
[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64383-64384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27093]


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SECURITIES AND EXCHANGE COMMISSION

SEC File No. 270-774, OMB Control No. 3235-0726]


Proposed Collection; Comment Request

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

Extension:
    Rules 300-304 of Regulation Crowdfunding (Intermediaries).

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the collection of 
information provided for Rule 17Ab2-1 (17 CFR 240.17Ab2-1) and Form CA-
1: Registration of Clearing Agencies (17 CFR 249b.200) under the 
Securities Exchange Act of 1934 (``Exchange Act'') (15 U.S.C. 78a et 
seq.). The Commission plans to submit this existing collection

[[Page 64384]]

of information to the Office of Management and Budget (``OMB'') for 
extension and approval.
    Rules 300-304 of Regulation Crowdfunding enumerate the requirements 
with which intermediaries must comply to participate in the offer and 
sale of securities in reliance on Section 4(a)(6) of the Securities Act 
of 1933 (``Section 4(a)(6)''). Rule 300 requires an intermediary to be 
registered with the Commission as a broker or as a funding portal and 
be a member of a registered national securities association.\1\
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    \1\ Currently, FINRA is the only registered national securities 
association.
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    Rule 301 requires intermediaries to have a reasonable basis for 
believing that an issuer seeking to offer and sell securities in 
reliance on Section 4(a)(6) through the intermediary's platform 
complies with the requirements in Section 4A(b) of the Securities Act 
and the related requirements in Regulation Crowdfunding. Rule 302 
provides that no intermediary or associated person of an intermediary 
may accept an investment commitment in a transaction involving the 
offer or sale of securities made in reliance on Section 4(a)(6) until 
the investor has opened an account with the intermediary and the 
intermediary has obtained from the investor consent to electronic 
delivery of materials. Rule 303 requires an intermediary to make 
publicly available on its platform the information that an issuer of 
crowdfunding securities is required to provide to potential investors, 
in a manner that reasonably permits a person accessing the platform to 
save, download or otherwise store the information, for a minimum of 21 
days before any securities are sold in the offering, during which time 
the intermediary may accept investment commitments. Rule 303 also 
requires intermediaries to comply with the requirements related to the 
maintenance and transmission of funds. An intermediary that is a 
registered broker is required to comply with the requirements of Rule 
15c2-4 of the Securities Exchange Act of 1934 (``Exchange Act'') 
(Transmission or Maintenance of Payments Received in Connection with 
Underwritings).\2\ An intermediary that is a registered funding portal 
must direct investors to transmit the money or other consideration 
directly to a qualified third party that has agreed in writing to hold 
the funds for the benefit of, and to promptly transmit or return the 
funds to, the persons entitled thereto in accordance with Regulation 
Crowdfunding.
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    \2\ 17 CFR 240.15c2-4.
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    The rules also require intermediaries to implement and maintain 
systems to comply with the information disclosure, communication 
channels, and investor notification requirements. These requirements 
include providing disclosure about compensation at account opening 
(Rule 302), obtaining investor acknowledgements to confirm investor 
qualifications and review of educational materials (Rule 303), 
providing investor questionnaires (Rule 303), providing communication 
channels with third parties and among investors (Rule 303), notifying 
investors of investment commitments (Rule 303), confirming completed 
transactions (Rule 303) and confirming or reconfirming offering 
cancellations (Rule 304).
    The Commission staff estimates that there are 62 intermediaries 
engaged in crowdfunding activity and therefore subject to Rules 300-
304. The Commission staff estimates that annualized industry burden 
would be 15,621 hours to comply with Rules 300-304. This estimate is 
composed of a one-time burden for new intermediaries to comply with the 
rules and develop the platform and ongoing burdens associated with 
maintaining the platform. The Commission staff estimates that the costs 
associated with complying with Rules 300-304 are estimated to be 
approximately a total amount of $5,772,327. These costs are composed of 
a one-time burden for new intermediaries to comply with the rules and 
develop the platform and ongoing burdens associated with maintaining 
the platform.
    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 
estimates of the burden of the proposed collection of information; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be 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.
    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.
    Please direct your written comments to: Charles Riddle, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an 
email to: PRA_Mailbox@sec.gov.

    Dated: December 10, 2018.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27093 Filed 12-13-18; 8:45 am]
BILLING CODE 8011-01-P


