[Federal Register Volume 67, Number 111 (Monday, June 10, 2002)]
[Notices]
[Pages 39751-39752]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 02-14524]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From:
Securities and Exchange Commission, Office of Filings and
Information Services, Washington, DC 20549.
Extension: Rule 17a-11, SEC File No. 270-94, OMB Control No.
3235-0085.
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.
Rule 17a-11 (17 CFR 240.17a-11) requires broker-dealers to give
notice when certain specified events occur. Specifically, the rule
requires a broker-dealer to give notice of a net capital deficiency on
the same day that the net capital deficiency is discovered or a broker-
dealer is informed by its designated examining authority or the
Commission that it is, or has been, in violation of its minimum
requirement under Rule 15c3-1 (17 CFR 240.15c3-1) of the Securities
Exchange Act of 1934 (``Exchange Act''). Under Rule 17a-11 an over-the-
counter (``OTC'') derivatives dealers must also provide notice to the
Commission when a net capital deficiency is discovered but need not
give notice to any SRO because OTC derivatives dealers are only
required to register with the Commission.
Rule 17a-11 also requires a broker-dealer to send notice promptly
(within 24 hours) after the broker-dealer's aggregate indebtedness is
in excess of 1,200 percent of its net capital, its net capital is less
than 5 percent of aggregate debit items, or its total net capital is
less than 120 percent of its required minimum net capital. In addition,
a broker-dealer must give notice if it fails to make and keep current
books and records required by Rule 17a-3 (17 CFR 240.17a-3), if any
material inadequacy is discovered as defined in Rule 17a-5(g) (17 CFR
240.17a-5(g)), and if back testing exceptions are identified pursuant
to Appendix F of Rule 15c3-1 (17 CFR 15c3-1f) for a broker-dealer
registered as an OTC derivatives dealer.
The notice required by the rule alerts the Commission, self-
regulatory organizations (``SROs''), and the Commodity Futures Trading
Commission (``CFTC'') if the broker-dealer is registered as a futures
commission merchant, which have oversight responsibility over broker-
dealers, to those firms having financial or operational problems.
Because broker-dealers are required to file pursuant to Rule 17a-11
only when certain specified events occur, it is difficult to develop a
meaningful figure for the cost of compliance with Rule 17a-11. In 2001,
the Commission received 692 notices under this rule from 627 broker-
dealers. Each broker-dealer reporting pursuant to Rule 17a-11 will
spend approximately one hour preparing and transmitting the notice as
required by the rule. Accordingly, the total estimated annualized
burden for 2001 was 692 hours. With respect to those broker-dealers
that must give notice under Rule 17a-11, the Commission staff estimates
that the approximate administrative cost, consisting mostly of
accountant clerical work, to broker-dealers would be $24.53 per hour
(based on the Securities Industry Association salary survey and
including 35% in overhead costs). Therefore, based on approximately one
hour per notice and a total of 692 notices filed, the total annual
expense for the reporting broker-dealers in 2001 was approximately
$16,975.
Broker-dealers providing notice and reports under Rule 17a-11 are
required to preserve such records under Rule 17a-4 (17 CFR 240.17a-4)
for a period of not less than three years, the first two years in an
accessible place. Compliance with the Rule is mandatory. The Commission
will generally not publish or make available to any person notice or
reports received pursuant to Rule 17a-11. The Commission believes that
information obtained under Rule 17a-11 relates to a condition report
prepared for the use of the Commission, other federal governmental
authorities, and securities industry self-regulatory organizations
responsible for the regulation or supervision of financial
institutions.
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.
Written comments regarding the above information should be directed
to the following persons: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10202, New Executive Office
Building, Washington, DC 20503; and (ii) Michael E. Bartell, Associate
Executive Director, Office of Information Technology, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC
[[Page 39752]]
20549. Comments must be submitted to OMB within 30 days of this notice.
Dated: June 3, 2002.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-14524 Filed 6-7-02; 8:45 am]
BILLING CODE 8010-01-P