http://www.amcity.com/austin/stories/1999/04/05/focus2.html?h=y2k

relevant quote:

"How did investment firms fare in meeting the Dec. 7 deadline?

According to Brooks Slaughter, president of Slaughter & Associates, not too well.

"I saw some figures for the filing back in December ... which was the first filing. [The SEC] had a huge number of advisors who didn't file the form. I won't quote you a percentage because I don't remember exactly what it was. It was substantial. Maybe even fifty percent."

Slaughter says he thinks there are several reasons the numbers were so high.

"It was a very quickly passed requirement by Congress and the SEC and I quite frankly am not sure that a lot of [advisors] knew about it to actually file," he says. "The first time I heard about it was the [SEC] division up in Ft. Worth. They did a survey on the phone just about opinions on Y2K ... The guy on the phone said `hey you might want to be on the lookout ... this mailout for this Y2K form will be going out in a week. So I was looking for it."

Load heavy for small shops Slaughter thought another reason might be smaller advisors being overwhelmed by the amount of paperwork they'd need to complete.

"There are a lot of small advisors and there's no distinction on [the SEC form for them]. A one man advisor shop fills out the same form as Paine Webber, Schwab, Merrill Lynch," he says.

"So it was a huge ominous task for the one and two person shop," Slaughter says. "They might have just said `Oh my god, I don't know what to do' and stuck it in a pile."

Allen Campbell of Y2K Resources shares a similar opinion about small advisors being overwhelmed.

"I am aware that a number of the smaller firms are complaining about the treatment from the SEC," Campbell says. They're saying `well those big guys, they have all the money to address all of this and [the SEC is] being discriminatory against us'."

"I guess my inclination is to think that if they're complaining about this, there might be some reason to worry that they're not going to be ready," Campbell says. "

-- Arlin H. Adams (ahadams@ix.netcom.com), April 05, 1999

Answers

What will the SEC's response be if they don't file?

Don't assure compliance? IF not compliant, won't the SEC "have" to cut them off from trading - if so, where do their clients go? Seems like even a few percent "non-compliant" (5-15% total volume) would over a few days - screw up the big traders very quickly. Then everybody would have to return to "paper-trading"???

How? It would appear to be: No compliant "form" = no trading after cut-off date.

If so, then what happens to the small-non-compliant shops, who "fake" the audits or fake their form? How/when do they get caught? What happens - after the fact of non-compliant trading?

-- Robert A Cook, PE (Kennesaw, GA) (Cook.R@csaatl.com), April 06, 1999.