
[Federal Register Volume 88, Number 221 (Friday, November 17, 2023)]
[Notices]
[Pages 80365-80366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25479]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-381, OMB Control No. 3235-0434]


Submission for OMB Review; Comment Request; Extension: Rule 15g-2

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

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.)(``PRA''), 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.
    Rule 15g-2 (17 CFR 240.15g-2) (The ``Penny Stock Disclosure Rule'') 
under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
(``Exchange Act'') requires 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

[[Page 80366]]

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. Rule 15g-2 also requires a broker-dealer, upon 
request of a customer, to furnish the customer with a copy of certain 
information set forth on the Commission's website.
    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 approximately 175 broker-dealers are 
engaged in penny stock transactions and that each of these firms 
processes an average of three new customers for penny stocks per week. 
The Commission further estimates that half of the broker-dealers send 
the penny stock disclosure documents by mail, and the other half send 
them through electronic means such as email. Because the Commission 
estimates the copying and mailing of the penny stock disclosure 
document takes two minutes, this means that there is an annual burden 
of 27,456 minutes, or 447 hours, for this third-party disclosure burden 
of mailing documents. Additionally, because the Commission estimates 
that sending the penny stock disclosure document electronically takes 
one minute, the annual burden is 13,728 minutes, or 229 hours, for this 
third-party disclosure burden of emailing documents.
    Broker-dealers also incur a recordkeeping burden of approximately 
two minutes per response when filing the completed penny stock 
disclosure documents as required pursuant to the Rule 15g-2(c), which 
means that the respondents incur an aggregate recordkeeping burden of 
54,600 minutes, or 910 hours.
    Furthermore, Rule 15g-2(d) requires a broker-dealer, upon request 
of a customer, to furnish the customer with a copy of certain 
information set forth on the Commission's website, which takes a 
respondent no more than two minutes per customer. Because the 
Commission estimates that a quarter of customers who are required to 
receive the Rule 15g-2 disclosure document will request that their 
broker-dealer provide them with the additional microcap and penny stock 
information posted on the Commission's website, the Commission 
therefore estimates that 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, which amounts to an 
annual burden of 13,650 minutes, or 228 hours. There was an overall 
decrease in the total burden hours because the number of registered 
broker-dealers the Commission estimates will be engaged in penny stock 
transactions decreased from 182 to 175.
    The Commission does not maintain the risk disclosure document. 
Instead, it must be retained by the broker-dealer 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 collection of information required by the rule is mandatory. The 
risk disclosure document is otherwise governed by the internal policies 
of the broker-dealer regarding confidentiality, etc.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    The public may view background documentation for this information 
collection at the following website: www.reginfo.gov. Find this 
particular information collection by selecting ``Currently under 30-day 
Review--Open for Public Comments'' or by using the search function. 
Written comments and recommendations for the proposed information 
collection should be sent by December 18, 2023 to
    (i) www.reginfo.gov/public/do/PRAMain and (ii) David Bottom, 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o John Pezzullo, 100 F Street NE, Washington, DC 20549, or by sending 
an email to: [email protected].

    Dated: November 14, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25479 Filed 11-16-23; 8:45 am]
BILLING CODE 8011-01-P


