Document ID: SEC-2006-0426-0001
Agency: sec
Document Type: Notice
Title: Agency information collection activities; proposals, submissions, and approvals
Posted Date: 2006-03-30T05:00Z

[Federal Register: March 30, 2006 (Volume 71, Number 61)]
[Notices]               
[Page 16182]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30mr06-97]                         

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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 Filings and Information Services, Washington, DC 
20549.

Extension: 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 
of 1995 (44 U.S.C. Sections 3501 through 3520) the Securities and 
Exchange Commission (``Commission'') has submitted to the Office of 
Management and Budget (``OMB'') a request for extension of the 
previously approved collection of information discussed below.
    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 Issuer'' (17 CFR 205.1 through 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. 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 17,710 
issuers that are subject to the rules.\1\ Of these, we estimate that 
approximately ten percent, or 1,771, 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 
3,542 hours. Assuming half of the burden hours will be incurred by 
outside counsel at a rate of $300 per hour would result in a cost of 
$531,300.
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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 2005 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 (13,660). In addition, we estimate that 
approximately 4,050 investment companies currently file periodic 
reports on Form N-SAR.
    \2\ Indications are that the 2003 estimate of the percentage of 
issuers that would establish QLCCs (20%) was high. Our adjusted 
estimate in the percentage of QLCCs (10%) 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. Compliance with 
the collection of information requirements is in some cases mandatory 
and in some cases voluntary depending on the circumstances. Responses 
to the collection may or may not be kept confidential.
    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 regarding the above information should be directed 
to the following persons: (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: 
David-Rostker@omb.oep.gov; and (ii) R. Corey Booth, 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. Comments must be submitted to OMB 
within 30 days of this publication.

    Dated: March 23, 2006.
Nancy M. Morris,
Secretary.
 [FR Doc. E6-4623 Filed 3-29-06; 8:45 am]

BILLING CODE 8010-01-P