Proposed Collection; Comment Request, 20975-20976 [E8-8183]

Download as PDF Federal Register / Vol. 73, No. 75 / Thursday, April 17, 2008 / Notices Dated: April 10, 2008. Florence E. Harmon, Deputy Secretary. [FR Doc. E8–8182 Filed 4–16–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon written request, Copies available from: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549–0213. sroberts on PROD1PC64 with NOTICES Extension: Rule 15g–9; SEC File No. 270–325 ; OMB Control No. 3235–0385. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et. seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comment on the collection of information described below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Section 15(c)(2) of the Securities Exchange Act of 1934 (15 U.S. C. 78a et seq.) (the ‘‘Exchange Act’’) authorizes the Commission to promulgate rules that prescribe means reasonably designed to prevent fraudulent, deceptive, or manipulative practices in connection with over-the-counter (‘‘OTC’’) securities transactions. Pursuant to this authority, the Commission in 1989 adopted Rule 15a– 6 (the ‘‘Rule’’), which was subsequently redesignated as Rule 15g–9, 17 CFR 240.15g–9. The Rule requires brokerdealers to produce a written suitability determination for, and to obtain a written customer agreement to, certain recommended transactions in lowpriced stocks that are not registered on a national securities exchange or authorized for trading on NASDAQ, and whose issuers do not meet certain minimum financial standards. The Rule is intended to prevent the indiscriminate use by broker-dealers of fraudulent, high pressure telephone sales campaigns to sell low-priced securities to unsophisticated customers. The Commission staff estimates that there are approximately 240 brokerdealers subject to the Rule. The burden of the Rule on a respondent varies widely depending on the frequency with which new customers are solicited. On the average for all respondents, the staff has estimated that respondents process three new customers per week, VerDate Aug<31>2005 17:08 Apr 16, 2008 Jkt 214001 or approximately 156 new customer suitability determinations per year. We also estimate that a broker-dealer would expend approximately one-half hour per new customer in obtaining, reviewing, and processing (including transmitting to the customer) the information required by Rule 15g–9, and each respondent would consequently spend 78 hours annually (156 customers × .5 hours) obtaining the information required in the rule. We determined, based on the estimate of 240 brokerdealer respondents, that the current annual burden of Rule 15g–9 is 18,720 hours (240 respondents × 78 hours). In addition, we estimate that if tangible communications alone are used to transmit the documents required by Rule 15g–9, each customer should take: (1) No more than eight minutes to review, sign and return the suitability determination document; and (2) no more than two minutes to either read and return or produce the customer agreement for a particular recommended transaction in penny stocks, listing the issuer and number of shares of the particular penny stock to be purchased, and send it to the broker-dealer. Thus, the total current customer respondent burden is approximately 10 minutes per response, for an aggregate total of 1,560 minutes for each broker-dealer respondent. Since there are 240 respondents, the annual burden for customer responses is 374,400 minutes (1,560 customer minutes per each of the 240 respondents) or 6,240 hours. In addition, we estimate that, if tangible means of communications alone are used, broker-dealers could incur a recordkeeping burden under Rule 15g–9 of approximately two minutes per response. Since there are approximately 240 broker-dealer respondents and each respondent would have approximately 156 responses annually, respondents would incur an aggregate recordkeeping burden of 74,880 minutes (240 respondents × 156 responses × 2 minutes per response), or 1,248 hours. Accordingly, the aggregate annual hour burden associated with Rule 15g–9 is 26,208 hours (18,720 hours to prepare the suitability statement and agreement + 6,240 hours for customer review + 1,248 recordkeeping hours). We recognize that under the amendments to Rule 15g–9, the burden hours may be slightly reduced if the transaction agreement required under the rule is provided through electronic means such as e-mail from the customer to the broker-dealer (e.g., the customer may take only one minute, instead of the two minutes estimated above, to provide the transaction agreement by e- PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 20975 mail rather than regular mail). If each of the customer respondents estimated above communicates with his or her broker-dealer electronically, the total burden hours on the customers would be reduced from 10 minutes to 9 minutes per response, or an aggregate total of 1,404 minutes per respondent (156 customers × 9 minutes for each customer). Since there are 240 respondents, the annual customer respondent burden, if electronic communications were used by all customers, would be approximately 336,960 minutes (240 respondents × 1,404 minutes per each respondent), or 5,616 hours. We do not believe the hour burden on broker-dealers in obtaining, reviewing, and processing the suitability determination would change through use of electronic communications. In addition, we do not believe that, based on information currently available to us, recordkeeping burdens under Rule 15g– 9 would change where the required documents were sent or received through means of electronic communication. Thus, if all brokerdealer respondents obtain and send the documents required under the rule electronically, the aggregate annual hour burden associated with Rule 15g–9 would be 25,584 hours (18,720 hours to prepare the suitability statement and agreement + 5,616 hours for customer review + 1,248 recordkeeping hours). We cannot estimate how many brokerdealers and customers will choose to communicate electronically. If we assume that 50 percent of respondents would continue to provide documents and obtain signatures in tangible form, and 50 percent would choose to communicate electronically in satisfaction of the requirements of Rule 15g–9, the total aggregate hour burden would be 25,896 burden hours ((26,208 aggregate burden hours for documents and signatures in tangible form × 0.50 of the respondents = 13,104 hours) + (25,584 aggregate burden hours for electronically signed and transmitted documents × 0.50 of the respondents = 12,792 hours)). Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information on respondents; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or E:\FR\FM\17APN1.SGM 17APN1 20976 Federal Register / Vol. 73, No. 75 / Thursday, April 17, 2008 / Notices other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Comments should be directed to: R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 22312; or comments may be sent by e-mail to: PRA_Mailbox@sec.gov. Comments must be submitted within 60 days of this notice. Dated: April 10, 2008. Florence E. Harmon, Deputy Secretary. [FR Doc. E8–8183 Filed 4–16–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Release No. 34–57649; File No. 4–551] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d– 2; Notice of Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among the American Stock Exchange LLC, Boston Stock Exchange, Inc., Chicago Board Options Exchange, Incorporated, International Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc., The NASDAQ Stock Market LLC, NYSE Arca, Inc., and Philadelphia Stock Exchange, Inc. sroberts on PROD1PC64 with NOTICES April 11, 2008. Notice is hereby given that the Securities and Exchange Commission (‘‘Commission’’) has issued an Order, pursuant to Section 17(d) of the Securities Exchange Act of 1934 (‘‘Act’’),1 approving and declaring effective an amendment to the plan for allocating regulatory responsibility (‘‘Plan’’) filed pursuant to Rule 17d–2 of the Act,2 by the American Stock Exchange LLC (‘‘Amex’’), Boston Stock Exchange, Inc. (‘‘BSE’’), Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), International Securities Exchange, LLC (‘‘ISE’’), Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), The NASDAQ Stock Market LLC (‘‘NASDAQ’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), and Philadelphia Stock Exchange, Inc. (‘‘Phlx’’) (collectively, 1 15 2 17 U.S.C. 78q(d). CFR 240.17d–2. VerDate Aug<31>2005 17:08 Apr 16, 2008 Jkt 214001 ‘‘SRO participants’’) concerning options-related market surveillance. I. Introduction Section 19(g)(1) of the Act,3 among other things, requires every selfregulatory organization (‘‘SRO’’) registered as either a national securities exchange or national securities association to examine for, and enforce compliance by, its members and persons associated with its members with the Act, the rules and regulations thereunder, and the SRO’s own rules, unless the SRO is relieved of this responsibility pursuant to Section 17(d) 4 or Section 19(g)(2) 5 of the Act. Without this relief, the statutory obligation of each individual SRO could result in a pattern of multiple examinations of broker-dealers that maintain memberships in more than one SRO (‘‘common members’’). Such regulatory duplication would add unnecessary expenses for common members and their SROs. Section 17(d)(1) of the Act 6 was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.7 With respect to a common member, Section 17(d)(1) authorizes the Commission, by rule or order, to relieve an SRO of the responsibility to receive regulatory reports, to examine for and enforce compliance with applicable statutes, rules, and regulations, or to perform other specified regulatory functions. To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d–1 and Rule 17d–2 under the Act.8 Rule 17d–1 authorizes the Commission to name a single SRO as the designated examining authority (‘‘DEA’’) to examine common members for compliance with the financial responsibility requirements imposed by the Act, or by Commission or SRO rules.9 When an SRO has been named as a common member’s DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d–1 deals only with an SRO’s obligations to enforce member compliance with financial 3 15 U.S.C. 78s(g)(1). U.S.C. 78q(d). 5 15 U.S.C. 78s(g)(2). 6 15 U.S.C. 78q(d)(1). 7 See Securities Act Amendments of 1975, Report of the Senate Committee on Banking, Housing, and Urban Affairs to Accompany S. 249, S. Rep. No. 94– 75, 94th Cong., 1st Session 32 (1975). 8 17 CFR 240.17d–1 and 17 CFR 240.17d–2, respectively. 9 See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). 4 15 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 responsibility requirements. Rule 17d–1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including sales practices and trading activities and practices. To address regulatory duplication in these and other areas, the Commission adopted Rule 17d–2 under the Act.10 Rule 17d–2 permits SROs to propose joint plans for the allocation of regulatory responsibilities with respect to their common members. Under paragraph (c) of Rule 17d–2, the Commission may declare such a plan effective if, after providing for notice and comment, it determines that the plan is necessary or appropriate in the public interest and for the protection of investors, to foster cooperation and coordination among the SROs, to remove impediments to, and foster the development of, a national market system and a national clearance and settlement system, and is in conformity with the factors set forth in Section 17(d) of the Act. Commission approval of a plan filed pursuant to Rule 17d–2 relieves an SRO of those regulatory responsibilities allocated by the plan to another SRO. II. The Plan On December 11, 2007, the Commission approved the Plan for allocating regulatory responsibilities pursuant to Rule 17d–2.11 The Plan is designed to reduce regulatory duplication for common members by allocating regulatory responsibility for certain options-related market surveillance matters among the SRO participants.12 Generally, under the current Plan, an SRO participant will 10 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). 11 See Securities Exchange Act Release No. 56941 (December 11, 2007), 72 FR 71723 (December 18, 2007) (File No. 4–551). 12 The Plan is wholly separate from the multiparty options agreement made pursuant to Rule 17d–2 by and among Amex, BSE, CBOE, ISE, FINRA, New York Stock Exchange LLC, NASDAQ, NYSE Arca, and Phlx involving the allocation of regulatory responsibilities with respect to common members for compliance with common rules relating to the conduct of broker-dealers of accounts for listed options or index warrants entered into on December 1, 2006, and as may be amended from time to time. See Securities Exchange Act Release Nos. 55145 (January 22, 2007), 72 FR 3882 (January 26, 2007) (File No. S7–966), and 55532 (March 26, 2007), 72 FR 15729 (April 2, 2007) (File No. S7– 966). See also Securities Exchange Act Release No. 57481 (March 12, 2008), 73 FR 14507 (March 18, 2008) (File No. S7–966) (approving an amendment which sought, among other things, to add NASDAQ as a participant to such agreement). E:\FR\FM\17APN1.SGM 17APN1

Agencies

[Federal Register Volume 73, Number 75 (Thursday, April 17, 2008)]
[Notices]
[Pages 20975-20976]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-8183]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon written request, Copies available from: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension:
    Rule 15g-9; SEC File No. 270-325 ; OMB Control No. 3235-0385.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et. seq.), the Securities and Exchange 
Commission (``Commission'') is soliciting comment on the collection of 
information described below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget for extension and approval.
    Section 15(c)(2) of the Securities Exchange Act of 1934 (15 U.S. C. 
78a et seq.) (the ``Exchange Act'') authorizes the Commission to 
promulgate rules that prescribe means reasonably designed to prevent 
fraudulent, deceptive, or manipulative practices in connection with 
over-the-counter (``OTC'') securities transactions. Pursuant to this 
authority, the Commission in 1989 adopted Rule 15a-6 (the ``Rule''), 
which was subsequently redesignated as Rule 15g-9, 17 CFR 240.15g-9. 
The Rule requires broker-dealers to produce a written suitability 
determination for, and to obtain a written customer agreement to, 
certain recommended transactions in low-priced stocks that are not 
registered on a national securities exchange or authorized for trading 
on NASDAQ, and whose issuers do not meet certain minimum financial 
standards. The Rule is intended to prevent the indiscriminate use by 
broker-dealers of fraudulent, high pressure telephone sales campaigns 
to sell low-priced securities to unsophisticated customers.
    The Commission staff estimates that there are approximately 240 
broker-dealers subject to the Rule. The burden of the Rule on a 
respondent varies widely depending on the frequency with which new 
customers are solicited. On the average for all respondents, the staff 
has estimated that respondents process three new customers per week, or 
approximately 156 new customer suitability determinations per year. We 
also estimate that a broker-dealer would expend approximately one-half 
hour per new customer in obtaining, reviewing, and processing 
(including transmitting to the customer) the information required by 
Rule 15g-9, and each respondent would consequently spend 78 hours 
annually (156 customers x .5 hours) obtaining the information required 
in the rule. We determined, based on the estimate of 240 broker-dealer 
respondents, that the current annual burden of Rule 15g-9 is 18,720 
hours (240 respondents x 78 hours).
    In addition, we estimate that if tangible communications alone are 
used to transmit the documents required by Rule 15g-9, each customer 
should take: (1) No more than eight minutes to review, sign and return 
the suitability determination document; and (2) no more than two 
minutes to either read and return or produce the customer agreement for 
a particular recommended transaction in penny stocks, listing the 
issuer and number of shares of the particular penny stock to be 
purchased, and send it to the broker-dealer. Thus, the total current 
customer respondent burden is approximately 10 minutes per response, 
for an aggregate total of 1,560 minutes for each broker-dealer 
respondent. Since there are 240 respondents, the annual burden for 
customer responses is 374,400 minutes (1,560 customer minutes per each 
of the 240 respondents) or 6,240 hours.
    In addition, we estimate that, if tangible means of communications 
alone are used, broker-dealers could incur a recordkeeping burden under 
Rule 15g-9 of approximately two minutes per response. Since there are 
approximately 240 broker-dealer respondents and each respondent would 
have approximately 156 responses annually, respondents would incur an 
aggregate recordkeeping burden of 74,880 minutes (240 respondents x 156 
responses x 2 minutes per response), or 1,248 hours. Accordingly, the 
aggregate annual hour burden associated with Rule 15g-9 is 26,208 hours 
(18,720 hours to prepare the suitability statement and agreement + 
6,240 hours for customer review + 1,248 recordkeeping hours).
    We recognize that under the amendments to Rule 15g-9, the burden 
hours may be slightly reduced if the transaction agreement required 
under the rule is provided through electronic means such as e-mail from 
the customer to the broker-dealer (e.g., the customer may take only one 
minute, instead of the two minutes estimated above, to provide the 
transaction agreement by e-mail rather than regular mail). If each of 
the customer respondents estimated above communicates with his or her 
broker-dealer electronically, the total burden hours on the customers 
would be reduced from 10 minutes to 9 minutes per response, or an 
aggregate total of 1,404 minutes per respondent (156 customers x 9 
minutes for each customer). Since there are 240 respondents, the annual 
customer respondent burden, if electronic communications were used by 
all customers, would be approximately 336,960 minutes (240 respondents 
x 1,404 minutes per each respondent), or 5,616 hours. We do not believe 
the hour burden on broker-dealers in obtaining, reviewing, and 
processing the suitability determination would change through use of 
electronic communications. In addition, we do not believe that, based 
on information currently available to us, recordkeeping burdens under 
Rule 15g-9 would change where the required documents were sent or 
received through means of electronic communication. Thus, if all 
broker-dealer respondents obtain and send the documents required under 
the rule electronically, the aggregate annual hour burden associated 
with Rule 15g-9 would be 25,584 hours (18,720 hours to prepare the 
suitability statement and agreement + 5,616 hours for customer review + 
1,248 recordkeeping hours).
    We cannot estimate how many broker-dealers and customers will 
choose to communicate electronically. If we assume that 50 percent of 
respondents would continue to provide documents and obtain signatures 
in tangible form, and 50 percent would choose to communicate 
electronically in satisfaction of the requirements of Rule 15g-9, the 
total aggregate hour burden would be 25,896 burden hours ((26,208 
aggregate burden hours for documents and signatures in tangible form x 
0.50 of the respondents = 13,104 hours) + (25,584 aggregate burden 
hours for electronically signed and transmitted documents x 0.50 of the 
respondents = 12,792 hours)).
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; (b) the accuracy of the agency's estimates of 
the burden of the proposed collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information on 
respondents; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or

[[Page 20976]]

other forms of information technology. Consideration will be given to 
comments and suggestions submitted in writing within 60 days of this 
publication.
    Comments should be directed to: R. Corey Booth, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Shirley 
Martinson, 6432 General Green Way, Alexandria, Virginia 22312; or 
comments may be sent by e-mail to: PRA_Mailbox@sec.gov. Comments must 
be submitted within 60 days of this notice.

    Dated: April 10, 2008.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-8183 Filed 4-16-08; 8:45 am]
BILLING CODE 8010-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.