[Federal Register: March 13, 2003 (Volume 68, Number 49)]
[Notices]
[Page 12108-12109]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr03-127]
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SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon written request, copies available from: Securities and Exchange
Commission, Office of Filings and Information Services, Washington,
DC 20549.
Extension:
Regulation S-P; SEC File No. 270-480; OMB Control No. 3235-0537.
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'') is soliciting comments on the collection of
information summarized below. The Commission plans to submit this
existing collection of information to the Office of Management and
Budget for extension and approval.
[sbull] Regulation S-P--Privacy of Consumer Financial Information
On June 22, 2000, effective November 13, 2000, the Commission
adopted Regulation S-P under the Securities Exchange Act of 1934
(``Exchange Act'') to implement title V of the Gramm-Leach-Bliley Act
(``G-L-B Act'' or ``Act''). Among other things, title V of the G-L-B
Act requires that at the time of establishing a customer relationship
with a consumer and not less than annually during the continuation of
such relationship, a financial institution shall provide a clear and
conspicuous disclosure to such consumer of such financial institution's
policies and practices with respect to disclosing nonpublic personal
information to affiliates and nonaffiliated third parties (``privacy
notice''). Title V of the Act also provides that, unless an exception
applies, a financial institution may not disclose nonpublic personal
information of a consumer to a nonaffiliated third party unless the
financial institution clearly and conspicuously discloses to the
consumer that such information may be disclosed to such third party;
the consumer is given the opportunity, before the time that such
information is initially disclosed, to direct that such information not
be disclosed to such third party; and the consumer is given an
explanation of how the consumer can exercise that nondisclosure option
(``opt out notice'').
The privacy notices required by the Act are mandatory. The opt out
notices are not mandatory for financial institutions that do not share
nonpublic personal information with nonaffiliated third parties except
as permitted under an exception to the statute's opt out provisions.
Regulation S-P implements the statute's requirements with respect to
broker-dealers, investment companies, and registered investment
advisers (``covered entities''). The Act and Regulation S-P also
contain consumer reporting requirements. In order for consumers to opt
out, they must respond to opt out notices. At any time during their
continued relationship, consumers have the right to change or update
their opt out status. Most covered entities do not share nonpublic
personal information with nonaffiliated third parties and therefore are
not required to provide opt out notices to consumers under Regulation
S-P. Therefore, few consumers are required to respond to opt out
notices under the rule.
Compliance with Regulation S-P is necessary for covered entities to
achieve compliance with the consumer financial privacy notice
requirements of title V of the G-L-B Act. The required consumer notices
are not submitted to the Commission. Because the notices do not involve
a collection of information by the Commission, Regulation S-P does not
involve the collection of confidential information. Regulation S-P does
not have a record retention requirement per se, although the notices to
consumers it requires are subject to the recordkeeping requirements of
rules 17a-3 and 17a-4.
Currently, there are approximately 18,500 covered entities
(approximately 5,600 broker-dealers that conduct business with the
general public, 5,100 investment companies, and 7,800 registered
investment advisers) that must prepare or revise the annual and initial
privacy notices they provide to their customers. To prepare or revise
their privacy notices, each of the approximately 10,700 covered
entities that is a broker-dealer or investment company requires an
estimated 40 hours at a cost of $5,248 (32 hours of professional time
at $160 per hour plus 8 hours of clerical or administrative time at $16
per hour) and each of the approximately 7,800 covered entities that is
a registered investment adviser requires an estimated 5 hours at a cost
of $656 (4 hours of professional time at $160 per hour plus 1 hour of
clerical or administrative time at $16 per hour). Thus, the total
compliance burden per year is 740,000 hours (40 hours for 10,700
broker-dealers and investment companies, and 5 hours for 7,800
registered investment advisers (40 x 10,700 = 428,000, 5 x 7,800 =
39,000, and 428,000 + 39,000 = 467,000), and $57,401,600 ($5,248 x
10,700 = $56,153,600, $160 x 7,800 = $1,248,000, and $56,153,600 +
$1,248,000 = $57,401,600).
It is not anticipated that covered entities will need to incur any
capital or start-up cost to comply with Regulation S-P. However,
covered entities generally will include initial and annual privacy
notices to customers with disclosure documents or account statements
that they currently receive. These statements typically are assembled
and sent by organizations that specialize in mailing and distribution.
The additional material might result in an increase in total annual
distribution costs of approximately $2.6 million for all covered
entities. This estimate is based on an average additional cost per
mailing of $0.02 for 130.7 million investor accounts. The number of
investor accounts assumes there are 53 million brokerage accounts, 77.3
million individual investment company shareholders, and 400,000
customers of investment advisers.
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 shall
have practical utility; (b) the accuracy of the agency's estimates of
the burden of the proposed collection of information; (c) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated
collection techniques or
[[Page 12109]]
other forms of information technology. Consideration will be given to
comments and suggestions submitted in writing within 60 days of this
publication.
Please direct your written comments to Kenneth A. Fogash, Acting
Associate Executive Director/CIO, Office of Information Technology,
Securities and Exchange Commission, 450 5th Street, NW., Washington, DC
20549.
Dated: March 6, 2003.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-5992 Filed 3-12-03; 8:45 am]
BILLING CODE 8010-01-P