[Federal Register Volume 84, Number 26 (Thursday, February 7, 2019)]
[Notices]
[Pages 2617-2618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01367]
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SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
Extension:
Rules 300-304 of Regulation Crowdfunding (Intermediaries), SEC
File No. 270-774, OMB Control No. 3235-0726.
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget (``OMB'') a request for approval of extension of the
previously approved collection of information provided for in Rules
300-304 of Regulation Crowdfunding.\1\
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\1\ See Regulation Crowdfunding, Exchange Act Release No. 76324
(Oct. 30, 2015), 80 FR 71387 (Nov. 16, 2015) (Final Rule)
(``Regulation Crowdfunding'').
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Rules 300-304 of Regulation Crowdfunding enumerate the requirements
with which intermediaries must comply to participate in the offer and
sale of securities in reliance on Section 4(a)(6) of the Securities Act
of 1933 (``Section 4(a)(6)''). Rule 300 requires an intermediary to be
registered with the Commission as a broker or as a funding portal and
be a member of a registered national securities association.\2\
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\2\ Currently, FINRA is the only registered national securities
association.
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Rule 301 requires intermediaries to have a reasonable basis for
believing that an issuer seeking to offer and sell securities in
reliance on Section 4(a)(6) through the intermediary's platform
complies with the requirements in Section 4A(b) of the Securities Act
and
[[Page 2618]]
the related requirements in Regulation Crowdfunding. Rule 302 provides
that no intermediary or associated person of an intermediary may accept
an investment commitment in a transaction involving the offer or sale
of securities made in reliance on Section 4(a)(6) until the investor
has opened an account with the intermediary and the intermediary has
obtained from the investor consent to electronic delivery of materials.
Rule 303 requires an intermediary to make publicly available on its
platform the information that an issuer of crowdfunding securities is
required to provide to potential investors, in a manner that reasonably
permits a person accessing the platform to save, download or otherwise
store the information, for a minimum of 21 days before any securities
are sold in the offering, during which time the intermediary may accept
investment commitments. Rule 303 also requires intermediaries to comply
with the requirements related to the maintenance and transmission of
funds. An intermediary that is a registered broker is required to
comply with the requirements of Rule 15c2-4 of the Securities Exchange
Act of 1934 (``Exchange Act'') (Transmission or Maintenance of Payments
Received in Connection with Underwritings).\3\ An intermediary that is
a registered funding portal must direct investors to transmit the money
or other consideration directly to a qualified third party that has
agreed in writing to hold the funds for the benefit of, and to promptly
transmit or return the funds to, the persons entitled thereto in
accordance with Regulation Crowdfunding.
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\3\ 17 CFR 240.15c2-4.
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The rules also require intermediaries to implement and maintain
systems to comply with the information disclosure, communication
channels, and investor notification requirements. These requirements
include providing disclosure about compensation at account opening
(Rule 302), obtaining investor acknowledgements to confirm investor
qualifications and review of educational materials (Rule 303),
providing investor questionnaires (Rule 303), providing communication
channels with third parties and among investors (Rule 303), notifying
investors of investment commitments (Rule 303), confirming completed
transactions (Rule 303) and confirming or reconfirming offering
cancellations (Rule 304).
The Commission staff estimates that there would be 62
intermediaries engaged in crowdfunding activity and therefore subject
to Rules 300-304. The Commission staff estimates that annualized
industry burden would be 15,621 hours to comply with Rules 300-304.
This estimate is composed of a one-time burden for new intermediaries
to comply with the rules and develop the platform and ongoing burdens
associated with maintaining the platform. The Commission staff
estimates that the costs associated with complying with Rules 300-304
are estimated to be approximately a total amount of $5,772,327. These
costs are composed of a one-time burden for new intermediaries to
comply with the rules and develop the platform and ongoing burdens
associated with maintaining the platform.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
The public may view background documentation for this information
collection at the following website: www.reginfo.gov. 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 email to:
[email protected] and (ii) Charles Riddle, Acting Director/
Chief Information Officer, Securities and Exchange Commission, c/o
Candace Kenner, 100 F Street NE, Washington, DC 20549, or by sending an
email to: [email protected]. Comments must be submitted to OMB within
30 days of this notice.
Dated: February 1, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-01367 Filed 2-6-19; 8:45 am]
BILLING CODE 8011-01-P