Public Company Accounting Oversight Board; Notice of Filing of and Immediate Effectiveness of Proposed Bylaw and Rule Amendments To Provide That the Board's Appointment and Removal of Hearing Officers Are Subject to Commission Approval, 4594-4597 [2019-02450]

Download as PDF 4594 Federal Register / Vol. 84, No. 32 / Friday, February 15, 2019 / Notices Moreover, prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. The Information Bulletin will also discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. In addition, the Information Bulletin will reference that the Trust is subject to various fees and expenses described in the Registration Statement. The Information Bulletin will also disclose the trading hours of the Shares and that the NAV for the Shares will be calculated after 4:00 p.m. E.T. each trading day. The Information Bulletin will disclose that information about the Shares will be publicly available on the Trust’s website. Trading in Shares of the Trust will be halted if the circuit breaker parameters in NYSE Arca Rule 7.12–E have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of a new type of exchange-traded product based on the price of bitcoin that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. khammond on DSKBBV9HB2PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of a new type of Commodity-Based Trust Share based on the price of bitcoin that will enhance competition among market participants, to the benefit of investors and the marketplace. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. VerDate Sep<11>2014 19:41 Feb 14, 2019 Jkt 247001 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2019–01, and should be submitted on or before March 8, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–02389 Filed 2–14–19; 8:45 am] Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85090; File No. PCAOB– 2019–01] • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2019–01 on the subject line. Public Company Accounting Oversight Board; Notice of Filing of and Immediate Effectiveness of Proposed Bylaw and Rule Amendments To Provide That the Board’s Appointment and Removal of Hearing Officers Are Subject to Commission Approval Paper Comments February 11, 2019. • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2019–01. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (the ‘‘Act’’), 15 U.S.C. 7217(b), notice is hereby given that on January 29, 2019, the Public Company Accounting Oversight Board (the ‘‘Board’’ or the ‘‘PCAOB’’) filed with the Securities and Exchange Commission (the ‘‘SEC’’ or the ‘‘Commission’’) the proposed amendments described in items I and II below, which items have been prepared by the Board. The Commission is publishing this notice to solicit comments on the proposed amendments from interested persons. PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 I. Board’s Statement of the Terms of Substance of the Proposed Amendments On December 20, 2018, the Board adopted amendments to its bylaws and rules (collectively, the ‘‘proposed amendments’’) to provide that the PCAOB’s appointment and removal of PCAOB hearing officers are subject to Commission approval and to make related clarifying and conforming changes to the PCAOB’s rules. Specifically, the Board is amending Article VI of its bylaws and PCAOB Rules 1001(h)(i), 5200, and 5402. The proposed amendments are concerned 18 17 E:\FR\FM\15FEN1.SGM CFR 200.30–3(a)(12). 15FEN1 Federal Register / Vol. 84, No. 32 / Friday, February 15, 2019 / Notices solely with the administration of the PCAOB in that they relate to the employment relationship between the Board and its hearing officers, its interaction with the Commission in the Commission’s performance of oversight of the PCAOB, and the clarification of the delegations of authority by the Board to PCAOB hearing officers. The text of the proposed amendments appears in the Board’s SEC Form 19b– 4 filing and is available on the Board’s website at https://pcaobus.org/ Rulemaking/Pages/Docket045 and at the Commission’s Public Reference Room. II. Board’s Statement of the Purpose of, and Statutory Basis for, the Proposed Amendments In its filing with the Commission, the Board included statements concerning the purpose of, and basis for, the proposed amendments and stated that the amendments are concerned solely with the administration of the PCAOB. The text of these statements may be examined at the places specified in Item IV below. The Board has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Board’s Statement of the Purpose of, and Statutory Basis for, the Proposed Amendments 1. Purpose khammond on DSKBBV9HB2PROD with NOTICES The Board’s duties under the Act include acting on registration applications of public accounting firms that prepare audit reports for issuers, brokers, or dealers,1 and conducting disciplinary proceedings concerning, and imposing appropriate sanctions where justified upon, registered public accounting firms and their associated persons.2 In carrying out these duties, the Board may direct that a PCAOB hearing officer preside over a disciplinary or other proceeding.3 The Board’s authority to do so derives from Section 101(f)(4) of the Act, permitting the Board, subject to Commission oversight under Section 107 of the Act, ‘‘to appoint such employees, accountants, attorneys, and other agents as may be necessary or appropriate, and to determine their qualifications, define 1 The PCAOB has oversight authority with respect to audits of brokers and dealers that are registered with the SEC. See Sections 110(3) and (4) of the Act, 15 U.S.C. 7220(3) and (4). 2 See, e.g., Sections 101(c)(1) & (4), 102(c), 105(a) & (c)(1)–(3) of the Act, 15 U.S.C. 7211(c)(1) & (4), 7212(c), 7215(a) & (c)(1)–(3). 3 See, e.g., Sections 101(f)(4) and 101(g)(2) of the Act, 15 U.S.C. 7211(f)(4) & (g)(2); PCAOB Rules 5200 (Commencement of Disciplinary Proceedings), 5500 (Commencement of Hearing on Disapproval of a Registration Application). VerDate Sep<11>2014 19:41 Feb 14, 2019 Jkt 247001 their duties, and fix their salaries or other compensation.’’ Section 101(g)(2) of the Act further authorizes that ‘‘[t]he rules of the Board shall, subject to the approval of the Commission . . . permit, as the Board determines necessary and appropriate, delegation by the Board of any of its functions to an . . . employee of the Board, . . . including functions with respect to hearing, determining, ordering, certifying, reporting, or otherwise acting as to any matter.’’ In 2004, the Commission approved the Board’s proposed rules relating to investigations and adjudications, authorizing creation of the PCAOB’s hearing officer position.4 On June 21, 2018, the U.S. Supreme Court held in Lucia v. SEC that SEC Administrative Law Judges (ALJs) are inferior officers under the Appointments Clause of the U.S. Constitution and that accordingly SEC ALJs are required to be appointed by ‘‘the President, a court of law, or a head of department,’’ such as the Commission.5 Since the Lucia decision, the Commission has taken various actions, including issuance of an order reiterating its November 30, 2017 approval of the prior appointments of its ALJs by its staff as the Commission’s own under the Constitution.6 In light of the Lucia litigation, other federal government agencies have taken similar measures as to their ALJs or like officials, also out of an abundance of caution and for avoidance of doubt.7 The Lucia case did not involve a challenge to PCAOB hearing officers, 4 See Order Approving Proposed Rules Relating to Investigations and Adjudications, SEC Rel. No. 34– 49704, 2004 WL 1439833 (May 14, 2004). 5 138 S. Ct. 2044, 2050–51 (2018). 6 See In re Pending Administrative Proceedings, SEC Rel. No. 34–83907, 2018 WL 4003609, *1 (Aug. 22, 2018). 7 See, e.g., USITC, The Appointment of the Commission’s Administrative Law Judges for Section 337 Investigations, 83 FR 45,678–01 (Sept. 10, 2018); FMSHRC, Ratification Notice (Apr. 3, 2018), available at www.fmshrc.gov/about/news/ commission-ratification-notice; FDIC, Resolution of Board of Directors (July 19, 2018), available at https://www.fdic.gov/news/board/2018-07-19085152.pdf; CFTC, Ratification and Reconsideration Order, In re Pending Administrative Proceedings, 2018 WL 1966116 (Apr. 6, 2018); Letter from Sec’y R. Alexander Acosta, Dep’t of Labor, to Hon. Paul R. Almanza, Admin. Law Judge, Dep’t of Labor (Dec. 21, 2017), available at https:// www.oalj.dol.gov/PUBLIC/FOIA/Frequently_ Requested_Records/ALJ_Appointments/Secretarys_ Ratification_of_ALJ_Appointments_12_21_ 2017.pdf; FTC, P130500 Federal Trade Commission Minute: Ratification of Appointment of Administrative Law Judge and Chief Administrative Law Judge (Sept. 11, 2015), attached as Ex. A to FTC, Order Denying Respondent LabMD, Inc.’s Motion to Dismiss, In re LabMD Inc., No. 9357 (Sept. 14, 2015), available at https://www.ftc.gov/ system/files/documents/cases/ 150914labmdmotion.pdf. PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 4595 only to SEC ALJs. Nor has any court, the Commission, or the Board adjudicated whether a PCAOB hearing officer is, like an SEC ALJ, an inferior officer under the Appointments Clause.8 Indeed, there are a number of differences between the position of an SEC ALJ and the position of a PCAOB hearing officer.9 Nevertheless, out of an abundance of caution and to eliminate any uncertainty about the status of PCAOB hearing officers that might distract from the PCAOB’s mission, including its important registration and disciplinary functions, the Board is adopting certain amendments to its bylaws and rules. These amendments modify the PCAOB’s processes to appoint and remove its hearing officers to provide that such appointments and removals shall be subject to the approval of the Commission, a head of department under the Appointments Clause. The amendments to Article VI of the Board’s bylaws and PCAOB Rule 1001(h)(i), the language of which rule is changed to cross-reference the bylaw amendment, specify that the PCAOB’s appointment and removal of any PCAOB hearing officer are subject to Commission approval. These changes are consistent with the Commission’s broad authority to oversee the Board under Section 107 of the Act, see Sections 101(c) & (f) and 107 of the Act, 15 U.S.C. 7211(c) & (f), 7217, and the Commission’s authority to ‘‘appoint . . . officers, attorneys, economists, examiners, and other employees’’ under Section 4(b) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’), 15 U.S.C. 78d(b). As contemplated by these amendments, when the PCAOB’s Governing Board, as defined by the bylaws,10 has reached a decision on the appointment or removal of any PCAOB hearing officer, that decision shall be 8 An attempt was made to challenge the constitutionality of a PCAOB hearing officer’s appointment in Kabani v. SEC, but the court held that the argument had not been timely raised and was forfeited. 733 F. App’x 918, 2018 WL 3828524, *1 (9th Cir. Aug. 13, 2018). 9 For example, an SEC ALJ may administer oaths and affirmations; issue, revoke, quash, or modify subpoenas; issue protective orders; and punish contemptuous conduct; a PCAOB hearing officer does not have that authority. Compare 17 CFR 200.14(a)(1) & (2), 200.111(b), 180(a), 232(e), 322 with PCAOB Rules 5103, 5105, 5200(b)(1), 5424. 10 See Articles IV and VI of the PCAOB’s bylaws (stating that ‘‘[t]he Governing Board shall consist of those persons appointed thereto by the Securities and Exchange Commission, pursuant to Section 101 of the Act’’ and that ‘‘[t]he Chairman of the Governing Board . . . shall also be the President and Chief Executive Officer of the Corporation’’). In Free Enterprise Fund v. PCAOB, 561 U.S. 477, 510 (2010), the Supreme Court held that PCAOB Governing Board members are inferior officers under the Appointments Clause. E:\FR\FM\15FEN1.SGM 15FEN1 4596 Federal Register / Vol. 84, No. 32 / Friday, February 15, 2019 / Notices khammond on DSKBBV9HB2PROD with NOTICES submitted to the Commission for consideration. The proposed appointment or removal of a hearing officer by the PCAOB cannot be effectuated until Commission approval has been given. The Commission’s approval of a PCAOB hearing officer’s appointment will result in the hearing officer being appointed in the manner of an inferior officer for purposes of the Appointments Clause.11 The Board is also adopting certain clarifying and conforming amendments to its adjudications rules in light of the rule changes discussed above. Specifically, the Board is adding a new subsection to Rule 5200 to summarize the framework within which the hearing officer functions under the Act and the Board’s rules. That new subsection explains that all proceedings shall be presided over by the Board, which is the entity empowered to act on registration applications and to conduct disciplinary proceedings.12 Alternatively, the Board may order that the proceedings be conducted in the first instance by a hearing officer to whom the Board has, under certain conditions, delegated adjudicatory responsibilities.13 The new subsection makes even more explicit the manner in which current PCAOB rules, such as Rules 5200(b)(10), 5201(d)(2), 5204(b), and 5445, situate the hearing officer within PCAOB adjudication processes.14 Additionally, the amendments make clarifying and conforming edits to the heading of current PCAOB Rule 5200(b) and to the heading and text of PCAOB Rule 5402(b). Specifically, the words ‘‘appointment’’ and ‘‘appoint’’ in these current rules are replaced with ‘‘assignment’’ and ‘‘assign,’’ and current Rule 5200(b) is renumbered Rule 5200(c) and cross-referenced to new Rule 5200(b). These changes avoid any confusion between the actions of the Board and the Commission in appointing, and approving the appointment of, a hearing officer, and the PCAOB Secretary’s ministerial act of 11 See Free Enterprise Fund, 561 U.S. at 512 n.13 (noting examples of precedents in which ‘‘[w]e have previously found that the department head’s approval [of the appointment of personnel] satisfies the Appointments Clause’’). 12 See, e.g., Sections 101(c)(1) & (4) of the Act, 15 U.S.C. 7211(c)(1) & (4) (‘‘the Board shall . . . register public accounting firms . . . [and] conduct . . . disciplinary proceedings . . .’’) (emphasis added). 13 See Section 101(g)(2) of the Act, 15 U.S.C. 7211(g)(2) (permitting, under specified conditions, ‘‘delegation by the Board of any of its functions to an . . . employee of the Board . . . , including functions with respect to hearing, determining, ordering, certifying, reporting, or otherwise acting as to any matter’’). 14 The provision is also analogous to SEC Rule of Practice 110, 17 CFR 201.110. VerDate Sep<11>2014 19:41 Feb 14, 2019 Jkt 247001 assigning a specific hearing officer to a specific proceeding pursuant to a Board order. The above-described, targeted amendments seek to dispel any legal uncertainty arising from Lucia about the PCAOB hearing officer, who, as noted, may be tasked with presiding over a disciplinary or other proceeding. This will facilitate and make more efficient the Board’s performance of its duties under the Act to take ‘‘[a]ction on [a]pplications’’ for the ‘‘regist[ration] [of] public accounting firms that prepare audit reports for issuers, brokers, and dealers’’; to ‘‘conduct . . . disciplinary proceedings concerning, and impose appropriate sanctions where justified upon, registered public accounting firms and associated persons of such firms’’; and to ‘‘enforce compliance with th[e] Act, the rules of the Board, professional standards, and the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto, by registered public accounting firms and associated persons thereof.’’ 15 These functions are part of the Board’s responsibility ‘‘to oversee the audit of companies that are subject to the securities laws, and related matters, in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.’’ 16 Moreover, additional benefits will flow from the amendments because the Appointments Clause serves an important public purpose. The Supreme Court has described the Clause’s requirements as ‘‘among the significant structural safeguards of the constitutional scheme,’’ ‘‘designed to preserve political accountability relative to important government assignments.’’ 17 The Board has chosen to remedy the uncertainty caused by Lucia by conforming the appointment and removal of its hearing officers to those requirements. Thus, the Appointments Clause’s benefits and protections are explicitly extended to respondents in PCAOB proceedings, and to the public more broadly. 2. Statutory Basis The statutory basis for the proposed amendments is Title I of the Act. Specifically, Section 101(f)(2) of the Act empowers the Board, subject to Commission oversight under Section 107 of the Act, ‘‘to conduct its 15 See, e.g., Sections 101(c)(1), (4) & (6), 102(c), 105(a) & (c)(1)–(3) of the Act, 15 U.S.C. 7211(c)(1), (4) & (6), 7212(c), 7215(a) & (c)(1)–(3). 16 See Section 101(a) of the Act, 15 U.S.C. 7211(a). 17 Edmond v. United States, 520 U.S. 651, 659, 663 (1997). PO 00000 Frm 00165 Fmt 4703 Sfmt 4703 operations and maintain offices, and to exercise all other rights and powers authorized by this Act.’’ Section 101(f)(4), as discussed, empowers the Board, subject to Commission oversight under Section 107 of the Act, to appoint personnel. Section 101(g)(1) directs the Board, ‘‘subject to the approval of the Commission . . . [to] provide for the operation and administration of the Board, the exercise of its authority, and the performance of its responsibilities under th[e] Act.’’ And Section 101(g)(2), as discussed, permits the Board, ‘‘subject to the approval of the Commission,’’ to delegate its hearing functions within the PCAOB. Furthermore, the amendments directly relate to statutory duties of the Board and purposes for its establishment that are discussed above. B. Board’s Statement on Burden on Competition Not applicable. The proposed amendments are concerned solely with the administration of the PCAOB, as discussed in Item I above. C. Board’s Statement on Comments on the Proposed Amendments Received From Members, Participants or Others Written comments were neither solicited nor received. The proposed amendments are concerned solely with the administration of the PCAOB, as discussed in Item I above. III. Date of Effectiveness of the Proposed Amendments and Timing for Commission The foregoing proposed amendments have become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934 18 and paragraph (f)(3) of Rule 19b–4 thereunder.19 At any time within 60 days of the filing of the proposed amendments, the Commission summarily may temporarily suspend such amendments if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed amendments are consistent with the requirements of Title I of the Act. Comments may be submitted by any of the following methods: 18 15 19 17 E:\FR\FM\15FEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(3). 15FEN1 4597 Federal Register / Vol. 84, No. 32 / Friday, February 15, 2019 / Notices Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/pcaob.shtml); or • Send an email to rule-comments@ sec.gov. Please include PCAOB–2019– 01 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to PCAOB–2019–01. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/pcaob.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed amendments that are filed with the Commission, and all written communications relating to the proposed amendments between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549–1090, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the PCAOB. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to PCAOB– 2019–01 and should be submitted on or before March 8, 2019. For the Commission, by the Office of the Chief Accountant, pursuant to delegated authority.20 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–02450 Filed 2–14–19; 8:45 am] BILLING CODE 8011–01–P SOCIAL SECURITY ADMINISTRATION [Docket No SSA–2019–0007] Agency Information Collection Activities: Proposed Request and Comment Request The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104–13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes revisions of OMB-approved information collections. SSA is soliciting comments on the accuracy of the agency’s burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information Number of respondents Modality of completion khammond on DSKBBV9HB2PROD with NOTICES SSA–7163A–F4 ............................................................................................... 2. Information About Joint Checking/ Savings Account—20 CFR 416.1201 and 416.1208—0960–0461. SSA considers a person’s resources when evaluating eligibility for Supplemental Security Income (SSI). Generally, we consider funds in checking and savings accounts as resources owned by the individuals whose names appear on the account. However, individuals applying for SSI may rebut this assumption of ownership in a joint account by submitting certain 20 17 collection(s) to the OMB Desk Officer and SSA Reports Clearance Officer at the following addresses or fax numbers. (OMB) Office of Management and Budget, Attn: Desk Officer for SSA, Fax: 202–395–6974, Email address: OIRA_Submission@omb.eop.gov. (SSA) Social Security Administration, OLCA, Attn: Reports Clearance Director, 3100 West High Rise, 6401 Security Blvd., Baltimore, MD 21235, Fax: 410–966–2830, Email address: OR.Reports.Clearance@ssa.gov. Or you may submit your comments online through www.regulations.gov, referencing Docket ID Number [SSA– 2019–0007]. I. The information collections below are pending at SSA. SSA will submit them to OMB within 60 days from the date of this notice. To be sure we consider your comments, we must receive them no later than April 16, 2019. Individuals can obtain copies of the collection instruments by writing to the above email address. 1. Supplemental Statement Regarding Farming Activities of Person Living Outside the U.S.A.—0960–0103. When a beneficiary or claimant reports farm work from outside the United States, SSA documents this work on Form SSA–7163A–F4. Specifically, SSA uses the form to determine if we should apply foreign work deductions to the recipient’s Title II benefits. We collect the information either annually or every other year, depending on the respondent’s country of residence. Respondents are Social Security recipients engaged in farming activities outside the United States. Type of Request: Revision of an OMBapproved information collection. Frequency of response 1,000 evidence to establish the funds do not belong to them. SSA uses Form SSA– 2574 to collect information from SSI applicants and recipients who object to the assumption that they own all or part of the funds in a joint checking or savings account bearing their names. SSA collects information about the account from both the SSI applicant or recipient and the other account holder(s). After receiving the completed form, SSA determines if we should 1 19:41 Feb 14, 2019 Jkt 247001 PO 00000 Frm 00166 Fmt 4703 Sfmt 4703 60 Estimated total annual burden (hours) 1,000 consider the account to be a resource for the SSI applicant and recipient. The respondents are applicants and recipients of SSI, and individuals who list themselves as joint owners of financial accounts with SSI applicants or recipients. Type of Request: Revision of an OMBapproved information collection. CFR 200.30–11(b)(2). VerDate Sep<11>2014 Average burden per response (minutes) E:\FR\FM\15FEN1.SGM 15FEN1

Agencies

[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Notices]
[Pages 4594-4597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02450]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85090; File No. PCAOB-2019-01]


Public Company Accounting Oversight Board; Notice of Filing of 
and Immediate Effectiveness of Proposed Bylaw and Rule Amendments To 
Provide That the Board's Appointment and Removal of Hearing Officers 
Are Subject to Commission Approval

February 11, 2019.
    Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (the 
``Act''), 15 U.S.C. 7217(b), notice is hereby given that on January 29, 
2019, the Public Company Accounting Oversight Board (the ``Board'' or 
the ``PCAOB'') filed with the Securities and Exchange Commission (the 
``SEC'' or the ``Commission'') the proposed amendments described in 
items I and II below, which items have been prepared by the Board. The 
Commission is publishing this notice to solicit comments on the 
proposed amendments from interested persons.

I. Board's Statement of the Terms of Substance of the Proposed 
Amendments

    On December 20, 2018, the Board adopted amendments to its bylaws 
and rules (collectively, the ``proposed amendments'') to provide that 
the PCAOB's appointment and removal of PCAOB hearing officers are 
subject to Commission approval and to make related clarifying and 
conforming changes to the PCAOB's rules. Specifically, the Board is 
amending Article VI of its bylaws and PCAOB Rules 1001(h)(i), 5200, and 
5402. The proposed amendments are concerned

[[Page 4595]]

solely with the administration of the PCAOB in that they relate to the 
employment relationship between the Board and its hearing officers, its 
interaction with the Commission in the Commission's performance of 
oversight of the PCAOB, and the clarification of the delegations of 
authority by the Board to PCAOB hearing officers.
    The text of the proposed amendments appears in the Board's SEC Form 
19b-4 filing and is available on the Board's website at https://pcaobus.org/Rulemaking/Pages/Docket045 and at the Commission's Public 
Reference Room.

II. Board's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Amendments

    In its filing with the Commission, the Board included statements 
concerning the purpose of, and basis for, the proposed amendments and 
stated that the amendments are concerned solely with the administration 
of the PCAOB. The text of these statements may be examined at the 
places specified in Item IV below. The Board has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

A. Board's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Amendments

1. Purpose
    The Board's duties under the Act include acting on registration 
applications of public accounting firms that prepare audit reports for 
issuers, brokers, or dealers,\1\ and conducting disciplinary 
proceedings concerning, and imposing appropriate sanctions where 
justified upon, registered public accounting firms and their associated 
persons.\2\ In carrying out these duties, the Board may direct that a 
PCAOB hearing officer preside over a disciplinary or other 
proceeding.\3\ The Board's authority to do so derives from Section 
101(f)(4) of the Act, permitting the Board, subject to Commission 
oversight under Section 107 of the Act, ``to appoint such employees, 
accountants, attorneys, and other agents as may be necessary or 
appropriate, and to determine their qualifications, define their 
duties, and fix their salaries or other compensation.'' Section 
101(g)(2) of the Act further authorizes that ``[t]he rules of the Board 
shall, subject to the approval of the Commission . . . permit, as the 
Board determines necessary and appropriate, delegation by the Board of 
any of its functions to an . . . employee of the Board, . . . including 
functions with respect to hearing, determining, ordering, certifying, 
reporting, or otherwise acting as to any matter.'' In 2004, the 
Commission approved the Board's proposed rules relating to 
investigations and adjudications, authorizing creation of the PCAOB's 
hearing officer position.\4\
---------------------------------------------------------------------------

    \1\ The PCAOB has oversight authority with respect to audits of 
brokers and dealers that are registered with the SEC. See Sections 
110(3) and (4) of the Act, 15 U.S.C. 7220(3) and (4).
    \2\ See, e.g., Sections 101(c)(1) & (4), 102(c), 105(a) & 
(c)(1)-(3) of the Act, 15 U.S.C. 7211(c)(1) & (4), 7212(c), 7215(a) 
& (c)(1)-(3).
    \3\ See, e.g., Sections 101(f)(4) and 101(g)(2) of the Act, 15 
U.S.C. 7211(f)(4) & (g)(2); PCAOB Rules 5200 (Commencement of 
Disciplinary Proceedings), 5500 (Commencement of Hearing on 
Disapproval of a Registration Application).
    \4\ See Order Approving Proposed Rules Relating to 
Investigations and Adjudications, SEC Rel. No. 34-49704, 2004 WL 
1439833 (May 14, 2004).
---------------------------------------------------------------------------

    On June 21, 2018, the U.S. Supreme Court held in Lucia v. SEC that 
SEC Administrative Law Judges (ALJs) are inferior officers under the 
Appointments Clause of the U.S. Constitution and that accordingly SEC 
ALJs are required to be appointed by ``the President, a court of law, 
or a head of department,'' such as the Commission.\5\ Since the Lucia 
decision, the Commission has taken various actions, including issuance 
of an order reiterating its November 30, 2017 approval of the prior 
appointments of its ALJs by its staff as the Commission's own under the 
Constitution.\6\ In light of the Lucia litigation, other federal 
government agencies have taken similar measures as to their ALJs or 
like officials, also out of an abundance of caution and for avoidance 
of doubt.\7\
---------------------------------------------------------------------------

    \5\ 138 S. Ct. 2044, 2050-51 (2018).
    \6\ See In re Pending Administrative Proceedings, SEC Rel. No. 
34-83907, 2018 WL 4003609, *1 (Aug. 22, 2018).
    \7\ See, e.g., USITC, The Appointment of the Commission's 
Administrative Law Judges for Section 337 Investigations, 83 FR 
45,678-01 (Sept. 10, 2018); FMSHRC, Ratification Notice (Apr. 3, 
2018), available at www.fmshrc.gov/about/news/ commission-
ratification-notice; FDIC, Resolution of Board of Directors (July 
19, 2018), available at https://www.fdic.gov/news/board/2018-07-19-085152.pdf; CFTC, Ratification and Reconsideration Order, In re 
Pending Administrative Proceedings, 2018 WL 1966116 (Apr. 6, 2018); 
Letter from Sec'y R. Alexander Acosta, Dep't of Labor, to Hon. Paul 
R. Almanza, Admin. Law Judge, Dep't of Labor (Dec. 21, 2017), 
available at https://www.oalj.dol.gov/PUBLIC/FOIA/Frequently_Requested_Records/ALJ_Appointments/Secretarys_Ratification_of_ALJ_Appointments_12_21_2017.pdf; FTC, 
P130500 Federal Trade Commission Minute: Ratification of Appointment 
of Administrative Law Judge and Chief Administrative Law Judge 
(Sept. 11, 2015), attached as Ex. A to FTC, Order Denying Respondent 
LabMD, Inc.'s Motion to Dismiss, In re LabMD Inc., No. 9357 (Sept. 
14, 2015), available at https://www.ftc.gov/system/files/documents/cases/150914labmdmotion.pdf.
---------------------------------------------------------------------------

    The Lucia case did not involve a challenge to PCAOB hearing 
officers, only to SEC ALJs. Nor has any court, the Commission, or the 
Board adjudicated whether a PCAOB hearing officer is, like an SEC ALJ, 
an inferior officer under the Appointments Clause.\8\ Indeed, there are 
a number of differences between the position of an SEC ALJ and the 
position of a PCAOB hearing officer.\9\
---------------------------------------------------------------------------

    \8\ An attempt was made to challenge the constitutionality of a 
PCAOB hearing officer's appointment in Kabani v. SEC, but the court 
held that the argument had not been timely raised and was forfeited. 
733 F. App'x 918, 2018 WL 3828524, *1 (9th Cir. Aug. 13, 2018).
    \9\ For example, an SEC ALJ may administer oaths and 
affirmations; issue, revoke, quash, or modify subpoenas; issue 
protective orders; and punish contemptuous conduct; a PCAOB hearing 
officer does not have that authority. Compare 17 CFR 200.14(a)(1) & 
(2), 200.111(b), 180(a), 232(e), 322 with PCAOB Rules 5103, 5105, 
5200(b)(1), 5424.
---------------------------------------------------------------------------

    Nevertheless, out of an abundance of caution and to eliminate any 
uncertainty about the status of PCAOB hearing officers that might 
distract from the PCAOB's mission, including its important registration 
and disciplinary functions, the Board is adopting certain amendments to 
its bylaws and rules. These amendments modify the PCAOB's processes to 
appoint and remove its hearing officers to provide that such 
appointments and removals shall be subject to the approval of the 
Commission, a head of department under the Appointments Clause.
    The amendments to Article VI of the Board's bylaws and PCAOB Rule 
1001(h)(i), the language of which rule is changed to cross-reference 
the bylaw amendment, specify that the PCAOB's appointment and removal 
of any PCAOB hearing officer are subject to Commission approval. These 
changes are consistent with the Commission's broad authority to oversee 
the Board under Section 107 of the Act, see Sections 101(c) & (f) and 
107 of the Act, 15 U.S.C. 7211(c) & (f), 7217, and the Commission's 
authority to ``appoint . . . officers, attorneys, economists, 
examiners, and other employees'' under Section 4(b) of the Securities 
Exchange Act of 1934 (``Exchange Act''), 15 U.S.C. 78d(b).
    As contemplated by these amendments, when the PCAOB's Governing 
Board, as defined by the bylaws,\10\ has reached a decision on the 
appointment or removal of any PCAOB hearing officer, that decision 
shall be

[[Page 4596]]

submitted to the Commission for consideration. The proposed appointment 
or removal of a hearing officer by the PCAOB cannot be effectuated 
until Commission approval has been given. The Commission's approval of 
a PCAOB hearing officer's appointment will result in the hearing 
officer being appointed in the manner of an inferior officer for 
purposes of the Appointments Clause.\11\
---------------------------------------------------------------------------

    \10\ See Articles IV and VI of the PCAOB's bylaws (stating that 
``[t]he Governing Board shall consist of those persons appointed 
thereto by the Securities and Exchange Commission, pursuant to 
Section 101 of the Act'' and that ``[t]he Chairman of the Governing 
Board . . . shall also be the President and Chief Executive Officer 
of the Corporation''). In Free Enterprise Fund v. PCAOB, 561 U.S. 
477, 510 (2010), the Supreme Court held that PCAOB Governing Board 
members are inferior officers under the Appointments Clause.
    \11\ See Free Enterprise Fund, 561 U.S. at 512 n.13 (noting 
examples of precedents in which ``[w]e have previously found that 
the department head's approval [of the appointment of personnel] 
satisfies the Appointments Clause'').
---------------------------------------------------------------------------

    The Board is also adopting certain clarifying and conforming 
amendments to its adjudications rules in light of the rule changes 
discussed above. Specifically, the Board is adding a new subsection to 
Rule 5200 to summarize the framework within which the hearing officer 
functions under the Act and the Board's rules. That new subsection 
explains that all proceedings shall be presided over by the Board, 
which is the entity empowered to act on registration applications and 
to conduct disciplinary proceedings.\12\ Alternatively, the Board may 
order that the proceedings be conducted in the first instance by a 
hearing officer to whom the Board has, under certain conditions, 
delegated adjudicatory responsibilities.\13\ The new subsection makes 
even more explicit the manner in which current PCAOB rules, such as 
Rules 5200(b)(10), 5201(d)(2), 5204(b), and 5445, situate the hearing 
officer within PCAOB adjudication processes.\14\
---------------------------------------------------------------------------

    \12\ See, e.g., Sections 101(c)(1) & (4) of the Act, 15 U.S.C. 
7211(c)(1) & (4) (``the Board shall . . . register public accounting 
firms . . . [and] conduct . . . disciplinary proceedings . . .'') 
(emphasis added).
    \13\ See Section 101(g)(2) of the Act, 15 U.S.C. 7211(g)(2) 
(permitting, under specified conditions, ``delegation by the Board 
of any of its functions to an . . . employee of the Board . . . , 
including functions with respect to hearing, determining, ordering, 
certifying, reporting, or otherwise acting as to any matter'').
    \14\ The provision is also analogous to SEC Rule of Practice 
110, 17 CFR 201.110.
---------------------------------------------------------------------------

    Additionally, the amendments make clarifying and conforming edits 
to the heading of current PCAOB Rule 5200(b) and to the heading and 
text of PCAOB Rule 5402(b). Specifically, the words ``appointment'' and 
``appoint'' in these current rules are replaced with ``assignment'' and 
``assign,'' and current Rule 5200(b) is renumbered Rule 5200(c) and 
cross-referenced to new Rule 5200(b). These changes avoid any confusion 
between the actions of the Board and the Commission in appointing, and 
approving the appointment of, a hearing officer, and the PCAOB 
Secretary's ministerial act of assigning a specific hearing officer to 
a specific proceeding pursuant to a Board order.
    The above-described, targeted amendments seek to dispel any legal 
uncertainty arising from Lucia about the PCAOB hearing officer, who, as 
noted, may be tasked with presiding over a disciplinary or other 
proceeding. This will facilitate and make more efficient the Board's 
performance of its duties under the Act to take ``[a]ction on 
[a]pplications'' for the ``regist[ration] [of] public accounting firms 
that prepare audit reports for issuers, brokers, and dealers''; to 
``conduct . . . disciplinary proceedings concerning, and impose 
appropriate sanctions where justified upon, registered public 
accounting firms and associated persons of such firms''; and to 
``enforce compliance with th[e] Act, the rules of the Board, 
professional standards, and the securities laws relating to the 
preparation and issuance of audit reports and the obligations and 
liabilities of accountants with respect thereto, by registered public 
accounting firms and associated persons thereof.'' \15\ These functions 
are part of the Board's responsibility ``to oversee the audit of 
companies that are subject to the securities laws, and related matters, 
in order to protect the interests of investors and further the public 
interest in the preparation of informative, accurate, and independent 
audit reports.'' \16\
---------------------------------------------------------------------------

    \15\ See, e.g., Sections 101(c)(1), (4) & (6), 102(c), 105(a) & 
(c)(1)-(3) of the Act, 15 U.S.C. 7211(c)(1), (4) & (6), 7212(c), 
7215(a) & (c)(1)-(3).
    \16\ See Section 101(a) of the Act, 15 U.S.C. 7211(a).
---------------------------------------------------------------------------

    Moreover, additional benefits will flow from the amendments because 
the Appointments Clause serves an important public purpose. The Supreme 
Court has described the Clause's requirements as ``among the 
significant structural safeguards of the constitutional scheme,'' 
``designed to preserve political accountability relative to important 
government assignments.'' \17\ The Board has chosen to remedy the 
uncertainty caused by Lucia by conforming the appointment and removal 
of its hearing officers to those requirements. Thus, the Appointments 
Clause's benefits and protections are explicitly extended to 
respondents in PCAOB proceedings, and to the public more broadly.
---------------------------------------------------------------------------

    \17\ Edmond v. United States, 520 U.S. 651, 659, 663 (1997).
---------------------------------------------------------------------------

2. Statutory Basis
    The statutory basis for the proposed amendments is Title I of the 
Act. Specifically, Section 101(f)(2) of the Act empowers the Board, 
subject to Commission oversight under Section 107 of the Act, ``to 
conduct its operations and maintain offices, and to exercise all other 
rights and powers authorized by this Act.'' Section 101(f)(4), as 
discussed, empowers the Board, subject to Commission oversight under 
Section 107 of the Act, to appoint personnel. Section 101(g)(1) directs 
the Board, ``subject to the approval of the Commission . . . [to] 
provide for the operation and administration of the Board, the exercise 
of its authority, and the performance of its responsibilities under 
th[e] Act.'' And Section 101(g)(2), as discussed, permits the Board, 
``subject to the approval of the Commission,'' to delegate its hearing 
functions within the PCAOB. Furthermore, the amendments directly relate 
to statutory duties of the Board and purposes for its establishment 
that are discussed above.

B. Board's Statement on Burden on Competition

    Not applicable. The proposed amendments are concerned solely with 
the administration of the PCAOB, as discussed in Item I above.

C. Board's Statement on Comments on the Proposed Amendments Received 
From Members, Participants or Others

    Written comments were neither solicited nor received. The proposed 
amendments are concerned solely with the administration of the PCAOB, 
as discussed in Item I above.

III. Date of Effectiveness of the Proposed Amendments and Timing for 
Commission

    The foregoing proposed amendments have become effective pursuant to 
Section 19(b)(3)(A) of the Securities Exchange Act of 1934 \18\ and 
paragraph (f)(3) of Rule 19b-4 thereunder.\19\ At any time within 60 
days of the filing of the proposed amendments, the Commission summarily 
may temporarily suspend such amendments if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
Act.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(3).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed 
amendments are consistent with the requirements of Title I of the Act. 
Comments may be submitted by any of the following methods:

[[Page 4597]]

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/pcaob.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
PCAOB-2019-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to PCAOB-2019-01. This file number should 
be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's internet website (https://www.sec.gov/rules/pcaob.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed amendments that are filed with 
the Commission, and all written communications relating to the proposed 
amendments between the Commission and any person, other than those that 
may be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for website viewing and printing in the 
Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549-1090, on official business days between the hours of 10:00 a.m. 
and 3:00 p.m. Copies of such filing will also be available for 
inspection and copying at the principal office of the PCAOB. All 
comments received will be posted without change. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to PCAOB-2019-01 and should be submitted on or 
before March 8, 2019.

    For the Commission, by the Office of the Chief Accountant, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-11(b)(2).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02450 Filed 2-14-19; 8:45 am]
 BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.