Comments on Electronic Submission of Certain Materials Under the Securities Exchange Act of 1934; Amendments Regarding the FOCUS Report

>> View full comment letter on SEC.gov

Dear Madam Secretary,

As the founder and a principal of one of the only woman-owned broker-dealers in the United States, I appreciate the opportunity to comment on Release No. 34-97208. Tobin & Company Securities LLC (“TOBIN”) is a boutique broker-dealer that has served issuers and sponsors and safeguarded investors with uncompromising diligence and deep regulatory engagement for over twenty years. We support modernization in principle but note that the implementation of this release creates disproportionate burdens for small firms. TOBIN is a small firm, operating under the $250,000 net capital measurement.

Your release encompasses two distinct initiatives:

• EDGAR Next, requiring all filers to migrate to a new (but hardly modern) identity and access management system; and
• Structured Data, requiring broker-dealers to submit audited financial statements in Inline XBRL or similar format.

Although separate in purpose, these initiatives were bundled in this rulemaking and together they demonstrate how modernization efforts, absent proportionality, can impose material burdens on the smallest registrants.

1. EDGAR Next: Implementation Challenges
   TOBIN has already complied with EDGAR Next. My team and I finally completed the process yesterday. We began early and still required six weeks to complete enrollment. Our experience demonstrates the difficulty of compliance for all firms and that the Commission underestimates the heightened difficulty of compliance for small firms. EDGAR Next reflects an aged, flawed system design and lack of clear guidance. Among the obstacles we encountered:
   • File naming restrictions (32-character limit, lowercase only, no spaces) were undisclosed until after failed uploads. Member FINRA/SIPC
   • Adobe PDFs were rejected, forcing us to
     • make more phone calls to the Commission,
     • follow instructions to reformat the Adobe PDFs to “plain” PDFs, which in the end said instructions did not work,
     • email, through the Internet, confidential audit documents to EDGAR staff for manual formatting,
     • await the completion of that process by EDGAR staff,
     • then upload said documents to EDGAR Next, which SEC staff already had in hand!
   • Titles of firm executives were rejected with no explanation,
     • so we had to make more phone calls to the Commission,
     • we were told that only two titles are permitted (neither fit the titles we use – why does the Commission get to tell us what our titles should be?)
     • but these required titles were nowhere disclosed in an approved list of acceptable entries, nor was a drop-down menu provided.
   • Error messages were opaque, failing to identify actual problems,
   • Passwords, CCC numbers, PMAC numbers, passphrases and CIK numbers were rejected, many of these figures determined as inadmissible by the EDGAR system and needing to be updated or replaced – and a user is not permitted to paste these figures into the receiving cells. Each of these failures illustrates poor user-centered design and inadequate testing. For small firms without technical staff, these inefficiencies are paralyzing. With the September 12, 2025 enrollment deadline approaching, the Commission risks a widespread compliance crisis. If TOBIN required six weeks despite early engagement, many firms will fail outright, creating disruption that will not enhance transparency but instead impede compliance.
2. Misleading Guidance on Filing Method
   Commission materials suggested firms could continue filing in the traditional manner until September 12, 2025, while enrolling in EDGAR Next. Our PCAOB auditor shared this interpretation. Yet as a June 30 fiscal year-end filer, with an August 30 deadline to file our audit, TOBIN was informed yesterday, directly by SEC staff only after we mailed in our audit, that we are not permitted to file our audit physically and are required to file electronically through EDGAR immediately. This was not clear from published guidance. Our auditor “misinterpreted” the guidance as well, confirming the instructions were materially unclear. If both a PCAOB auditor and a diligent broker-dealer misread the same guidance, then I don’t think that we “misinterpreted” the information. The problem lies with the Commission’s communication. Ambiguity and lack of detailed clarification exposes small firms to last-minute compliance shocks. (Yesterday was quite a day!) Requirements must be transparent, clear and evenly applied.
3. Structured Data: A Disproportionate Burden
   The structured data mandate, set to apply to small broker-dealers by June 30, 2028, creates a regressive cost burden. TOBIN already pays $10,000–$20,000 annually for PCAOB audits. Structured data conversion will add another $5,000–$10,000 per year—a 50% or greater increase in annual audit compliance costs.Structured data benefits regulators, not small firms nor their investors. Our audited financials are not public instruments for market analysis. It is inappropriate to shift the cost of the Commission’s analytical convenience onto the smallest registrants. If the federal government wants access to data, then the federal government should pay for that, with the tax dollars that small firm members have already provided to you. The requirement to submit our audit as structured data should be remanded for firms under $250,000 net capital, or the SEC should provide free or subsidized services to ensure costs are not borne exclusively by those who do not benefit from them.

Recommendations

We respectfully recommend that the Commission:

1. Acknowledge and prepare for widespread noncompliance with EDGAR Next by September 12, 2025. The enrollment process is lengthy and engagement is low, creating systemic risk.
2. Address usability flaws in EDGAR Next by publishing clear technical standards, offering approved dropdowns for fields like titles, and ensuring acceptance of standard formats such as Adobe PDFs. Error messaging should be explicit and actionable.
3. Clarify filing guidance for non-calendar-year fiscal year-end firms to prevent other registrants from being blindsided as TOBIN was.
4. Remand the structured data deadline for small broker-dealers, or provide subsidized tagging and filing services.
5. Adopt proportionality as a guiding principle in modernization, ensuring costs and complexity are distributed fairly, with the largest registrants and the Commission itself bearing the heaviest burdens.

Conclusion

TOBIN has complied with EDGAR Next, but our experience underscores systemic risks and inequities. The Commission’s modernization efforts risk destabilizing small registrants that already operate under high compliance costs and thin margins.

Small broker-dealers should not be required to subsidize the Commission’s data transparency project. Without adjustment, this rulemaking will accelerate industry consolidation, reduce diversity of ownership, and continue to weaken the role of independent firms.

We appreciate the opportunity to comment and stand ready to support a more functional and modern culture and framework.

Respectfully submitted,

Justine Tobin

Executive Representative and Founder (Two unacceptable titles in your eyes!)

Tobin & Company Securities LLC