82 FR 36064 - Proposed Collection; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 147 (August 2, 2017)

Page Range		36064-36065
FR Document		2017-16214
Federal Register, Volume 82 Issue 147 (Wednesday, August 2, 2017)
[Federal Register Volume 82, Number 147 (Wednesday, August 2, 2017)]
[Notices]
[Pages 36064-36065]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-16214]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-381, OMB Control No. 3235-0434]


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: U.S. Securities and 
Exchange Commission, Office of FOIA Services, 100 F Street NE., 
Washington, DC 20549-2736.

Extension: Rule 15g-2.

    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 198 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 
3,969 registered broker-dealers = 198 broker-dealers). The Commission 
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 198 
respondents, the current annual burden is 61,776 minutes (312 minutes 
per each of the 198 respondents) or 1,030 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 61,776 
minutes (198 respondents x 156 responses for each x 2 minutes per 
response) or 1,030 hours, under Rule 15g-2. Accordingly, the current 
aggregate annual hour burden associated with Rule 15g-2 (assuming

[[Page 36065]]

that all respondents provide tangible copies of the required documents) 
is approximately 2,060 hours (1,030 third party disclosure hours + 
1,030 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 198 
respondents, the annual third party disclosure burden, if electronic 
communications were used by all customers, is 30,888 minutes (156 
minutes per each of the 198 respondents) or 515 hours. If all 
respondents were to use electronic means, the recordkeeping burden 
would be 61,776 minutes or 1,030 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 1,545 (515 hours + 1,030 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 198 
respondents, the estimated annual burden is 15,444 minutes (78 minutes 
per each of the 198 respondents) or 257 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 2,060 ((aggregate burden hours for sending disclosure 
documents and obtaining signed customer acknowledgements in tangible 
form x 0.50 of the respondents = 1,030 hours) + (aggregate burden hours 
for electronically signed and transmitted documents x 0.50 of the 
respondents = 773 hours) + (257 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: Pamela Dyson, 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: PRA_Mailbox@sec.gov.

    Dated: July 27, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16214 Filed 8-1-17; 8:45 am]
 BILLING CODE 8011-01-P
36064 Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Notices

the extent DTC receives written printing in the Commission’s Public risk disclosure document. The amended
comments on the proposed rule change, Reference Room, 100 F Street NE., rule also requires broker-dealers to
DTC will forward such comments to the Washington, DC 20549 on official maintain a copy of the customer’s
Commission. business days between the hours of written acknowledgement for at least
10:00 a.m. and 3:00 p.m. Copies of the three years following the date on which
III. Date of Effectiveness of the filing also will be available for the risk disclosure document was
Proposed Rule Change and Timing for inspection and copying at the principal provided to the customer, the first two
Commission Action office of DTC and on DTCC’s Web site years in an accessible place. Rule 15g–
The foregoing rule change has become (http://dtcc.com/legal/sec-rule- 2 also requires a broker-dealer, upon
effective pursuant to Section filings.aspx). All comments received request of a customer, to furnish the
19(b)(3)(A) 38 of the Act and paragraph will be posted without change; the customer with a copy of certain
(f) of Rule 19b–4 39 thereunder. At any Commission does not edit personal information set forth on the
time within 60 days of the filing of the identifying information from Commission’s Web site.
proposed rule change, the Commission submissions. You should submit only The risk disclosure documents are for
summarily may temporarily suspend information that you wish to make the benefit of the customers, to assure
such rule change if it appears to the available publicly. All submissions that they are aware of the risks of
Commission that such action is should refer to File Number SR–DTC– trading in ‘‘penny stocks’’ before they
necessary or appropriate in the public 2017–010 and should be submitted on enter into a transaction. The risk
interest, for the protection of investors, or before August 23, 2017. disclosure documents are maintained by
or otherwise in furtherance of the the broker-dealers and may be reviewed
For the Commission, by the Division of
purposes of the Act. Trading and Markets, pursuant to delegated during the course of an examination by
authority.40 the Commission.
IV. Solicitation of Comments There are approximately 198 broker-
Eduardo A. Aleman,
Interested persons are invited to dealers that could potentially be subject
Assistant Secretary.
submit written data, views and to current Rule 15g–2. The Commission
[FR Doc. 2017–16269 Filed 8–1–17; 8:45 am]
arguments concerning the foregoing, estimates that approximately 5% of
BILLING CODE 8011–01–P registered broker-dealers are engaged in
including whether the proposed rule
change is consistent with the Act. penny stock transactions, and thereby
Comments may be submitted by any of subject to the Rule (5% × approximately
SECURITIES AND EXCHANGE
the following methods: 3,969 registered broker-dealers = 198
COMMISSION broker-dealers). The Commission
Electronic Comments [SEC File No. 270–381, OMB Control No. estimates that each one of these firms
• Use the Commission’s Internet 3235–0434] processes an average of three new
comment form (http://www.sec.gov/ customers for penny stocks per week.
rules/sro.shtml); or Proposed Collection; Comment Thus, each respondent processes
• Send an email to rule-comments@ Request approximately 156 penny stock
sec.gov. Please include File Number SR– Upon Written Request, Copies Available disclosure documents per year. If
DTC–2017–010 on the subject line. From: U.S. Securities and Exchange communications in tangible form alone
Paper Comments Commission, Office of FOIA Services, are used to satisfy the requirements of
100 F Street NE., Washington, DC Rule 15g–2, then the copying and
• Send paper comments in triplicate mailing of the penny stock disclosure
20549–2736.
to Secretary, Securities and Exchange document takes no more than two
Commission, 100 F Street NE., Extension: Rule 15g–2.
minutes. Thus, the total associated
Washington, DC 20549–1090. Notice is hereby given that pursuant burden is approximately 2 minutes per
All submissions should refer to File to the Paperwork Reduction Act of 1995 response, or an aggregate total of 312
Number SR–DTC–2017–010. This file (44 U.S.C. 3501 et seq.) (‘‘PRA’’), the minutes per respondent. Since there are
number should be included on the Securities and Exchange Commission 198 respondents, the current annual
subject line if email is used. To help the (‘‘Commission’’) is soliciting comments burden is 61,776 minutes (312 minutes
Commission process and review your on the collection of information per each of the 198 respondents) or
comments more efficiently, please use provided for in Rule 15g–2 (17 CFR 1,030 hours for this third party
only one method. The Commission will 240.15g–2) under the Securities disclosure burden. In addition, broker-
post all comments on the Commission’s Exchange Act of 1934 (15 U.S.C. 78a et dealers incur a recordkeeping burden of
Internet Web site (http://www.sec.gov/ seq.) (‘‘Exchange Act’’). The approximately two minutes per
rules/sro.shtml). Copies of the Commission plans to submit this response when filing the completed
submission, all subsequent existing collection of information to the penny stock disclosure documents as
amendments, all written statements Office of Management and Budget required pursuant to the Rule
with respect to the proposed rule (‘‘OMB’’) for extension and approval. 15(g)(2)(c), which requires a broker-
change that are filed with the Rule 15g–2 (The ‘‘Penny Stock dealer to preserve a copy of the written
Commission, and all written Disclosure Rule’’) requires broker- acknowledgement pursuant to Rule
communications relating to the dealers to provide their customers with 17a–4(b) of the Exchange Act. Since
proposed rule change between the a risk disclosure document, as set forth there are approximately 156 responses
sradovich on DSKBCFCHB2PROD with NOTICES

Commission and any person, other than in Schedule 15G, prior to their first non- for each respondent, the respondents
those that may be withheld from the exempt transaction in a ‘‘penny stock.’’ incur an aggregate recordkeeping
public in accordance with the As amended, the rule requires broker- burden of 61,776 minutes (198
provisions of 5 U.S.C. 552, will be dealers to obtain written respondents × 156 responses for each ×
available for Web site viewing and acknowledgement from the customer 2 minutes per response) or 1,030 hours,
that he or she has received the required under Rule 15g–2. Accordingly, the
38 15 U.S.C. 78s(b)(3)(A). current aggregate annual hour burden
39 17 CFR 240.19b–4(f). 40 17 CFR 200.30–3(a)(12). associated with Rule 15g–2 (assuming

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Document Created: 2017-08-02 07:09:48
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Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 36064