Form BDW Supporting Statement FINAL

5

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 15b6-1 and Form BDW

A. Justification

1. Necessity of Information Collection

Section 15(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") provides that any broker-dealer may, upon such terms and conditions as the Securities and Exchange Commission (“Commission”) deems necessary or appropriate in the public interest or for the protection of investors, withdraw from registration by filing a written notice of withdrawal with the Commission. Similarly, Section 15B(c)(3) of the Exchange Act provides that municipal securities dealers may, upon such terms and conditions as the Commission may deem necessary in the public interest or for the protection of investors, or municipal entities or obligated person, withdraw from registration by filing a written notice of withdrawal with the Commission. In addition, Section 15C(c)(1)(B) of the Exchange Act provides that any government securities broker or government securities dealer may, upon such terms and conditions as the Commission may deem necessary in the public interest or for the protection of investors, withdraw from registration by filing a written notice of withdrawal with the Commission.

To implement the foregoing statutory provisions of the Exchange Act, the Commission has promulgated Rules 15b6-1, 15Bc3-1, and 15Cc1-1,¹ as well as Form BDW, the uniform request for broker-dealer withdrawal.² Rules 15b6-1, 15Bc3-1, and 15Cc1-1 require brokers or dealers, municipal securities dealers which are not a bank or a separately identifiable department or division of a bank, and government securities brokers or government securities dealers, respectively, to file a notice of withdrawal using Form BDW.

Form BDW must be filed in accordance with the instructions contained therein with the Central Registration Depository (“CRD”), a computerized database operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) that maintains information regarding broker-dealers and their registered personnel. CRD is used to facilitate registration and termination with federal and state securities regulators.

Withdrawal from broker-dealer registration becomes effective 60 days after the filing of Form BDW. The 60 days may be exceeded if the broker-dealer consents or the Commission by order determines a delay is necessary or appropriate in the public interest or for the protection of investors. The Commission may also determine a shorter period is required for effectiveness.

In addition, a notice-registered broker-dealer³ submitting a request to withdraw its registration must file a notice of withdrawal on Form BDW with the National Futures Association (“NFA”), which maintains information regarding notice-registered broker-dealers on behalf of the Commission.

The information collected on Form BDW is used by the Commission in determining whether it is in the public interest to permit a broker-dealer or notice-registered broker-dealer to withdraw from registration. The Commission also uses the information for other purposes, such as referrals to other government authorities or to self-regulatory organizations (“SROs”) for investigatory purposes in connection with securities litigation.

2. Purpose and Use of the Information Collection

The Commission uses the information disclosed by applicants in Form BDW, as required by Rules 15b6-1, 15Bc3-1, and 15Cc1-1 to: (1) determine whether it is in the public interest to permit broker-dealers and notice-registered broker-dealers to withdraw from registration; (2) develop central information resources where the Commission and other government agencies and SROs may obtain information for investigatory purposes in connection with securities litigation; and (3) to develop statistical information about broker-dealers, notice-registered broker-dealers, municipal securities dealers, and government securities broker-dealers. Without Form BDW, the Commission, SROs, state regulators, the Commodity Futures Trading Commission, and the public would be without an important source of information regarding broker-dealers and notice-registered broker-dealers that are seeking to withdraw from registration.

3. Consideration Given to Information Technology

As required by Rules 15b6-1, 15Bc3-1, 15Cc1-1, and the instructions to Form BDW, fully registered broker-dealers requesting to withdraw registration with the Commission currently file Form BDW with FINRA electronically through CRD. The filings are reviewed by the Commission through CRD. This method of collecting information reduces the regulatory burden upon broker-dealers by permitting them to file applications for registration, amendments thereto, and withdrawals at one central location, rather than separately with the Commission, certain SROs, and the states.

Notice-registered broker-dealers requesting to withdraw registration with the Commission file a completed Form BDW with the NFA. The NFA maintains these records on behalf of the Commission. This method of collecting information reduces the regulatory burden upon notice-registered broker-dealers, by permitting them to file applications for registration, amendments thereto, and withdrawal requests at one central location.

4. Duplication

As noted above, Rules 15b6-1, 15Bc3-1, and 15Cc1-1 require that fully registered broker-dealers use Form BDW to withdraw from registration with the Commission. Form BDW was developed jointly with the state securities commissions and the SROs. Consequently, fully registered broker-dealers are able to file Form BDW only once with CRD as opposed to filing multiple copies of Form BDW with multiple regulators. The information disclosed in Form BDW is not available to the Commission or investors from any other source. The requirements to disclose information in Form BDW do not duplicate any other federal statute or rule.

In addition, notice-registered broker-dealers file Form BDW with the NFA to withdraw from registration with the Commission. The information disclosed in Form BDW is not available to the Commission or investors from any other source. The requirements to disclose information in Form BDW do not duplicate any other federal statute or rule.

5. Effect on Small Entities

All fully-registered broker-dealers and notice-registered broker-dealers, regardless of their size, are required to disclose the information requested in Form BDW. Thus, Form BDW affects small broker-dealers requesting withdrawal from registration. The Commission believes, however, that the disclosure requirements of Form BDW are not unduly burdensome, particularly in relation to the important objectives served by the disclosure of information called for by Form BDW.

6. Consequences of Not Conducting Collection

Rules 15b6-1, 15Bc3-1, and 15Cc1-1 require fully-registered broker-dealers and notice-registered broker-dealers to file Form BDW only once to withdraw from registration with the Commission. Thus, less frequent collections of Form BDW information is not possible.

7. Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

There are no special circumstances. This collection is 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.

9. Payment or Gift

No payments or gifts were provided.

10. Confidentiality

The collection of information includes social security numbers (“SSN”) of sole proprietors on a voluntary basis.⁴ To the extent the Commission receives SSNs or other confidential information pursuant to submissions on Form BDW, such information would be kept private to the extent permitted by law.

11. Sensitive Questions

To the extent the Commission receives confidential information pursuant to submissions on Form BDW, such information would be kept confidential, subject to the provisions of applicable law (e.g., Freedom of Information Act, 5 U.S.C. 552). In particular, the collection of information includes social security numbers (“SSN”) of sole proprietors on a voluntary basis.⁵ This information is necessary to help Commission staff process requests from registered broker-dealers to withdraw their registration. If a broker-dealer is a sole proprietor, such person’s IRS Employer Identification number, which would have been previously provided as part of the broker-dealer’s registration application, will be their SSN.

Form BDW was promulgated pursuant to the Commission’s rulemaking authority under the Securities and Exchange Act of 1934. We also believe that the treatment of confidential information in Form BDW is consistent with the Federal Information Security Management Act of 2002 and the Privacy Act of 1974. Further, this collection of personally identifiable information was included in the System of Records Notice (“SORN”) identified as “SEC-49” and published in the Federal Register on December 9, 1999.⁶ This SORN also may be found on the Commission’s Privacy Compliance website.⁷

12. Burden of Information Collection

The time necessary to complete and file Form BDW with CRD or the NFA will vary depending on the nature and complexity of the applicant’s securities business. On average, the Commission estimates that it would take a broker-dealer approximately one hour to complete and file a Form BDW to withdraw from Commission registration. The Commission further estimates that approximately 488 broker-dealers withdraw from Commission registration annually.⁸ Therefore, the 488 broker-dealers that withdraw from registration by filing Form BDW would incur an aggregate annual reporting burden of approximately 488 hours.⁹

The Commission believes that a broker-dealer would have a Chief Compliance Officer, at $441 per hour,¹⁰ complete and file the Form BDW to withdraw from Commission registration. Therefore, the estimated aggregate annual internal compliance cost to respondents of the burden hours associated with Rule 15b6-1 and Form BDW is approximately $215,208,¹¹ or $71,736 per year when annualized over three years.

13. Costs to Respondents

None. Respondents will not incur any capital, start-up, operation, or maintenance costs.

14. Costs to the Federal Government

None.

15. Changes in Burden

The annual burden of 488 hours reflects a 27 hour decrease from the current OMB inventory of 515 hours. This is due to a decrease in the number of respondents from 515 to 488.

16. Information Collection Planned for Statistical Purposes

Not applicable. The information collection is not used for statistical purposes

17. Approval to Omit OMB Expiration Date

We request authorization to omit the expiration date on the electronic version of the form for design and IT project scheduling reasons. The OMB control number will be displayed.

18. Exceptions to Certification for Paperwork Reduction Act Submissions

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.

1 17 CFR 240.15b6-1, 17 CFR 240.15Bc3-1, and 17 CFR 240.15Cc1-1.

217 CFR 249.501a.

3 15 U.S.C. 78o(b)(11) describes a class of notice-registered broker-dealers and the statutory requirements that such broker-dealers must satisfy in order to file by notice with the Commission as a broker-dealer for the purpose of trading security futures products.

4 17 CFR 249.501a.

5 Id.

6 See Privacy Act of 1974: Notice of Modifications to a System of Records and the Establishment of a New System of Records, 64 FR 69051 (Dec. 9, 1999).

7 The document can be found at http://www.sec.gov/about/privacy/sorn/secsorn49.pdf.

8 This estimate is based on Form BDW data collected over the past three years for fully registered broker-dealers. In fiscal year (from 10/1 through 9/30) 2011, 524 broker-dealers withdrew from registration. In fiscal year 2012, 428 broker-dealers withdrew from registration. In fiscal year 2013, 513 broker-dealers withdrew from registration. (524 + 428 + 513) / 3 = 488.

9 (488 x 1 hour) = 488 hours.

10 According to the SIFMA publication titled Management & Professional Salaries Data -- Oct, 2012, as modified by Commission staff to account for an 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead, the hourly cost of a Chief Compliance Officer is approximately $441/hour.

11 488 hours x $441 = $215,208.