[Federal Register Volume 83, Number 117 (Monday, June 18, 2018)]
[Notices]
[Pages 28281-28282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12983]
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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 FOIA Services, 100 F Street NE, Washington, DC
20549-2736
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
(PRA) of 1995, 44 U.S.C. 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
[[Page 28282]]
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 10,712 issuers that are subject to the rules.\1\ Of
these, we estimate that approximately 319, which is approximately 3
percent, 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 638 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 $159,500.
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\1\ This figure is based on the estimated 7,625 operating
companies that filed annual reports on Form 10-K, Form 20-F, or Form
40-F during the 2017 calendar year, and the estimated 3,087
investment companies that filed periodic reports on Form N-SAR
during that same time period.
\2\ This estimate is based on issuer-filings made with the
Commission between January 1, 2015 and March 18, 2018 that include a
reference to the issuer's QLCC.
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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 website, 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) Pamela Dyson, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington, DC 20549 or send an email to
[email protected]. Comments must be submitted to OMB within 30 days
of this notice.
Dated: June 13, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-12983 Filed 6-15-18; 8:45 am]
BILLING CODE 8011-01-P