How to Legally Reduce SEC Compliance Costs

The U.S. Securities and Exchange Commission (SEC) and its compliance regulations have changed the way storage administrators work today. After the Enron debacle, the SEC altered its rules to require all public companies to store data and business records—including emails—on non-rewritable and non-erasable sources. In order to legally reduce costs, you can use a more affordable method of backing up your data, or you can choose a more drastic measure, such as reducing your number of shareholders to 300 and registering as a private company.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Phone
• Computer with Internet access

Change Your Storage Systems to Reduce Costs

1. Choose storage systems that are more economical than tape backups or hard disks. The SEC allows you to use any kind of non-erasable and non-rewritable media to legally store your electronic data, so you are free to investigate the cheapest legal method.
2. Consider WORM storage systems. This system, which stands for "Write Once, Read Many," allows data to be written once, with no danger of accidental rewriting. Super DLT media, LTO and AIT are examples of WORM media.
3. Investigate conventional hard disk options to back up your data and legally reduce SEC compliance costs even further. WORM conventional disks are the first magnetic disk-based device.
4. Hire a third-party company to handle your electronic data storage and archiving if feasible. This reduces the burden on your employees and can increase productivity, thus lessening the financial impact of the archiving company's fee.

Deregister Your Shares and Become a Private Company

5. Collect a group of investors who are willing to make an offer for the majority of your company's voting shares. These can be current shareholders or new investors. To be in compliance with SEC regulations, the final number of stockholders in your private company must be under 300.
6. Collect shareholders' votes. When approved, your group of investors can buy out the current shareholders.
7. Send a letter of transmittal on behalf of the investors who are purchasing the stock. This is how current stockholders will officially transmit their shares to the new owners.
8. Collect at least 90 percent of the company's shares. This entitles the buyer to a short-form merger.
9. File form SEC 15 to officially become a private company.

Tips & Warnings

• Going private means you won't have to abide by any of the SEC's rules for compliance. By not appearing on a public stock exchange, however, your company may lose publicity and public interest.
• Failure to archive your electronic data properly can result in fines as high as several million dollars.