[Federal Register Volume 79, Number 86 (Monday, May 5, 2014)]
[Notices]
[Pages 25629-25630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-10142]
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SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; 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.) (``PRA''), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collection of
information provided for in Rule 15g-2 (17 CFR 240.15g-2) under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (``Exchange
Act''). The Commission plans to submit this existing collection of
information to the Office of Management and Budget (``OMB'') for
extension and approval.
Rule 15g-2 (The ``Penny Stock Disclosure Rule'') requires 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. Rule 15g-2 also requires a broker-
dealer, upon request of a customer, to furnish the customer with a copy
of certain information set forth on the Commission's Web site.
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 the broker-dealers and may be reviewed
during the course of an examination by the Commission.
There are approximately 221 broker-dealers that could potentially
be subject to current Rule 15g-2. The Commission estimates that
approximately 5% of registered broker-dealers are engaged in penny
stock transactions, and thereby subject to the Rule (5% x approximately
4,410 registered broker-dealers = 221 broker-dealers). The Commission
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estimates 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 the copying and mailing of the penny
stock disclosure document takes no more than two minutes. Thus, the
total associated burden is approximately 2 minutes per response, or an
aggregate total of 312 minutes per respondent. Since there are 221
respondents, the current annual burden is 68,952 minutes (312 minutes
per each of the 221 respondents) or 1,150 hours for this third party
disclosure burden. In addition, broker-dealers incur a recordkeeping
burden of approximately two minutes per response when filing the
completed penny stock disclosure documents as required pursuant to the
Rule 15(g)(2)(c), which requires a broker-dealer to preserve a copy of
the written acknowledgement pursuant to Rule 17a-4(b) of the Exchange
Act. Since there are approximately 156 responses for each respondent,
the respondents incur an aggregate recordkeeping burden of 68,952
minutes (221 respondents x 156 responses for each x 2 minutes per
response) or 1,150 hours, under Rule 15g-2. Accordingly, the current
aggregate annual hour burden associated with Rule 15g-2 (assuming that
all respondents provide tangible copies of the required documents) is
approximately 2,300 hours (1,150 third party disclosure hours + 1,150
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 email 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 email to its customer). 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 1 minute per response, or an aggregate total of 156
minutes (156 customers x 1 minutes per respondent). Assuming 221
respondents, the annual third party disclosure burden, if electronic
communications were used by all customers, is 34,476 minutes (156
minutes per each of the 221 respondents) or 575 hours. If all
respondents were to use electronic means, the recordkeeping burden
would be 68,952 minutes or 1,150 hours (the same as above). 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 1,725 (575 hours + 1,150 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 221
respondents, the estimated annual burden is 17,238 minutes (78 minutes
per each of the 221 respondents) or 288 hours. This is a third party
disclosure type of burden.
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 would be 2,301 ((aggregate burden hours for sending disclosure
documents and obtaining signed customer acknowledgements in tangible
form x 0.50 of the respondents = 1,150 hours) + (aggregate burden hours
for electronically signed and transmitted documents x 0.50 of the
respondents = 863 hours) + (288 burden hours for those customers making
requests for a copy of the information on the Commission's Web site)).
Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden 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. Consideration will
be given to comments and suggestions submitted in writing within 60
days of this publication.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
Please direct your written comments to: Thomas Bayer, Director/
Chief Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549, or send an email
to: [email protected]..
Dated: April 29, 2014.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-10142 Filed 5-2-14; 8:45 am]
BILLING CODE 8011-01-P