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TAP-CJ SEC'S EDGAR ON NET, WHAT HAPPENED AND WHY
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from TAP-INFO Internet Distribution List

Taxpayer Assets Project Crown Jewels Campaign October 22, 1993

- NSF Announces Grant to Put EDGAR Online

- Decision is important victory for two year grass roots campaign to broaden public access to EDGAR

- Department of Justice meets with data users on monday to discuss future of JURIS program

FMI James Love (215/658-0880; love@essential.org) Mike Ward (202/387-8030; mike@essential.org)

Today the New York Times and Congressman Edward Markey (D- MA) announced that the National Science Foundation would fund a pilot project to place the Securities and Exchange Commission's (SEC) Electronic Data Gathering, Analysis and Retrieval (EDGAR) system online for users of the Internet. The service will be provided by New York University's Stern School of Business and the Internet Multicasting Service (IMS), which is run by Carl Malamud.

The SEC's EDGAR database is the world's most important and valuable source of information on corporate activities, and includes the full text of a large number of company disclosure reports on company fiances and operations. Access to the full text of these filings will now be free for data users with access to the Internet, including limited email access through such services as MCIMAIL and American Online.

THE 1989 SEC CONTRACT WITH MEAD DATA CENTRAL

In 1989 the SEC entered into a contract with Mead Data Central to manage the EDGAR database and to disseminate the information to the public. Mead, however, has a major conflict of interest, since it sells the EDGAR SEC filings on its high priced LEXIS/NEXIS services, for an estimated cost of $240 to $360 per hour (at normal searching patterns). Originally, Mead was going to be allowed to provide a only very limited wholesale access to the records, at costs ranging from $30,000 to $175,000 per year, for bulk dissemination of the current day's fillings. Under the terms of the original agreement, the Government only received a microfiche copy of the filings, while Mead kept the electronic records in Ohio on computers owned by Mead (but paid for under the SEC's $14 million contract with Mead). The Information Industry Association (IIA) heralded the EDGAR contract as a model for all federal agencies.

LIBRARY GROUPS SOUGHT ONLINE ACCESS TO EDGAR FILING IN 1989

In 1989, several library organizations expressed interest in receiving online access to the EDGAR system through the 1,400 member federal Depository Library Program (DLP). This effort was defeated when the SEC contractor claimed it would costs as much as $18 million per year to provide online searching of EDGAR from the 1,400 libraries.

TAP BEGINS CAMPAIGN FOR PUBLIC ACCESS TO EDGAR IN 1991

In April 1991 TAP provided testimony to the Joint Committee on Printing (JCP), criticizing the Mead/SEC contract, and asked for broader public access to the EDGAR filings. Discussions with the SEC and Congressional staff regarding access issues were expanded. In late 1991 and early 1992 TAP began posting messages on the Internet about the EDGAR contract. A letter asking for broader access to EDGAR was circulated on the Net. The presidents of the American Economic Association, the American Library Association and more than 200 others (economists, journalists, businesses, librarians, public interest groups and other data users) joined in asking for broader access to EDGAR, in a June 17, 1992 letter to the SEC, Representative Edward Markey and Senator Herbert Kohl. A large number of individuals, businesses and other organizations also wrote their own letters to Members of Congress.

Congressman Markey and Dingell responded to the June 17, 1992 letter and other inquires by asking GAO to conduct several reviews of the EDGAR contract. GAO generally defended the Mead contract, often with misleading or incorrect assumptions about the limited nature of public access under the contract.

TAP wrote several articles in computer magazines, newspapers, and academic journals about the EDGAR contract, and continued to meet with SEC and Congressional staff. In the fall of 1992 the American Library Association and the Taxpayer Assets Project began a new dialog with John Lane, the SEC's new Chief Information Officer, about public access to EDGAR.

On January 29, 1993 a meeting was held with Markey's staff which was attended by 27 persons representing a wide range of news media, academic, citizen group, and library researchers who want access to the EDGAR data, including representatives form such organizations as the Washington Post, the LA Times, USA Today, Barons, Associated Press, the Taxpayer Assets Project, the National Library of Money and Politics, the Information Trust, and the American Library Association, among others.

In early 1993 TAP decided to emphasize the importance of the EDGAR database to private information providers, who would benefit if low cost access to EDGAR led to expanded use of their services. A letter drafted by TAP was signed by 10 private information companies, including America Online, and sent to Markey on May 15, 1993. This letter asked that EDGAR data be made available through the Internet, including low-end internet email connections. The May 15 letter appeared to mobile Markey into pressing the SEC for online access to the EDGAR database.

SEC CONTINUED TO OPPOSE PUBLIC ACCESS, BUT MADE SEVERAL CONCESSIONS

SEC staff continued to oppose virtually every effort to expand public access to EDGAR, but the public pressure from mobilized data users was extremely effective. The following is a list of expanded public access proposals made by TAP that were first opposed by the SEC, but finally adopted:

- Require Mead to sell all historical filings received under the EDGAR system

- Require Mead to sell cumulative sets of data, rather that only "current day" filings

- Require Mead to install floppy diskettes in reading room terminals

- Require the SEC to disseminate EDGAR filings on CD-ROM, now expected by early next year

- Require the SEC to provide public online access to the EDGAR database to individuals

NSF SUPPORT AND THE PRO-ACTIVE UNSOLICITED PROPOSAL BY CARL MALAMUD'S INTERNET MULTICASTING SERVICE (IMS) WAS KEY

While the SEC refused to proceed on an online service earlier this year, the public access movement was kept alive by the efforts of Carl Malamud and the NSF. Mead threatened the SEC with lawsuits and other actions if it provided retail type online access to EDGAR. The NSF was willing to buy the data from Mead at the commercial rates, and fund NYU and IMS to disseminate the records on the Internet. While a number of persons were aware of the NSF/NYU/IMS proposal, things were kept very quiet, out of a fear that Mead would find a way to kill the project before it was born. Mead was completely surprised by the NSF action, since they believed they had killed off efforts for online access to EDGAR. By early this week Mead was still in a state of denial.

WHO MADE THIS HAPPEN?

The individuals and groups that made this happen include Congressman Markey, who fulfilled his promise to expand access to EDGAR, Steve Wolfe and the NSF, who funded the project despite immense opposition from Mead Data Central, Carl Malamud, who was tenacious in his efforts to get the database online, several White House staff members who supported the project behind the scenes, the 10 information providers who signed the May 15 letter to Markey, and hundreds of individuals, business and organizations who joined the grass roots lobbying effort to broaden public access to EDGAR. Of course, we would like to pat ourselves on the back as well.

ACTION IS HUGE VICTORY FOR PUBLIC ACCESS

The NSF/NYU/IMS project is a huge victory for public access proponents, not only because of the importance of EDGAR, but also because of the precedent that it sets. If EDGAR can be put on the Internet, any federal database can.

DECISION SETS THE STAGE FOR IMPORTANT MONDAY MEETING WITH DOJ REGARDING JURIS

On Monday TAP and more than one dozen other groups will meet with DOJ regarding the future of the DOJ's vast JURIS database of federal legal information. DOJ officials have recently stated they will kill the JURIS project by January 1, 1994, because West Publishing is asking DOJ to erase more than a decade of federal caselaw provided by DOJ under competitive procurement contracts. TAP and others are asking DOJ to replace West with another contractor, such as Tax Analysts, who are prepared to supply the data to the Government on a non-proprietary basis, with full public access through CD-ROMs and Online services.

jamie love


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