Submission for OMB Review; Comment Request, 72088 [E8-28111]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 229 (Wednesday, November 26, 2008)]
[Notices]
[Page 72088]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28111]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension:
    Reports of Evidence of Material Violations: SEC File No. 270-
514, OMB Control No. 3235-0572.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995, 44 U.S.C. Sections 3501 through 3520, 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.
    On February 6, 2003, the Commission published final rules, 
effective August 5, 2003, entitled ``Standards of Professional Conduct 
for Attorneys Appearing and Practicing Before the Commission in the 
Representation of an Issuer'' (17 CFR 205.1 through 205.7). The 
information collection embedded in the rules is necessary to implement 
the Standards of Professional Conduct for Attorneys prescribed by the 
rule and required by Section 307 of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7245). The rules impose an ``up-the-ladder'' reporting 
requirement when attorneys appearing and practicing before the 
Commission become aware of evidence of a material violation by the 
issuer or any officer, director, employee, or agent of the issuer. An 
issuer may choose to establish a qualified legal compliance committee 
(``QLCC'') as an alternative procedure for reporting evidence of a 
material violation. In the rare cases in which a majority of a QLCC has 
concluded that an issuer did not act appropriately, the information may 
be communicated to the Commission. The collection of information is, 
therefore, an important component of the Commission's program to 
discourage violations of the federal securities laws and promote 
ethical behavior of attorneys appearing and practicing before the 
Commission.
    The respondents to this collection of information are attorneys who 
appear and practice before the Commission and, in certain cases, the 
issuer, and/or officers, directors and committees of the issuer. We 
believe that, in providing quality representation to issuers, attorneys 
report evidence of violations to others within the issuer, including 
the Chief Legal Officer, the Chief Executive Officer, and, where 
necessary, the directors. In addition, officers and directors 
investigate evidence of violations and report within the issuer the 
results of the investigation and the remedial steps they have taken or 
sanctions they have imposed. Except as discussed below, we therefore 
believe that the reporting requirements imposed by the rule are ``usual 
and customary'' activities that do not add to the burden that would be 
imposed by the collection of information.
    Certain aspects of the collection of information, however, may 
impose a burden. For an issuer to establish a QLCC, the QLCC must adopt 
written procedures for the confidential receipt, retention, and 
consideration of any report of evidence of a material violation. We 
estimate for purposes of the PRA that there are approximately 16,611 
issuers that are subject to the rules.\1\ Of these, we estimate that 
approximately five percent, or 831, have established or will establish 
a QLCC.\2\ Establishing the written procedures required by the rule 
should not impose a significant burden. We assume that an issuer would 
incur a greater burden in the year that it first establishes the 
procedures than in subsequent years, in which the burden would be 
incurred in updating, reviewing, or modifying the procedures. For 
purposes of the PRA, we assume that an issuer would spend 6 hours every 
three-year period on the procedures. This would result in an average 
burden of 2 hours per year. Thus, we estimate for purposes of the PRA 
that the total annual burden imposed by the collection of information 
would be 1,662 hours. Assuming half of the burden hours will be 
incurred by outside counsel at a rate of $400 per hour would result in 
a cost of $332,400.
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    \1\ This estimate is based, in part, on the total number of 
operating companies that filed annual reports on Form 10-K, Form 10-
KSB, Form 20-F, or Form 40-F, during the 2008 fiscal year and an 
estimate of the average number of issuers that may have a 
registration statement filed under the Securities Act pending with 
the Commission at any time (12,939). In addition, we estimate that 
approximately 3,672 investment companies currently file periodic 
reports on Form N-SAR.
    \2\ Indications are that the 2005 estimate of the percentage of 
issuers that would establish QLCCs (10%) was high. Our adjusted 
estimate in the percentage of QLCCs (5%) results in a reduced burden 
estimate as compared to the previously-approved collection.
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study. Compliance with 
the collection of information requirements is in some cases mandatory 
and in some cases voluntary depending on the circumstances. Responses 
to the collection may or may not be kept confidential.
    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 OMB control number.
    Written comments regarding the above information should be directed 
to the following person: (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: 
nfraser@omb.eop.gov; and (ii) Lewis W. Walker, Acting Director/CIO, 
Office of Information Technology, 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 to 
OMB within 30 days of this publication.

    Dated: November 19, 2008.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-28111 Filed 11-25-08; 8:45 am]
BILLING CODE 8011-01-P