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SEC Launches Y2K Database

But some analysts question the value of the information contained in the reports.

SAN FRANCISCO -- Following through on a long-held promise, the Securities and Exchange Commission launched on its Web site Tuesday a separate and searchable database that houses year 2000 reports from the securities industry.

The database is designed to offer investors a window into the preparedness of the financial services industry by giving them more immediate access to the Y2K reports that certain broker-dealers, investment advisers, mutual funds and transfer agents are required to file with the SEC.

"It's important for investors to know how far along the securities industry is in fixing Y2K," says Dennis Grabow, CEO of

Millennium Investment

, a Chicago-based asset management firm. "This information offers a far more complete picture of compliance."

The securities industry reports are essentially 13-part questionnaires with yes-no and multiple-choice answers. These reports stand in contrast to the

year 2000 disclosures filed by companies in the forward-looking sections of their quarterly reports, which are presented in narrative form.

The questions are formulated to highlight key elements of a firm's Y2K plan, including the scope and costs of a plan, progress in repairing core systems and the status of contingency plans, among other issues. One question, for example, asks: "What percentage of third parties upon which you rely for mission-critical systems have you had contact regarding the third parties' readiness for the year 2000?" Respondents are given six answers to choose from, each with a different percentage range.

But some analysts question the value of the information contained in the reports.

"I don't know what the average investor is going to do with this information," says Kazim Isfahani, a Y2K analyst with the

Giga Information Group

. "The SEC is certainly doing this as a publicity stunt."

Without a context to interpret the information, Isfahani says the reports will be difficult to understand. "This is one more data point that you have," he says. "You need to speak with someone at the organization to get a better sense of what's going on."

To be sure, the reports include contact information, with names and phone numbers, for the people who filled out the forms. The SEC also admits on the project's index page that the database suffers from certain limitations. The SEC, for example, says it hasn't approved the information in the database, and that the information may be incomplete and not up to date.

The searchable database represents the latest effort by the SEC to educate investors about the risks posed by the millennium bug. As part of its ongoing year 2000 program, the SEC last year asked various financial institutions to file reports on their year 2000 readiness. Broker-dealers (Form BD-Y2K) and transfer agents (Form TA-Y2K) were required to file Y2K forms by Aug. 31, 1998. These forms reflected the status of Y2K preparations as of July 31, 1998.

Casting its net wider, the SEC required investment advisers (Form ADV-Y2K ) to file a readiness report by Dec. 7, 1998. Investment advisors, who manage approximately $15 trillion in assets, including more than $5 trillion in mutual funds, according to the SEC, were also required to report on the mutual funds that they advise.

If the regulated firms fail to file these reports, the SEC may take certain enforcement actions against them. Already, the commission has taken action

against nine transfer agents and 37 broker-dealers for failing to file timely Y2K reports.

Expect the database to expand as the year progresses. Broker-dealers and transfer agents must file follow-up forms on April 30, 1999, which should be current as of March 15, 1999. And investment advisers must file another form on June 7, 1999. Nevertheless, Isfahani doubts the value of any and all forms.

"Y2K is not a yes-no type of project," says Isfahani. "There are a lot of gray areas. Trying to capture that in a 13-point questionnaire doesn't do it justice."

Want to talk more about Y2K? Join's Year 2000 reporter Spencer Ante and the Giga Information Group's Y2K analyst Andy Diamondstein for a chat about the millennial bug on AOL on Thursday, Feb. 18 at 5 p.m. EST. (Keyword: Live)