
[Federal Register Volume 80, Number 6 (Friday, January 9, 2015)]
[Notices]
[Pages 1435-1436]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00139]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: U.S. Securities and 
Exchange Commission, Office of FOIA Services, 100 F Street NE., 
Washington, DC 20549-2736.

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 
(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 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 205.1-205.7). 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 QLCC may 
communicate the information 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. In 
providing quality representation to issuers, attorneys may 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 11,396 
issuers that are subject to the rules.\1\ Of these, we estimate that 
approximately 3.3 percent, or 373, 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 746 hours. Assuming half of the burden hours will be incurred 
by outside counsel at a rate of $500 per hour would result in a cost of 
$186,500.
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    \1\ This figure is based on the estimated 8,145 operating 
companies that filed annual reports on Form 10-K, Form 20-F, or Form 
40-F during the 2013 fiscal year (the most recent data currently 
available), and the estimated 3,251 investment companies that filed 
periodic reports on Form N-SAR between June 1, 2013 and May 31, 2014 
(the most recent data currently available).
    \2\ This estimate is based on the issuer filings made with the 
Commission during the past three years that include a reference to 
the issuer's QLCC.
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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 Pamela Dyson, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o Remi Pavlik-Simon, 100 F St. NE., Washington, DC 20549; or send an 
email to: PRA_Mailbox@sec.gov.


[[Page 1436]]


     Dated: January 5, 2015.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2015-00139 Filed 1-8-15; 8:45 am]
BILLING CODE 8011-01-P


