Rule 433 SupportingStatement.4-25-2011

SUPPORTING STATEMENT FOR SECURITIES ACT RULE 433

A.

Justification
1. And 2.

Circumstances Making the Collection of Information Necessary and
Purpose and Use of the Information Collection

The Commission adopted Rule 433 on July 19, 2005, in Release 33-8591
(“Securities Offering Reform”). The rule was designed to reduce current restrictions on
communications that issuers can make to investors during a registered offering of
securities. Specifically, it governs the use and filing of a free writing prospectus. Rule
433 applies to any free writing prospectus with respect to the securities of an issuer
(except as set forth in Rule 164), that are the subject of a registration statement that has
been filed under the Securities Act of 1933. The free writing prospectus can include
information that is not included in the registration statement. A free writing prospectus
that satisfies the conditions of Rule 433 will be a prospectus under Section 10(b) of the
Securities Act and will, for purposes of considering it a prospectus, be deemed to be
public, without regard to its method of use or distribution, because it is related to the
public offering of securities that are the subject of a filed registration statement. Rule 433
sets forth conditions that issuers must meet to use a free-writing prospectus.
3.

Consideration Given to Information Technology

Rule 433 communications are filed electronically on EDGAR, except under
limited conditions set forth in Rule 433(d).
4.

Duplication of Information
There are no other filing requirements that duplicate this information.

5.

Reducing the Burden on Small Entities

All issuers, including small business issuers have discretion as to whether or not
they want to disseminate written communications in the form of a free-writing
prospectus. Furthermore, Rule 433 was adopted in connection with other revisions, all of
which were intended to decrease costs and burdens for all issuers, including small
business issuers, and enhance communications between issuers and investors.
6.

Consequences of Not Conducting Collection

Rule 433 requires filing of written communications only when issuers choose to
disseminate them in a free-writing prospectus. Less frequent collection could
compromise investor protection.

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7.

Special Circumstances
Not applicable.

8.

Consultations with Persons Outside the Agency

Rule 433 was proposed for public comment. No comments were received on this
request during the 60-day comment period prior to OMB’s review of this submission.
9.

Payment or Gift to Respondents

Not applicable.
10.

Confidentiality

Not applicable.
11.

Sensitive Questions

Not applicable.
12.

Estimate of Respondent Reporting Burden

We estimate that it takes approximately 1.3 burden hours per response to prepare
a free writing prospectus and that the information is filed by 2,906 companies
approximately 1.25 times a year for a total of approximately 3,633 responses. We
estimate that 25% of the 1.3 burden hours per response (0.32 hours) is prepared by the
company for a total annual reporting burden of approximately 1,163 hours (0.32 x 3,633
responses).
13.

Estimate of Total Annualized Cost Burden

We estimated that 75% of the 1.3 hours per response (0.98 hours) is prepared by
the issuer’s outside counsel. We estimate that Rule 433 compliance will cost $400 per
hour ($400 x 0.98 hours per response x 3,633 responses) for a total cost of $1,424,136.
The estimated cost is made solely for the purpose of the Paperwork Reduction Act. The
cost is not derived from a comprehensive or even representative survey or study of the
cost of Commission rules and forms.
14.

Costs to Federal Government
The estimated cost to the federal government is $125,000.

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15.

Reason for Change in Burden
There is no change in the burden.

16.

Information Collection Planned for Statistical Purposes
Not applicable.

17.

Display of OMB Approval date
Not applicable.

18.

Exceptions to Certification for Paperwork Reduction Act Submissions
Not applicable.

B.

Statistical Methods
Not applicable.