[Federal Register Volume 68, Number 49 (Thursday, March 13, 2003)]
[Notices]
[Pages 12108-12109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5992]


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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