[Federal Register Volume 73, Number 121 (Monday, June 23, 2008)]
[Notices]
[Pages 35425-35426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14080]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon written request, Copies available from: U.S. Securities and 
Exchange Commission, Office of Investor Education and Advocacy, 
Washington, DC 20549-0213.

Extension:
    Rule 15g-9; SEC File No. 270-325; OMB Control No. 3235-0385.

    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'') has submitted to the Office of Management 
and Budget a request for extension of the previously approved 
collection of information discussed below.
    Section 15(c)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.) (the ``Exchange Act'') authorizes the Commission to 
promulgate rules that prescribe means reasonably designed to prevent 
fraudulent, deceptive, or manipulative practices in connection with 
over-the-counter (``OTC'') securities transactions. Pursuant to this 
authority, the Commission in 1989 adopted Rule 15a-6 (the ``Rule''), 
which was subsequently redesignated as Rule 15g-9, 17 CFR 240.15g-9. 
The Rule requires broker-dealers to produce a written suitability 
determination for, and to obtain a written customer agreement to, 
certain recommended transactions in low-priced stocks that are not 
registered on a national securities exchange or authorized for trading 
on NASDAQ, and whose issuers do not meet certain minimum financial 
standards. The Rule is intended to prevent the indiscriminate use by 
broker-dealers of fraudulent, high pressure telephone sales campaigns 
to sell low-priced securities to unsophisticated customers.
    The Commission staff estimates that there are approximately 240 
broker-dealers subject to the Rule. The burden of the Rule on a 
respondent varies widely depending on the frequency with which new 
customers are solicited. On the average for all respondents, the staff 
has estimated that respondents process three new customers per week, or 
approximately 156 new customer suitability determinations per year. We 
also estimate that a broker-dealer would expend approximately one-half 
hour per new customer in obtaining, reviewing, and processing 
(including transmitting to the customer) the information required by 
Rule 15g-9, and each respondent would consequently spend 78 hours 
annually (156 customers x .5 hours) obtaining the information required 
in the rule. We determined, based on the estimate of 240 broker-dealer 
respondents, that the current annual burden of Rule 15g-9 is 18,720 
hours (240 respondents x 78 hours).
    In addition, we estimate that if tangible communications alone are 
used to transmit the documents required by Rule 15g-9, each customer 
should take: (1) No more than eight minutes to review, sign and return 
the suitability determination document; and (2) no more than two 
minutes to either read and return or produce the customer agreement for 
a particular recommended transaction in penny stocks, listing the 
issuer and number of shares of the particular penny stock to be 
purchased, and send it to the broker-dealer. Thus, the total current 
customer respondent burden is approximately 10 minutes per response, 
for an aggregate total of 1,560 minutes for each broker-dealer 
respondent. Since there are 240 respondents, the annual burden for 
customer responses is 374,400 minutes (1,560 customer minutes per each 
of the 240 respondents) or 6,240 hours.
    In addition, we estimate that, if tangible means of communications 
alone are used, broker-dealers could incur a recordkeeping burden under 
Rule 15g-9 of approximately two minutes per response. Since there are 
approximately 240 broker-dealer respondents and each respondent would 
have approximately 156 responses annually, respondents would incur an 
aggregate recordkeeping burden of 74,880 minutes (240 respondents x 156 
responses x 2 minutes per response), or 1,248 hours. Accordingly, the 
aggregate

[[Page 35426]]

annual hour burden associated with Rule 15g-9 is 26,208 hours (18,720 
hours to prepare the suitability statement and agreement + 6,240 hours 
for customer review + 1,248 recordkeeping hours).
    We recognize that under the amendments to Rule 15g-9, the burden 
hours may be slightly reduced if the transaction agreement required 
under the rule is provided through electronic means such as e-mail from 
the customer to the broker-dealer (e.g., the customer may take only one 
minute, instead of the two minutes estimated above, to provide the 
transaction agreement by e-mail rather than regular mail). If each of 
the customer respondents estimated above communicates with his or her 
broker-dealer electronically, the total burden hours on the customers 
would be reduced from 10 minutes to 9 minutes per response, or an 
aggregate total of 1,404 minutes per respondent (156 customers x 9 
minutes for each customer). Since there are 240 respondents, the annual 
customer respondent burden, if electronic communications were used by 
all customers, would be approximately 336,960 minutes (240 respondents 
x 1,404 minutes per each respondent), or 5,616 hours. We do not believe 
the hour burden on broker-dealers in obtaining, reviewing, and 
processing the suitability determination would change through use of 
electronic communications. In addition, we do not believe that, based 
on information currently available to us, recordkeeping burdens under 
Rule 15g-9 would change where the required documents were sent or 
received through means of electronic communication. Thus, if all 
broker-dealer respondents obtain and send the documents required under 
the rule electronically, the aggregate annual hour burden associated 
with Rule 15g-9 would be 25,584 hours (18,720 hours to prepare the 
suitability statement and agreement + 5,616 hours for customer review + 
1,248 recordkeeping hours).
    We cannot estimate how many broker-dealers and customers will 
choose to communicate electronically. If we assume that 50 percent of 
respondents would continue to provide documents and obtain signatures 
in tangible form, and 50 percent would choose to communicate 
electronically in satisfaction of the requirements of Rule 15g-9, the 
total aggregate hour burden would be 25,896 burden hours ((26,208 
aggregate burden hours for documents and signatures in tangible form x 
0.50 of the respondents = 13,104 hours) + (25,584 aggregate burden 
hours for electronically signed and transmitted documents x 0.50 of the 
respondents = 12,792 hours)).
    The broker-dealer must keep the written suitability determination 
and customer agreement required by the Rule for at least three years. 
Completing the suitability determination and obtaining the customer 
agreement in writing is mandatory for broker-dealers who effect 
transactions in penny stocks and do not qualify for an exemption, but 
does not involve the collection of confidential information. Please 
note that 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.
    Comments should be directed to (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: [email protected]; and (ii) R. Corey Booth, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o Shirley 
Martinson, 6432 General Green Way, Alexandria, VA 22312 or send an e-
mail to: [email protected]. Comments must be submitted within 30 
days of this notice.

    Dated: June 16, 2008.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-14080 Filed 6-20-08; 8:45 am]
BILLING CODE 8010-01-P