[Federal Register: March 30, 2006 (Volume 71, Number 61)]
[Notices]
[Page 16182]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30mr06-97]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon written request, copies available from: Securities and Exchange
Commission, Office of Filings and Information Services, Washington, DC
20549.
Extension: 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 (44 U.S.C. Sections 3501 through 3520) the Securities and
Exchange Commission (``Commission'') has submitted to the Office of
Management and Budget (``OMB'') a request for extension of the
previously approved collection of information discussed below.
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 through 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. 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 17,710
issuers that are subject to the rules.\1\ Of these, we estimate that
approximately ten percent, or 1,771, 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
3,542 hours. Assuming half of the burden hours will be incurred by
outside counsel at a rate of $300 per hour would result in a cost of
$531,300.
---------------------------------------------------------------------------
\1\ This estimate is based, in part, on the total number of
operating companies that filed annual reports on Form 10-K, Form 10-
KSB, Form 20-F, or Form 40-F, during the 2005 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 (13,660). In addition, we estimate that
approximately 4,050 investment companies currently file periodic
reports on Form N-SAR.
\2\ Indications are that the 2003 estimate of the percentage of
issuers that would establish QLCCs (20%) was high. Our adjusted
estimate in the percentage of QLCCs (10%) results in a reduced
burden estimate as compared to the previously-approved collection.
---------------------------------------------------------------------------
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. Compliance with
the collection of information requirements is in some cases mandatory
and in some cases voluntary depending on the circumstances. Responses
to the collection may or may not be kept confidential.
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 regarding the above information should be directed
to the following persons: (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 e-mail to:
David-Rostker@omb.oep.gov; and (ii) R. Corey Booth, Director/Chief
Information Officer, Securities and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way, Alexandria, Virginia 22312 or send
an e-mail to PRA_Mailbox@sec.gov. Comments must be submitted to OMB
within 30 days of this publication.
Dated: March 23, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. E6-4623 Filed 3-29-06; 8:45 am]
BILLING CODE 8010-01-P