Allen's sale of stake in USA points up holes in reporting rules. (Media & Technology).

Look closely at Paul Allen's sale of his stake in USA Networks Inc., and one will find reasons to support the Securities and Exchange Commission's proposed changes in disclosure rules for insider stock trades.

Allen, the billionaire co-founder of Microsoft Corp., began unloading his 9.9 percent stake in the media and Internet company almost nine months ago. He was scheduled to sell the last of those shares last week in a $568.8 million private transaction.

Details about the private sale, covering 19.95 million shares, were available from the SEC almost immediately. But finding out about Allen's past sales of USA Networks, which amounted to 10.19 million shares and took place last August and November, took longer -- sometimes weeks longer.

Disclosures about those transactions were mailed to the SEC on paper forms, in accordance with current practice, rather than being transmitted via computer. Some were sent at a time when mail delivery was interrupted in the wake of anthrax-tainted letters.

The SEC wants to change that practice as part of an overhaul of disclosure standards, prompted by Enron Corp.'s bankruptcy and investors' desire for more current information about companies.

Last month, the agency proposed a rule that would require public companies to disclose stock purchases and sales of more than $100,000 by executives and directors within two business days. They would have to submit reports on Form 8-K, now used to provide updates on corporate events.

Form 8-K is among the types of documents that companies have to submit electronically to the SEC's Electronic Data Gathering, Analysis and Retrieval system, known by the acronym Edgar. Others include Form 13-D, filed by anyone owning more than 5 percent of a company's shares.

Allen, for example, made a 13-D filing on USA Networks in May 1997. The submission resulted from his agreement to sell a 49.6 percent stake in Ticketmaster, an entertainment and sports ticketing service, to the New York-based company for stock.

The recent disclosure of the $568.8 million sale took the form of a third amendment to that filing. The two previous amendments were submitted in July 1997, after the sale of the Ticketmaster stake was completed, and in February, after the sales of his USA Networks shares began.

Those sales were disclosed through a two-step process. First, Allen filed a so-called Form 144, a document covering the proposed sale of restricted shares -- securities that have to be sold to an institution, such as a brokerage firm, or registered with the SEC before an investor can get rid of them.

Once the shares were finally sold to investors, he submitted another filing: Form 4, disclosing any change in the holdings of corporate officers, directors, or 10 percent shareholders. Allen joined the board of USA Networks after selling his Ticketmaster stake, and will give up his seat as a result of the sale.

Allen sold another 8 million shares in November through four transactions with the help of Thomas Weisel Partners LLC, a San Francisco-based investment bank. But Form 144 submissions for these sales weren't received at the SEC until January, more than a month and half after the sales were completed. Two were stamped "U.S. Post Office Delayed."

As a result, there wasn't any way for people to find out about these sales until Dec. 10, when the Form 4 filing arrived for November.

The SEC received the 144 forms for the first sale on Jan. 3, for the last million-share sale on Jan. 7, and for the 5 million-share sale on Jan. 8.