[Federal Register Volume 68, Number 64 (Thursday, April 3, 2003)]
[Notices]
[Pages 16313-16314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8105]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47591; File No. S7-30-02]
RIN 3235-AI60


Regulation Analyst Certification

AGENCY: Securities and Exchange Commission.

ACTION: Notice of OMB approval of collections of information.

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SUMMARY: The Securities and Exchange Commission (``Commission'') 
adopted new Regulation Analyst Certification (``Regulation AC'') (17 
CFR 242.500 through 242.505) under the Securities Exchange Act (17 
U.S.C. 78, et seq.) on February 20, 2003. Regulation AC requires that 
brokers, dealers, and certain persons associated with a broker or 
dealer include in research reports certifications by the research 
analyst that the views expressed in the report accurately reflect his 
or her personal views, and disclose whether or not the analyst received 
compensation or other payments in connection with his or her specific 
recommendations or views. Broker-dealers would also be required to 
obtain periodic certifications by research analysts in connection with 
the analyst's public appearances. Certain provisions of the Regulation 
contain ``collection of information'' requirements within the meaning 
of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), and the 
Commission submitted the proposed collections of information to the 
Office of Management and Budget (OMB) for review. OMB has approved the 
collection of information requirements contained in Regulation AC.

EFFECTIVE DATE: April 14, 2003.

FOR FURTHER INFORMATION CONTACT: James Brigagliano, Thomas Eidt, or 
Racquel Russell, at (202) 942-0772 in the Office of Risk Management and 
Control in the Division of Market Regulation, Securities and Exchange 
Commission, 450 5th Street, NW., Washington, DC 20549-0506.

SUPPLEMENTARY INFORMATION:

I. Regulation Analyst Certification

    Regulation Analyst Certification requires that broker-dealers and 
covered persons include in their research reports:
    [sbull] A statement by the research analyst certifying that the 
views expressed in the research report accurately reflect such research 
analyst's personal views about the subject securities or issuers; and
    [sbull] A statement by the research analyst certifying that no part 
of his or her compensation was, is, or will be directly or indirectly 
related to the specific recommendation or views contained in the 
research report; or
    [sbull] A statement by the research analyst certifying that part or 
all of his or her compensation was, is, or will be directly or 
indirectly related to the specific recommendation or views contained in 
the research report. If the analyst did receive such related 
compensation, the statement must include the source and amount of such 
compensation, and the purpose of the compensation, and further disclose 
that such compensation may influence the recommendation in the research 
report.
    Additionally, under Regulation AC, broker-dealers must make a 
record related to public appearances by research analysts. 
Specifically, a broker-dealer who publishes, circulates, or provides a 
research report prepared by a research analyst it or a covered person 
employs, would be required to make a record within thirty days after 
each calendar quarter in which the research analyst made the public 
appearance, that includes:
    [sbull] A written statement by the research analyst certifying that 
the views expressed in each public appearance accurately reflected such 
research analyst's personal views about the subject securities or 
issuers; and
    [sbull] A written statement by the research analyst certifying that 
no part of such research analyst's compensation was, is, or will be 
directly or indirectly related to any specific recommendations or views 
expressed in any public appearance.
    In cases where the broker or dealer does not obtain a statement by 
the research analyst in connection with public appearances as described 
above, the broker-dealer must promptly notify its examining authority, 
designated

[[Page 16314]]

pursuant to section 17(d) of the Exchange Act and rule 17d-2 
thereunder, that the analyst did not provide certification in 
connection with public appearances. In addition, for 120 days following 
such notification, the broker-dealer must disclose in any research 
report it distributes authored by that analyst that the analyst did not 
provide certification specified in rule 502(a) of Regulation AC. 
Further, broker-dealers must keep and maintain these records pursuant 
to Rule 17a-4(b).

II. Collection of Information Requirements

    Certain provisions of Regulation AC contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995.\1\ In proposing Regulation AC, the Commission 
estimated the burden hours for these collection of information 
requirements and solicited comments on the collection of information 
requirements and the burden estimate. The Commission submitted the 
proposed collection of information requirements to OMB for review as 
required pursuant to 44 U.S.C. 3507 and 5 CFR 1320.11. The Commission 
received one comment letter on the collection of information and has 
revised estimates in response to that comment.\2\
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    \1\ 44 U.S.C. 3501 et seq.
    \2\ The Commission intends to submit a change sheet to OMB in 
order to reflect changes.
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    The purpose of requiring that research analysts certify that the 
views expressed in research reports and public appearances reflect 
their personal views, and requiring disclosure of information regarding 
whether analyst compensation is related to those specific 
recommendations or views, is to help bolster investor confidence in the 
quality of research. This, in turn, should help bolster investor 
confidence in the securities markets. The Commission estimates that the 
annual paperwork burden in hours is 11,296 for a cost in dollars of 
approximately $1,372,464.\3\
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    \3\ The Commission estimates that the proposed regulation would 
result in a total annual time burden of approximately 11,296 hours 
(10,950 hours to comply with research report requirements + 346 
hours to comply with public appearance requirements), and a total 
annual cost in dollars of approximately $1,372,464 ($1,330,425 to 
comply with the research report requirements + $42,039 to comply 
with the public appearance requirements).
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    On March 5, 2003, OMB approved the collections of information 
contained in Regulation AC. Regulation AC (OMB Control No. 3235-0575) 
was adopted pursuant to the Securities Exchange Act of 1934 (17 U.S.C. 
78, et seq.) on February 20, 2003. 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 control number. We are 
providing this Notice to inform the public that the Commission has 
received OMB approval and OMB has issued a control number for this 
collection.

    Dated: March 28, 2003.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-8105 Filed 4-2-03; 8:45 am]
BILLING CODE 8010-01-P