Document ID: SEC-2008-1291-0001
Agency: sec
Document Type: Notice
Title: Agency Information Collection Activities; Proposals, Submissions, and Approvals
Posted Date: 2008-09-23T04:00Z

[Federal Register: September 23, 2008 (Volume 73, Number 185)]
[Notices]               
[Page 54874-54875]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23se08-116]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy Washington, DC 
20549-0213.

Reports of Evidence of Material Violations:
    SEC File No. 270-514, OMB Control No. 3235-0572.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
(PRA) of 1995, 44 U.S.C. Sections 3501-3520, the Securities and 
Exchange Commission (``Commission'') is soliciting comments on the 
collection of information summarized below. The Commission plans to 
submit the existing collection of information to the Office of 
Management and Budget for extension.
    On February 6, 2003, the Commission published final rules, 
effective August 5, 2003, entitled ``Standards of Professional Conduct 
for Attorneys Appearing and Practicing Before the Commission in the 
Representation of an

[[Page 54875]]

Issuer'' (17 CFR 205.1-205.7). The information collection embedded in 
the rules is necessary to implement the Standards of Professional 
Conduct for Attorneys prescribed by the rule and required by Section 
307 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7245). The rules 
impose an ``up-the-ladder'' reporting requirement when attorneys 
appearing and practicing before the Commission become aware of evidence 
of a material violation by the issuer or any officer, director, 
employee, or agent of the issuer. An issuer may choose to establish a 
qualified legal compliance committee (``QLCC'') as an alternative 
procedure for reporting evidence of a material violation. In the rare 
cases in which a majority of a QLCC has concluded that an issuer did 
not act appropriately, the information may be communicated to the 
Commission. The collection of information is, therefore, an important 
component of the Commission's program to discourage violations of the 
federal securities laws and promote ethical behavior of attorneys 
appearing and practicing before the Commission.
    The respondents to this collection of information are attorneys who 
appear and practice before the Commission and, in certain cases, the 
issuer, and/or officers, directors and committees of the issuer. We 
believe that, in providing quality representation to issuers, attorneys 
report evidence of violations to others within the issuer, including 
the Chief Legal Officer, the Chief Executive Officer, and, where 
necessary, the directors. In addition, officers and directors 
investigate evidence of violations and report within the issuer the 
results of the investigation and the remedial steps they have taken or 
sanctions they have imposed. Except as discussed below, we therefore 
believe that the reporting requirements imposed by the rule are ``usual 
and customary'' activities that do not add to the burden that would be 
imposed by the collection of information.
    Certain aspects of the collection of information, however, may 
impose a burden. For an issuer to establish a QLCC, the QLCC must adopt 
written procedures for the confidential receipt, retention, and 
consideration of any report of evidence of a material violation. We 
estimate for purposes of the PRA that there are approximately 16,611 
issuers that are subject to the rules.\1\ Of these, we estimate that 
approximately five percent, or 831, have established or will establish 
a QLCC.\2\ Establishing the written procedures required by the rule 
should not impose a significant burden. We assume that an issuer would 
incur a greater burden in the year that it first establishes the 
procedures than in subsequent years, in which the burden would be 
incurred in updating, reviewing, or modifying the procedures. For 
purposes of the PRA, we assume that an issuer would spend 6 hours every 
three-year period on the procedures. This would result in an average 
burden of 2 hours per year. Thus, we estimate for purposes of the PRA 
that the total annual burden imposed by the collection of information 
would be 1,662 hours. Assuming half of the burden hours will be 
incurred by outside counsel at a rate of $400 per hour would result in 
a cost of $332,400.
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    \1\ This estimate is based, in part, on the total number of 
operating companies that filed annual reports on Form 10-K, Form 10-
KSB, Form 20-F, or Form 40-F, during the 2008 fiscal year and an 
estimate of the average number of issuers that may have a 
registration statement filed under the Securities Act pending with 
the Commission at any time (12,939). In addition, we estimate that 
approximately 3,672 investment companies currently file periodic 
reports on Form N-SAR.
    \2\ Indications are that the 2005 estimate of the percentage of 
issuers that would establish QLCCs (10%) was high. Our adjusted 
estimate in the percentage of QLCCs (5%) results in a reduced burden 
estimate as compared to the previously-approved collection.
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study. 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 OMB 
control number.
    Written comments are requested on: (a) Whether the collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimate of the burden[s] 
of the collection of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques or 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 Lewis W. Walker, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
C/O Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 
22312; or send an e-mail to: PRA_Mailbox@sec.gov.

    September 15, 2008.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-22115 Filed 9-22-08; 8:45 am]

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