PRA 17Ad-4(b) (c) Justification 2012

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 17Ad-4(b) and (c)

A. Justification
(1) Necessity of Information Collection
To facilitate the establishment of a national clearance and settlement system for securities
transactions, Congress authorized the Securities and Exhange Commission (“Commission”) to
establish a regulatory scheme for transfer agents under the Securities Exchange Act of 1934 (the
“Act”). Pursuant to this authority, the Commission promulgated rules that require registered
transfer agents to meet minimum performance and recordkeeping standards designed to protect
investors and facilitate securities transfers. Because a significant number of registered transfer
agents perform transfer functions for a relatively small number of securities issues or because of
the limited trading volume in those issues, the Commission concluded that these transfer agents
should be able to claim relief from many of the Commission’s transfer agent rules.
If the Commission or the Office of the Comptroller of the Currency (“OCC”) is the
appropriate regulatory authority (“ARA”) for an exempt transfer agent, that transfer agent is
required to prepare and maintain in its possession a notice certifying that it is exempt from
certain performance standards and recordkeeping and record retention provisions of the
Commission’s transfer agent rules. This notice need not be filed with the Commission or OCC.
If the Board of Governors of the Federal Reserve System (“Fed”) or the Federal Deposit
Insurance Corporation (“FDIC”) is the transfer agent’s ARA, that transfer agent must prepare a
notice and file it with the Fed or FDIC.
Rule 17Ad-4(c) sets forth the conditions under which a registered transfer agent loses its
exempt status. Once the conditions for exemption no longer exist and if the ARA for the transfer
agent is the Fed or the FDIC, the transfer agent must prepare and file a notice of loss of exempt
status under paragraph (c). The transfer agent cannot claim exempt status under Rule 17Ad-4(b)
again until it remains subject to the minimum performance standards for non-exempt transfer
agents for six consecutive months.
The ARAs use the information contained in the notice to determine whether a registered
transfer agent qualifies for the exemption, to determine when a registered transfer agent no
longer qualifies for the exemption, and to determine the extent to which that transfer agent is
subject to regulation.
(2) Purpose and Use of the Information Collection
The ARAs would be unable to effectively monitor transfer agent compliance with the
Commission’s transfer agent rules if agents claiming exemptions from certain performance
standards and recordkeeping and record retention provisions did not prepare and file these
notices.

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(3) Consideration Given to Information Technology
Not applicable.
(4) Duplication
There are no duplicative requirements.
(5) Effect on Small Entities
Rule 17Ad-4(b) exempts small entity transfer agents from compliance with the
performance standards and recordkeeping and record retention requirements that other transfer
agents are subject to. The collection of information concerning the number of items received for
transfer and processing for the preceding six months creates a minimal burden that is outweighed
by the exemption from the detailed recordkeeping and record retention provisions that other
transfer agents must comply with.
(6) Consequences of Not Conducting Collection
Since the notice of exempt status or loss of exempt status must be prepared and filed in
some cases only at the time exempt status is attained or lost, the information collected could not
be conducted less frequently.
(7) Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
The collection of information upon which the preparation, and filing where appropriate,
of a notice of exempt status or loss of exempt status is conducted in a manner consistent with the
guidelines in 5 CFR 1320.5(d)(2).
(8) Consultations Outside the Agency
The required Federal Register notice with a 60-day comment period soliciting comments
on this collection of information was published. No public comments were received. In
addition, the Commission’s staff periodically discusses matters affecting transfer agent
regulation with the FDIC, OCC, and the Fed.
(9) Payment or Gift
Not applicable.
(10) Confidentiality
No assurance of confidentiality is provided.
(11) Sensitive Questions

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No questions of a sensitive nature are asked.
(12) Burden of Information Collection
The Fed receives approximately 2 notices of exempt status and 2 notices of loss of
exempt status annually. The FDIC also receives approximately 2 notices of exempt status and 2
notices of loss of exempt status annually. The Commission and OCC currently do not require
transfer agents to file notice of exempt status or loss of exempt status. Instead, transfer agents
whose ARA is the Commission or OCC need only to prepare and maintain these notices. The
Commission estimates that approximately 10 notices of exempt status and 10 notices of loss of
exempt status are prepared annually by transfer agents whose ARA is the Commission. We
estimate that transfer agents that have the OCC as their ARA prepare and maintain
approximately 5 notices of exempt status and 5 notices of loss of exempt status annually. Thus,
a total of approximately 38 notices of exempt status and loss of exempt status are prepared and
maintained by transfer agents annually.
Respondents spend a minimal amount of time preparing notices of exempt status or loss of
exempt status. In view of the readily available nature of the information required to be stated in
the notice (because the information must be compiled and retained pursuant to other Commission
rules), the summary fashion in which such information must be presented in the notice (most
notices are one page or less in length), and the experience of the transfer agent staff regarding
these notices, the Commission estimates that most notices require approximately one-half hour to
prepare. Therefore, the Commission estimates the annual burden to be 19 hours (38 respondents
times one-half hour). We estimate the average cost per hour to be $30.00. Therefore, the total
cost of compliance for respondents is approximately $570 annually.
(13) Costs to Respondents
It is not anticipated that respondents will have to incur any capital and start up cost to
comply with the rule, and the only additional operational or maintenance costs respondents will
have to bear would be limited to postage, which would be minimal.
(14) Costs to Federal Government
The costs to the Federal Government associated with Rule 17Ad-4(b) & (c) are minimal.
The rule requires that transfer agents maintain notices of exempt status and, if the transfer
agent’s ARA is the Fed or FDIC, file that notice of exempt status or loss of exempt status with
the Fed or FDIC. The Commission and other ARAs review these records during the course of
examining and monitoring the operation of transfer agents. The time necessary to review these
notices, whether they have been filed with the FDIC or the Fed or during an inspection is onehalf hour. The annual cost to the Commission and other ARAs is approximately $1,000.

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(15) Changes in Burden
The $570.00 change in the annual cost burden is due to the incorrect monetization of the
time burden in the last ICR submission.
(16) Information Collection Planned for Statistical Purposes
Not applicable. The information collection is not used for statistical purposes.
(17) Approval to Display OMB Expiration Date
The Commission is not seeking approval from OMB.
(18) Exceptions to Certification
This collection complies with the requirements in 5 CFR 1320.9.
B. Collection of Information Employing Statistical Methods
This collection does not involve statistical methods.