
[Federal Register Volume 77, Number 102 (Friday, May 25, 2012)]
[Notices]
[Page 31408]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12724]



[[Page 31408]]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; 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:
    Rule 17g-5, SEC File. No. 270-581, OMB Control No. 3235-0649.

    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 existing 
collection of information provided for in Rule 17g-5 (17 CFR 240.17g-5) 
under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
(``Exchange Act''). The Commission plans to submit this existing 
collection of information to the Office of Management and Budget 
(``OMB'') for extension and approval.
    The Credit Rating Agency Reform Act of 2006 (Pub. L. 109-291) 
(``Rating Agency Act''), enacted on September 29, 2006, defines the 
term ``nationally recognized statistical rating organization,'' or 
``NRSRO'' and provides authority for the Commission to implement 
registration, recordkeeping, financial reporting, and oversight rules 
with respect to registered credit rating agencies.
    In 2009, the Commission adopted amendments to Rule 17g-5. Rule 17g-
5, as amended, imposes additional requirements on NRSROs in order to 
address concerns about the integrity of their credit rating procedures 
and methodologies in light of the role they played in determining 
credit ratings for securities collateralized by or linked to subprime 
residential mortgages.
    Rule 17g-5, as amended, requires NRSROs to disclose and manage 
certain conflicts of interest. The collection of information obligation 
imposed by Rule 17g-5 is mandatory for credit rating agencies that are 
applying to register or are registered with the Commission as NRSROs. 
Registration with the Commission as an NRSRO is voluntary.
    The Rating Agency Act added a new Section 15E, ``Registration of 
Nationally Recognized Statistical Rating Organizations'' (15 U.S.C. 
78o-7) to the Exchange Act. Exchange Act Section 15E(h)(2) provides the 
Commission with authority to prohibit, or require the management and 
disclosure of, any potential conflict of interest relating to the 
issuance of credit ratings by an NRSRO (15 U.S.C. 78o-7(h)(2)).
    Rule 17g-5, as amended, requires the disclosure and establishment 
of procedures to manage an additional conflict of interest and 
prohibits an NRSRO from issuing a rating for a structured finance 
product unless information about the transaction and the assets 
underlying the rated security are disclosed to certain persons. The 
Commission estimates that it will take 10 NRSROs approximately 300 
hours to develop a system, as well as the policies and procedures, for 
the disclosures required by Rule 17g-5, resulting in a total one-time 
hour burden of 3,000.
    Rule 17g-5, as amended, also requires disclosures on a transaction 
by transaction basis. The Commission estimates that the total number of 
structured finance ratings issued by all NRSROs in a given year would 
be 14,880 and that it would take 1 hour per transaction to make the 
information publicly available resulting in a total aggregate annual 
burden to the industry of 14,880 hours.
    Rule 17g-5, as amended, also requires arrangers to disclose certain 
information. The Commission estimates that it would take 200 arrangers 
subject to the rule approximately 300 hours to develop a system, as 
well as the policies and procedures, for the disclosures required by 
Rule 17g-5, resulting in a total one-time hour burden of 60,000.
    Rule 17g-5, as amended, also requires disclosures by arrangers on a 
transaction by transaction basis. The Commission estimates that 200 
arrangers would arrange approximately 20 new transactions per year and 
that it would take 1 hour per transaction to make the information 
publicly available, resulting in a total aggregate annual burden of 
4,000 hours.
    Rule 17g-5, as amended, also requires disclosure of information by 
arrangers on an ongoing basis that is used by an NRSRO to undertake 
credit rating surveillance on the structured finance product. The 
Commission estimates this disclosure would be required for 
approximately 125 transactions a month, and it would take each 
respondent approximately 0.5 hours per transaction to disclose the 
information. Therefore, the Commission estimates that it would take 
each respondent approximately 750 hours on an annual basis to disclose 
such information, for a total aggregate annual burden of 150,000 hours.
    Finally, Rule 17g-5, as amended, requires NRSROs to submit an 
annual certification to the Commission. The Commission estimates that 
it would take each NRSRO approximately 2 hours to complete the 
certification, resulting in a total aggregate annual burden of 20 
hours.
    Accordingly, the total estimated burden associated with Rule 17g-5 
is 63,000 hours on a one-time basis (3,000 + 60,000 = 63,000) and 
168,900 on an annual basis (14,880 + 150,000 + 4,000 + 20 = 168,900).
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
estimate of the burden of the proposed collection of information; (c) 
ways to enhance the quality, utility, and clarity of the information on 
respondents; 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.
    The Commission may not conduct or sponsor a collection of 
information unless it displays a currently valid OMB control number. No 
person shall be subject to any penalty for failing to comply with a 
collection of information subject to the PRA that does not display a 
valid OMB control number.
    Please direct your written comments to: Thomas Bayer, Director/
Chief Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312 or send an 
email to: PRA_Mailbox@sec.gov.

    Dated: May 21, 2012.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12724 Filed 5-24-12; 8:45 am]
BILLING CODE 8011-01-P


