Document ID: SEC-2011-0734-0001
Agency: sec
Document Type: Proposed Rule
Title: Privacy Act; Implementation and Amendment of Exemptions
Posted Date: 2011-05-24T04:00Z

[Federal Register Volume 76, Number 100 (Tuesday, May 24, 2011)]
[Proposed Rules]
[Pages 30048-30050]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-12694]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 200

[Release No. PA-45; File No. S7-19-11]

Privacy Act of 1974: Implementation and Amendment of Exemptions

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: Pursuant to the Privacy Act of 1974, as amended, the 
Securities and Exchange Commission (``Commission'' or ``SEC'') proposes 
to exempt portions of three new systems of records from provisions of 
the Privacy Act to the extent that the records contain investigatory 
materials compiled for law enforcement purposes. Additionally, the 
Commission proposes to make technical amendments to its Privacy Act 
regulation exempting specific systems of records from certain 
provisions of the Privacy Act. In a companion release published 
elsewhere in this issue, the Commission is giving concurrent notice of 
three new systems of records pursuant to the Privacy Act of 1974.

DATES: Comments must be received on or before June 23, 2011.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-19-11 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

    Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090. All submissions should refer to File Number 
S7-19-11. This file number should be included on the subject line if e-
mail is used. To help us process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments are also available for Web site viewing 
and printing in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. All comments received will be posted without 
change; we do not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly.

FOR FURTHER INFORMATION CONTACT: Cristal Perpignan, Acting Chief 
Privacy Officer, Office of Information Technology, 202-551-7716.

SUPPLEMENTARY INFORMATION: Pursuant to, and limited by 5 U.S.C. 
552a(k)(2), the Commission proposes to exempt systems of records, 
``Tips, Complaints, and Referrals (TCR) Records (SEC-63)''; ``SEC 
Security in the Workplace Incident Records (SEC-64)''; and ``Investor 
Response Information System (IRIS) (SEC-65)'', from 5 U.S.C. 
552a(c)(3), (d), (e)(1), (e)(4)(G), (H), and (I), and (f) and 17 CFR 
200.303, 200.304, and 200.306, insofar as they contain investigatory 
materials compiled for law enforcement purposes. The Privacy Act allows 
Government agencies to exempt certain records from the notification, 
access and amendment provisions. If an agency claims an exemption, 
however, it must issue a rule to explain the reasons why a particular 
exemption is claimed. The proposed exemption would be applicable except 
under the circumstances set forth in the provisions of section (k)(2) 
of the Privacy Act.\1\
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    \1\ See 5 U.S.C. 552a(k)(2).
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    The TCR Records (SEC-63) system of records contains records related 
to tips, complaints, referrals of misconduct, or related information 
about actual or potential violations of the federal securities laws; 
investor harm; conduct of public companies; securities professionals; 
regulated entities; and associated persons. This system of records may 
include investigatory materials that were compiled in connection with 
the Commission's enforcement responsibilities under the federal 
securities laws. Such material may consist of unsolicited and often 
unverified statements concerning individuals, information received from 
confidential sources, as well as reports

[[Page 30049]]

from the Commission's investigators and other law enforcement 
personnel. The disclosure of the existence of investigatory materials 
could seriously undermine effective enforcement of the federal 
securities laws by prematurely alerting individuals to the fact that 
they are under investigation, by giving them access to the evidentiary 
bases for a Commission enforcement action or seriously hampering the 
Commission's case in court or before an administrative law judge.
    The SEC Security in the Workplace Incident Records (SEC-64) system 
of records contains records related to reports involving incidents of 
assault, harassment, intimidation, bullying, weapons possession, or 
threats at the SEC. This system of records may include investigatory 
materials that were compiled in connection with inquiries or 
investigation of potential or actual incidents of violence by and 
against individuals at an SEC facility. The disclosure of information 
as it relates to investigatory materials or the identity of sources of 
information may seriously undermine the safety and security of 
employees in the workplace. Access to such information could allow the 
subject of an investigation or inquiry of an actual or potential 
criminal or civil violation to interfere with and impede the 
investigation, tamper with witnesses or evidence, and to avoid 
detection or apprehension.
    The IRIS (SEC-65) system of records contains records related to 
complaints/inquiries/requests from members of the public and others. 
This system of records may include investigatory materials that were 
compiled in connection with the Commission's enforcement 
responsibilities under the federal securities laws. Such material may 
consist of unsolicited and often unverified statements concerning 
individuals, information received from confidential sources, as well as 
reports from the Commission's investigators and other law enforcement 
personnel. The disclosure of the existence of investigatory materials 
could seriously undermine effective enforcement of the federal 
securities laws by prematurely alerting individuals to the fact that 
they are under investigation, by giving them access to the evidentiary 
bases for a commission enforcement action or seriously hampering the 
Commission's case in court or before an administrative law judge.
    The Commission also proposes to amend its inventory of exempted 
systems of records by changing the name of the system of records 
titled: ``Office of Personnel Code of Conduct and Employee Performance 
Files (SEC-38)'' to ``Disciplinary and Adverse Actions, Employee 
Conduct, and Labor Relations Files''. In a companion release the 
Commission is publishing a Privacy Act system of records notice to make 
technical amendments to this system of records to incorporate minor 
corrective and administrative modifications that have occurred since 
the notice was last published and will update the system name to more 
accurately reflect the records contained in the system. The Commission 
is amending its inventory of exempted systems of records reflect the 
new title of this system of records.
    Finally, the Commission is making a technical amendment to its 
inventory of exempted systems of records by removing a reference to the 
system of records titled: ``Personnel Security Files''. On August 8, 
2000 (65 FR 49037), the Commission published notice to delete this 
system of records as the records were duplicative of records in: 
``Personnel Investigations Records (OPM/Central-9)'', published by the 
United States Office of Personnel Management.

General Request for Comment

    The Commission requests comment on the proposed amendments in this 
release.

Paperwork Reduction Act

    The proposed amendments do not contain a ``collection of 
information'' requirement within the meaning of the Paperwork Reduction 
Act of 1995.'' \2\ Accordingly, the Paperwork Reduction Act is not 
applicable.
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    \2\ 44 U.S.C. 3501 et seq.
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Cost-Benefit Analysis

    The Commission is sensitive to the costs and benefits that result 
from its rules. This proposal would exempt portions of three new 
systems of records from provisions of the Privacy Act in so far as the 
records contain investigatory materials compiled for law enforcement 
purposes. As more fully described above, the TCR Records system of 
records, the SEC Security in the Workplace Incident Reports system of 
records and the IRIS system of records may include investigatory 
materials compiled in connection with the Commission's enforcement of 
the federal securities laws, in connection with potential or actual 
incidents of workplace violence, or in connection with public 
complaints/inquiries/request. Access to or disclosure of the 
investigatory materials in these systems of records could seriously 
undermine the effective enforcement of the Federal securities laws, and 
the safety and security of Commission employees in the workplace. We 
recognize that our proposed amendments may impose costs on individuals 
who may wish to obtain access to records that contain investigatory 
materials in these systems of records. Congress seems to have 
contemplated these costs in promulgating the exemption in 5 U.S.C. 
552a(k)(2).

Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act of 1980 \3\ 
(``RFA'') requires the Commission to undertake an initial regulatory 
flexibility analysis of the proposed rule amendments on small entities 
unless the Commission certifies that the proposal, if adopted, would 
not have a significant economic impact on a substantial number of small 
entities.\4\ Pursuant to 5 U.S.C. 605(b), the Commission hereby 
certifies that the proposed amendments to 17 CFR 200.312 would not, if 
adopted, have a significant economic impact on a substantial number of 
small entities. The proposed amendments would exempt portions of three 
new systems of records from provisions of the Privacy Act in so far as 
the records contain investigatory materials compiled for law 
enforcement purposes. Because the proposed amendments would apply 
solely to private individuals, the proposed amendments would not, if 
adopted, have a significant economic impact on a substantial number of 
``small entities,'' as defined by the RFA.\5\ We encourage written 
comments regarding this certification.
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    \3\ 5 U.S.C. 603(a).
    \4\ 5 U.S.C. 605(b).
    \5\ See 5 U.S.C. 601(6).
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Statutory Authority

    The Commission is proposing amendments to 17 CFR 200.312 under the 
authority in 5 U.S.C. 552a(k)(2) and 5 U.S.C. 552a(k)(5).

List of Subjects in 17 CFR Part 200

    Administrative practice and procedure; Privacy.

Text of Proposed Amendments

    For the reasons set out in the preamble, Title 17, Chapter II, of 
the Code of Federal Regulations is proposed to be amended as follows:

[[Page 30050]]

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

Subpart H--Regulations Pertaining to the Privacy of Individuals and 
Systems of Records Maintained by the Commission

    1. The authority citation for Part 200 is revised by adding 
authority for Sec.  200.312 in numerical order to read as follows:

    Authority: 15 U.S.C. 77o, 77s, 77sss, 78d, 78d-1, 78d-2, 78w, 
78ll(d), 78mm, 80a-37, 80b-11, and 7202, unless otherwise noted.

* * * * *
    Section 312 is also issued under 5 U.S.C. 552a(k).

    2. Amend Sec.  200.312 by:
    a. Removing ``and'' at the end of paragraph (a)(5);
    b. Adding paragraphs (a)(7), (8), and (9); and
    c. Revising paragraph (b); and
    d. Removing the authority citation at the end of the section.
    The revisions read as follows.

Sec.  200.312  Specific exemptions.

* * * * *
    (a) * * *
    (7) Tips, Complaints, and Referrals (TCR) Records;
    (8) SEC Security in the Workplace Incident Records; and
    (9) Investor Response Information System (IRIS).
    (b) Pursuant to 5 U.S.C. 552a(k)(5), the system of records 
containing the Commission's Disciplinary and Adverse Actions, Employee 
Conduct, and Labor Relations Files shall be exempt from sections 
(c)(3), (d), (e)(1), (e)(4)(G), (H), and (I), and (f) of the Privacy 
Act, 5 U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (e)(4)(H), and 
(e)(4)(I), and (f), and 17 CFR 200.303, 200.304, and 200.306 insofar as 
they contain investigatory material compiled to determine an 
individual's suitability, eligibility, and qualifications for federal 
civilian employment or access to classified information, but only to 
the extent that the disclosure of such material would reveal the 
identity of a source who furnished information to the Government under 
an express promise that the identity of the source would be held in 
confidence, or, prior to September 27, 1975, under an implied promise 
that the identity of the source would be held in confidence.

    By the Commission.

    Dated: May 18, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-12694 Filed 5-23-11; 8:45 am]
BILLING CODE 8011-01-P