match their future offering plans (which would, of course, result in activity in their accounts and therefore commence a new three-year period). Account holders may also request a refund of unused fees held on deposit at any time.

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