Submission for OMB Review; Comment Request, 36360-36361 [E8-14404]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 124 (Thursday, June 26, 2008)]
[Notices]
[Pages 36360-36361]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-14404]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

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

Extension:
    Rule 15g-2, SEC File No. 270-381, OMB Control No. 3235-0434.

    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'') has submitted to the Office of Management and Budget a 
request for extension of the previously approved collection of 
information discussed below.
    The ``Penny Stock Disclosure Rules'' (Rule 15g-2, 17 CFR 240.15g-2) 
require broker-dealers to provide their customers with a risk 
disclosure document, as set forth in Schedule 15G, prior to their first 
non-exempt transaction in a ``penny stock.'' As amended, the rule 
requires broker-dealers to obtain written acknowledgement from the 
customer that he or she has received the required risk disclosure 
document. The amended rule also requires broker-dealers to maintain a 
copy of the customer's written acknowledgement for at least three years 
following the date on which the risk disclosure document was provided 
to the customer, the first two years in an accessible place.
    The risk disclosure documents are for the benefit of the customers, 
to assure that they are aware of the risks of trading in ``penny 
stocks'' before they enter into a transaction. The risk disclosure 
documents are maintained by

[[Page 36361]]

the broker-dealers and may be reviewed during the course of an 
examination by the Commission.
    The Commission estimates that there are approximately 240 broker-
dealers that could potentially be subject to current Rule 15g-2, and 
that each one of these firms processes an average of three new 
customers for penny stocks per week. Thus, each respondent processes 
approximately 156 penny stock disclosure documents per year. If 
communications in tangible form alone are used to satisfy the 
requirements of Rule 15g-2, then (a) the copying and mailing of the 
penny stock disclosure document takes no more than two minutes per 
customer, and (b) each customer takes no more than eight minutes to 
review, sign and return the penny stock disclosure document. Thus, the 
total existing respondent burden is approximately 10 minutes per 
response, or an aggregate total of 1,560 minutes per respondent. Since 
there are 240 respondents, the current annual burden is 374,400 minutes 
(1,560 minutes per each of the 240 respondents) or 6,240 hours. In 
addition, broker-dealers incur a recordkeeping burden of approximately 
two minutes per response. Since there are approximately 156 responses 
for each respondent, the respondents incur an aggregate recordkeeping 
burden of 74,880 minutes (240 respondents x 156 responses for each x 2 
minutes per response) or 1,248 hours, under Rule 15g-2. Accordingly, 
the current aggregate annual hour burden associated with Rule 15g-2 
(that is, assuming that all respondents provide tangible copies of the 
required documents) is approximately 7,488 hours (6,240 response hours 
+ 1,248 recordkeeping hours).
    The burden hours associated with Rule 15g-2 may be slightly reduced 
when the penny stock disclosure document required under the rule is 
provided through electronic means such as e-mail from the broker-dealer 
(e.g., the broker-dealer respondent may take only one minute, instead 
of the two minutes estimated above, to provide the penny stock 
disclosure document by e-mail to its customer) and return e-mail from 
the customer (the customer may take only seven minutes, to review, 
electronically sign and electronically return the penny stock 
disclosure document). In this regard, if each of the customer 
respondents estimated above communicates with his or her broker-dealer 
electronically, the total ongoing respondent burden is approximately 8 
minutes per response, or an aggregate total of 1,248 minutes (156 
customers x 8 minutes per respondent). Assuming 240 respondents, the 
annual burden, if electronic communications were used by all customers, 
is 299,520 minutes (1,248 minutes per each of the 240 respondents) or 
4,992 hours. Under Rule 15g-2, the recordkeeping burden is 1,248 hours. 
Thus, if all broker-dealer respondents obtain and send the documents 
required under the rules electronically, the aggregate annual hour 
burden associated with Rule 15g-2 is 6,240 (1,248 hours + 4,992 hours).
    In addition, if the penny stock customer requests a paper copy of 
the information on the Commission's Web site regarding microcap 
securities, including penny stocks, from his or her broker-dealer, the 
printing and mailing of the document containing this information takes 
no more than two minutes per customer. Because many investors have 
access to the Commission's Web site via computers located in their 
homes, or in easily accessible public places such as libraries, then, 
at most, a quarter of customers who are required to receive the Rule 
15g-2 disclosure document request that their broker-dealer provide them 
with the additional microcap and penny stock information posted on the 
Commission's Web site. Thus, each broker-dealer respondent processes 
approximately 39 requests for paper copies of this information per year 
or an aggregate total of 78 minutes per respondent (2 minutes per 
customer x 39 requests per respondent). Since there are 240 
respondents, the estimated annual burden is 18,720 minutes (78 minutes 
per each of the 240 respondents) or 312 hours.
    We have no way of knowing how many broker-dealers and customers 
will choose to communicate electronically. Assuming that 50 percent of 
respondents continue to provide documents and obtain signatures in 
tangible form and 50 percent choose to communicate electronically to 
satisfy the requirements of Rule 15g-2, the total aggregate burden 
hours is 7,176 ((aggregate burden hours for documents and signatures in 
tangible form x 0.50 of the respondents = 3,744 hours) + (aggregate 
burden hours for electronically signed and transmitted documents x 0.50 
of the respondents = 3,120 hours) + (312 burden hours for those 
customers making requests for a copy of the information on the 
Commission's Web site)).
    The Commission does not maintain the risk disclosure document. 
Instead, it must be retained by the broker-dealer for at least three 
years following the date on which the risk disclosure document was 
provided to the customer, the first two years in an accessible place. 
The collection of information required by the rule is mandatory. The 
risk disclosure document is otherwise governed by the internal policies 
of the broker-dealer regarding confidentiality, etc.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid control number.
    Comments should be directed to (i) Desk Officer for the Securities 
and Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503 or by sending an e-mail to: Alexander_
T._Hunt@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o Shirley 
Martinson, 6432 General Green Way, Alexandria, VA 22312 or send an e-
mail to: PRA_Mailbox@sec.gov. Comments must be submitted within 30 
days of this notice.

    Dated: June 16, 2008.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-14404 Filed 6-25-08; 8:45 am]
BILLING CODE 8010-01-P