
[Federal Register: April 17, 2008 (Volume 73, Number 75)]
[Notices]               
[Page 20973-20975]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17ap08-98]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Proposed Collection; Comment Request

Upon written request, Copies available from: U.S. Securities and 
Exchange

[[Page 20974]]

Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension:
    Rule 15g-2; SEC File No. 270-381; OMB Control No. 3235-0434.

    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'') is soliciting comments on the collection of 
information summarized below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget for extension and approval.
    The ``Penny Stock Disclosure Rules'' (Rule 15g-2, 17 CFR 240.15g-2) 
require broker-dealers to provide their customers with a risk 
disclosure document, as set forth in Schedule 15G, prior to their first 
non-exempt transaction in a ``penny stock.'' As amended, the rule 
requires broker-dealers to obtain written acknowledgement from the 
customer that he or she has received the required risk disclosure 
document. The amended rule also requires broker-dealers to maintain a 
copy of the customer's written acknowledgement for at least three years 
following the date on which the risk disclosure document was provided 
to the customer, the first two years in an accessible place.
    The risk disclosure documents are for the benefit of the customers, 
to assure that they are aware of the risks of trading in ``penny 
stocks'' before they enter into a transaction. The risk disclosure 
documents are maintained by the broker-dealers and may be reviewed 
during the course of an examination by the Commission.
    The Commission estimates that there are approximately 240 broker-
dealers that could potentially be subject to current Rule 15g-2, and 
that each one of these firms processes an average of three new 
customers for penny stocks per week. Thus, each respondent processes 
approximately 156 penny stock disclosure documents per year. If 
communications in tangible form alone are used to satisfy the 
requirements of Rule 15g-2, then (a) the copying and mailing of the 
penny stock disclosure document takes no more than two minutes per 
customer, and (b) each customer takes no more than eight minutes to 
review, sign and return the penny stock disclosure document. Thus, the 
total existing respondent burden is approximately 10 minutes per 
response, or an aggregate total of 1,560 minutes per respondent. Since 
there are 240 respondents, the current annual burden is 374,400 minutes 
(1,560 minutes per each of the 240 respondents) or 6,240 hours. In 
addition, broker-dealers incur a recordkeeping burden of approximately 
two minutes per response. Since there are approximately 156 responses 
for each respondent, the respondents incur an aggregate recordkeeping 
burden of 74,880 minutes (240 respondents x 156 responses for each x 2 
minutes per response) or 1,248 hours, under Rule 15g-2. Accordingly, 
the current aggregate annual hour burden associated with Rule 15g-2 
(that is, assuming that all respondents provide tangible copies of the 
required documents) is approximately 7,488 hours (6,240 response hours 
+ 1,248 recordkeeping hours).
    The burden hours associated with Rule 15g-2 may be slightly reduced 
when the penny stock disclosure document required under the rule is 
provided through electronic means such as e-mail from the broker-dealer 
(e.g., the broker-dealer respondent may take only one minute, instead 
of the two minutes estimated above, to provide the penny stock 
disclosure document by e-mail to its customer) and return e-mail from 
the customer (the customer may take only seven minutes, to review, 
electronically sign and electronically return the penny stock 
disclosure document). In this regard, if each of the customer 
respondents estimated above communicates with his or her broker-dealer 
electronically, the total ongoing respondent burden is approximately 8 
minutes per response, or an aggregate total of 1,248 minutes (156 
customers x 8 minutes per respondent). Assuming 240 respondents, the 
annual burden, if electronic communications were used by all customers, 
is 299,520 minutes (1,248 minutes per each of the 240 respondents) or 
4,992 hours. Under Rule 15g-2, the recordkeeping burden is 1,248 hours. 
Thus, if all broker-dealer respondents obtain and send the documents 
required under the rules electronically, the aggregate annual hour 
burden associated with Rule 15g-2 is 6,240 (1,248 hours + 4,992 hours).
    In addition, if the penny stock customer requests a paper copy of 
the information on the Commission's Web site regarding microcap 
securities, including penny stocks, from his or her broker-dealer, the 
printing and mailing of the document containing this information takes 
no more than two minutes per customer. Because many investors have 
access to the Commission's Web site via computers located in their 
homes, or in easily accessible public places such as libraries, then, 
at most, a quarter of customers who are required to receive the Rule 
15g-2 disclosure document request that their broker-dealer provide them 
with the additional microcap and penny stock information posted on the 
Commission's Web site. Thus, each broker-dealer respondent processes 
approximately 39 requests for paper copies of this information per year 
or an aggregate total of 78 minutes per respondent (2 minutes per 
customer x 39 requests per respondent). Since there are 240 
respondents, the estimated annual burden is 18,720 minutes (78 minutes 
per each of the 240 respondents) or 312 hours.
    We have no way of knowing how many broker-dealers and customers 
will chose to communicate electronically. Assuming that 50 percent of 
respondents continue to provide documents and obtain signatures in 
tangible form and 50 percent choose to communicate electronically to 
satisfy the requirements of Rule 15g-2, the total aggregate burden 
hours is 7,176 ((aggregate burden hours for documents and signatures in 
tangible form x 0.50 of the respondents = 3,744 hours) + (aggregate 
burden hours for electronically signed and transmitted documents x 0.50 
of the respondents = 3,120 hours) + (312 burden hours for those 
customers making requests for a copy of the information on the 
Commission's Web site)).
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden 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.
    Comments should be directed to: R. Corey Booth, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Shirley 
Martinson, 6432 General Green Way, Alexandria, Virginia 22312; or 
comments may be sent by e-mail to: PRA_Mailbox@sec.gov. Comments must 
be submitted within 60 days of this notice.


[[Page 20975]]


    Dated: April 10, 2008.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-8182 Filed 4-16-08; 8:45 am]

BILLING CODE 8010-01-P
