

[Federal Register: December 6, 2007 (Volume 72, Number 234)]
[Notices]               
[Page 68902-68904]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de07-88]                         

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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:
    NAR Exemptive Request; OMB Control No. 3235-XXXX; SEC File No. 
270-573.

    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 (``OMB'') a request for pre-approval of an exemptive request 
by the National Association of Realtors[reg] (``NAR'') pursuant to the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (``Exchange 
Act'').

Background

    NAR has requested an exemption pursuant to Sections 15(a)(2) and 
36(a) of the Exchange Act from the broker-dealer registration 
requirements of Section 15(a)(1) and the reporting and other 
requirements of the Exchange Act (other than Sections 15(b)(4) and 
15(b)(6)), and the rules and regulations thereunder, that apply to a 
broker or dealer that is not registered with the Commission. Subject to 
the conditions specified in NAR's application (``Application''), the 
requested exemption would allow any licensed real estate agent or 
broker who is predominantly engaged in and has substantial experience 
in the sale of commercial real estate (``Commercial Real Estate 
Professional'') and the real estate brokerage firm with which he or she 
is licensed (``Real Estate Firm'') (collectively, a ``RE Participant'') 
to receive a real estate advisory fee (``Real Estate Advisory Fee'') 
from a purchaser of an undivided tenant-in-common interest in real 
property (``TIC Interest'') that is offered and sold together with 
other arrangements that cause it to be deemed to be a security under 
the federal securities laws (``TIC Security'').
    Under NAR's exemptive request, a Real Estate Advisory Fee could be 
paid by the purchaser directly or on behalf of the purchaser by the 
sponsor or issuer of the TIC Security, which could, thereby, reduce the 
commission or other compensation received by a registered broker-dealer 
involved in the TIC Security transaction. The Real Estate Advisory Fee 
generally would be paid to the Real Estate Firm with which the 
Commercial Real Estate Professional is licensed. The Firm would 
distribute all or a previously agreed upon percentage of the Real 
Estate Advisory Fee to the Commercial Real Estate Professional that 
signed a buyer's agent agreement with the client and to any other 
Commercial Real Estate Professional or Real Estate Firm that was added 
to the agreement with the consent of the client.

Proposed Collections of Information

    The requested exemption would contain five collections of 
information. First, the requested exemption would require a RE 
Participant to deliver a copy of the executed buyer's agent agreement 
to the registered broker-dealer acting as a placement agent (``Lead 
Placement Agent''). The purpose of the first collection is to assist in 
implementing the requested exemption and monitoring for compliance with 
the exemption's conditions. The proposed delivery requirement is 
designed to ensure that the Lead Placement Agent has a copy of the 
buyer's agent agreement in order to comply with its recordkeeping 
obligations discussed below, which would facilitate monitoring for 
compliance. Without this collection of information, the Commission and 
applicable self-regulatory organization (``SRO'') would be unable to 
monitor the Lead Placement Agent's compliance.
    Second, the requested exemption would require any Commercial Real 
Estate Professional that is to receive, directly or indirectly, a 
portion of a Real Estate Advisory Fee to not be subject to any 
``statutory disqualification,'' as defined in Section 3(a)(39) of the 
Exchange Act (other than subparagraph (E) of that section), and to 
deliver a representation in writing to that effect to the Lead 
Placement Agent at closing. The purpose of the second collection is to 
ensure that the Lead Placement Agent has a copy of the statutory 
disqualification representation in order to comply with its 
recordkeeping obligations, which would facilitate monitoring for 
compliance with the conditions of the requested exemption. Without this 
collection of information, the Commission and applicable SRO would be 
unable to monitor the Lead Placement Agent's compliance.
    Third, the requested exemption would require broker-dealers that 
sell the TIC Securities as participating brokers (``Selling Broker-
Dealers'') to deliver a representation in writing that the Selling 
Broker-Dealer performed a suitability analysis to the Lead Placement 
Agent at closing, or, if the Selling Broker-Dealer is the Lead 
Placement Agent, to make such a representation in writing at closing. 
The purpose of the third collection is to ensure that the Lead 
Placement Agent has a copy of the suitability analysis in order to 
comply with its recordkeeping obligations, which would facilitate 
monitoring compliance with the conditions of the requested exemption. 
Without this collection of information, the Commission and applicable 
SRO would be unable to monitor the Lead Placement Agent's compliance 
and would be unable to ensure that the Selling Broker-Dealer had 
conducted an appropriate suitability analysis.
    Fourth, the requested exemption would require a Selling Broker-
Dealer that determines that a TIC Security transaction is not suitable 
to obtain a written affirmation that the customer wants to proceed with 
the TIC Security transaction notwithstanding the Selling Broker-
Dealer's determination. It also would require the Selling Broker-Dealer 
to deliver the written affirmation to the Lead Placement Agent at 
closing or, if the Selling Broker-Dealer is the Lead Placement Agent, 
to maintain the written affirmation consistent with the record 
retention provisions of Exchange Act Rule 17a-4. The purpose of the 
fourth collection is to ensure that the customer is informed if a 
Selling Broker-Dealer determines a transaction is not suitable, and, if 
the customer wants to proceed with the transaction, that the customer 
has made such a decision in light of the broker-dealer's determination. 
In addition, the proposed delivery requirement is designed to ensure 
that the Lead Placement Agent has a copy of the customer affirmation in 
order to comply with its recordkeeping obligations, which would 
facilitate monitoring for compliance with the conditions of the 
requested exemption. Without this collection of information, the 
Commission and applicable SRO would be unable to monitor the Lead 
Placement Agent's compliance and would be unable to ensure that the 
Selling Broker-Dealer had conducted a suitability analysis and informed 
the client of this determination.
    Fifth, the requested exemption would require the Lead Placement 
Agent to maintain a copy of each of the documents that is to be made 
and/or

[[Page 68903]]

delivered at closing, as discussed above (i.e., the buyer's agent 
agreement, the statutory disqualification representations, the 
suitability representation, and, if applicable, the customer's written 
affirmation), and the relevant part of the real estate closing 
documents that evidences the amount of the Real Estate Advisory Fee 
paid to any RE Participant involved in the TIC Security transaction. 
The purpose of the fifth collection is to facilitate monitoring for 
compliance with the conditions of the requested exemption by compelling 
the Lead Placement Agent to maintain records of all documents that are 
required to be delivered at closing. Without this collection of 
information, the Commission and applicable SRO would be unable to 
monitor the Lead Placement Agent's compliance.

Estimate of Respondent Reporting Burden

a. Delivery of the Buyer's Agent Agreement to the Lead Placement Agent

    The Commission estimates that approximately 800 RE Participants 
would rely on the requested exemption and each RE Participant would on 
average deliver to the Lead Placement Agent a copy of an executed 
buyer's agent agreement 6.63 times \1\ a year. Based on these 
estimates, the Commission estimates that this requirement would result 
in approximately 5,304 disclosures \2\ per year. The Commission also 
estimates that a RE Participant would spend approximately five minutes 
per disclosure to the Lead Placement Agent. Thus, the estimated total 
annual reporting and recordkeeping burden for this requirement is 442 
hours \3\ for the RE Participants.
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    \1\ The Commission is estimating approximately 5,304 TIC 
Security transactions would occur under the requested exemption. 
Accordingly, 5,304 TIC Security transactions/800 RE Participants = 
6.63. For purposes of this Statement, the Commission has rounded all 
of its calculations to two decimal places.
    \2\ 6.63 x 800 = 5,304.
    \3\ 5,304 TIC Security transactions x five minutes per 
transaction = 26,520/60 = 442.
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b. Delivery of Statutory Disqualification

    The Commission estimates that approximately 800 Commercial Real 
Estate Professionals would rely on the requested exemption and each 
Commercial Real Estate Professional would on average deliver the 
written statutory disqualification representation 6.63 times \4\ a 
year. Based on these estimates, the Commission anticipates that this 
requirement would result in 5,304 disclosures \5\ per year. The 
Commission estimates that approximately 95 percent of Commercial Real 
Estate Professionals would spend approximately five minutes for each 
representation to the Lead Placement Agent. The Commission also 
estimates that approximately five percent of Commercial Real Estate 
Professionals would spend approximately 30 minutes for their first 
representation to the Lead Placement Agent, and five minutes for each 
of the 5.63 subsequent representations. Thus, the estimated total 
annual reporting and recordkeeping burden for these requirements is 
458.67 hours \6\ for Commercial Real Estate Professionals.
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    \4\ 5,304 TIC Security transactions/800 Commercial Real Estate 
Professionals = 6.63.
    \5\ 6.63 x 800 = 5,304.
    \6\ 800 x .95 x 6.63 x 5 = 25,194/60 = 419.90 total burden hours 
for 95 percent of the Commercial Real Estate Professionals. 800 x 
.05 x 1 x 30 = 1,200/60 = 20 hours for the first representation by 
five percent of the Commercial Real Estate Professionals. 800 x .05 
x 5.63 x 5 = 1,126/60 = 18.77 hours for the second and third 
representations by five percent of the Commercial Real Estate 
Professionals. Thus total burden hours would be 419.90 + 20 + 18.77 
= 458.67.
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c. Suitability Determination by the Selling Broker-Dealer

    The Commission estimates that approximately 150 Selling Broker-
Dealers would either deliver or make a representation at closing and 
each Selling Broker-Dealer would on average deliver or make such a 
representation 33.59 times \7\ a year. The Commission also estimates 
that a Selling Broker-Dealer would spend approximately five minutes on 
each disclosure. Thus, the estimated total annual reporting and 
recordkeeping burden for this requirement is 419.90 hours \8\ for 
Selling Broker-Dealers.
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    \7\ The Commission estimates that there would be approximately 
5,304 TIC Security transactions a year. Thus, a Selling Broker-
Dealer would make or deliver approximately ((5,304 x .95)/150) = 
33.59 determinations.
    \8\ (5,304 x .95) x five minutes per transaction = 25,194/60 = 
419.90.
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d. Customer Affirmation by the Selling Broker-Dealer

    The Commission estimates that there are approximately 150 Selling 
Broker-Dealers that are potential respondents, those Selling Broker-
Dealers would obtain and then deliver or maintain a written affirmation 
from 265.20 customers who are clients \9\ of Commercial Real Estate 
Participants a year, and each Selling Broker-Dealer would on average 
obtain and then deliver or maintain such an affirmation 1.77 \10\ times 
a year. The Commission also estimates that a customer would spend 
approximately 30 minutes on each disclosure and the Selling Broker-
Dealer would spend approximately 35 minutes on each disclosure. Thus, 
the estimated total annual reporting and recordkeeping burden for this 
proposed requirement is an aggregate of 132.60 hours for customers \11\ 
and 154.70 hours for the Selling Broker-Dealers.\12\
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    \9\ The Commission estimates that approximately five percent of 
all proposed TIC Security transactions would be determined to be not 
suitable. 5,304 x .05 = 265.20.
    \10\ The Commission estimates that there would be approximately 
5,304 TIC Security transactions under the requested exemption. The 
Commission estimates that Selling Broker-Dealers would obtain and 
then deliver or maintain the customer affirmation in five percent of 
all transactions under the requested exemption. Thus, a Selling 
Broker-Dealer would obtain approximately ((5,304 x .05)/150) = 1.77 
affirmations a year.
    \11\ 265.20 TIC Security transactions (5,304 x .05) x 30 minutes 
per transaction = 7956/60 = 132.60.
    \12\ 265.20 TIC Security transactions (5,304 x .05) x 35 minutes 
per transaction = 9282/60 = 154.70.
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e. Recordkeeping by the Lead Placement Agent

    The Commission estimates that approximately 45 Lead Placement 
Agents would act pursuant to the requested exemption. On average, a 
Lead Placement Agent would maintain copies of the relevant documents 
for approximately 117.87 TIC Security transactions \13\ a year. The 
Commission also estimates that a Lead Placement Agent would spend 10 
minutes per closing to maintain a copy of these documents. Thus, the 
estimated total annual reporting and recordkeeping burden for this 
requirement is 884 hours.\14\
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    \13\ 5,304 TIC Security transactions/45 Lead Placement Agents = 
117.87.
    \14\ 5,304 TIC Security transactions x 10 minutes = 53,040/60 = 
884.
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f. Aggregated Burdens for Entering Data into ROCIS.

    For purposes of entering the above collections into the OMB ROCIS 
system, the burdens discussed above have been summarized and aggregated 
as follows. There are approximately 995 total respondents.\15\ There 
are approximately 21 responses for each respondent.\16\ There are 
approximately 20,895 total responses.\17\ Thus, there are approximately 
.11 hours per response

[[Page 68904]]

for each respondent.\18\ There are approximately 2,298 total burden 
hours for all respondents.\19\
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    \15\ 800 + 150 + 45 = 995.
    \16\ 20,895 (total responses)/995 (total respondents) = 21. 
Although total responses should be 21,216 ((800 x 6.63) + (800 x 
6.63) + (150 x 33.59) + (150 x 1.77) + (45 x 117.87)), the number 
has been reduced to 20,895 to ensure consistency with the other 
data, specifically the 21 responses per respondent and .11 hours per 
respondent, being entered into ROCIS.
    \17\ 995 (total respondents) x 21 (responses per respondent) = 
20,895.
    \18\ 2,359 (total burden hours)/20,895 (total respondents) = 
0.11.
    \19\ 20,895 (total responses) x .11 (hours per respondent) = 
2,298.45. For purposes of entering this number into ROCIS, it has 
been rounded to 2,298.
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    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: 
Alexander_T._Hunt@omb.eop.gov; 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: PRA_Mailbox@sec.gov. Comments must be submitted within 30 
days of this notice.

    Dated: November 29, 2007.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-23607 Filed 12-5-07; 8:45 am]

BILLING CODE 8011-01-P
