[Federal Register Volume 76, Number 247 (Friday, December 23, 2011)]
[Notices]
[Page 80421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32921]
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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.
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 (``PRA''), 44 U.S.C. Sections 3501-3520, the Securities and
Exchange Commission (``Commission'') is soliciting comments on the
collection of information summarized below. The Commission plans to
submit the existing collection of information to the Office of
Management and Budget for extension.
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 205.1-205.7). 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 16,517
issuers that are subject to the rules.\1\ Of these, we estimate that
approximately 3.8% percent, or 637, 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 1,274 hours. Assuming half of the burden hours will be
incurred by outside counsel at a rate of $500 per hour would result in
a cost of $318,500.
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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 20-
F, or Form 40-F, during the 2011 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 (14,000). In addition, we estimate that approximately 2,517
investment companies currently file periodic reports on Form N-SAR.
\2\ We base this estimate on the number of issuers who have
reported in filings with the Commission that they have created
QLCCs. 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 (3.8%) 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. 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 are requested on: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burden[s]
of the collection of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology.
The public may view the background documentation for this
information collection at the following Web site, http://www.reginfo.gov. 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 email
to: [email protected]; and (ii) Thomas Bayer, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312 or send an
email to [email protected]. Comments must be submitted to OMB within
30 days of this notice.
Dated: December 19, 2011.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32921 Filed 12-22-11; 8:45 am]
BILLING CODE 8011-01-P