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B-231278

files. Closed microfiche files may increase the time needed to obtain materials, but such a policy makes it easier to maintain orderly and secure files so that the materials will be available to all. Moreover, an open files policy may also increase the time needed to obtain materials if files become so disorderly that it is difficult to locate materials. SEC has

established some time goals for filling microfiche requests and appears

to be meeting them.

We observed that the microfiche contractor did have earlier access to
certain time-sensitive documents. Although SEC staff delivered copies of
these documents to the reference room before they delivered copies to a
nearby location for the contractor, the reference room staff processed
the copies to facilitate subsequent shelving and retrieval before releas-
ing them to users of the reference room. Because the processing time in
the reference room could exceed the time it took the messenger to
deliver copies to the contractor, the contractor could receive access first.

We discussed the need to eliminate the contractor's earlier access to
information with SEC reference room officals. They told us they planned
to eliminate nearly all SEC staff processing of certain filings, which they
later said had been accomplished. Regular users decided among them-
selves to give these filings the batch numbers SEC staff had been
assigning to help the users later find and retrieve the information. A
complete discussion of original concerns, remaining concerns, SEC
actions, and our observations are contained in appendix III. Appendix
IV identifies legal issues raised by the former Chairman's July 14, 1988,
letter and gives our opinions.

Agency Comments

As agreed, we did not obtain written agency comments. However, we
discussed our work with SEC officials responsible for the operation of
the reference room. They told us they do not necessarily accept regular
user complaints as reasons for making changes to reference room opera-
tions. They said that operating the reference room to benefit all the pub-
lic may not always serve the profit-making needs of regular users. They
also suggested some technical changes, which are incorporated where
appropriate.

As agreed with the Subcommittee, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the issue date. At that time, we will send copies to the Chairman, Securities

and Exchange Commission, and other interested parties upon request.

If you have any questions regarding this report, please contact me on (202) 275-8678. Major contributors to the report are listed in appendix V.

Sincerely yours,

Craig A. Simmons
Director, Financial Institutions

and Markets Issues

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