Form 3 Supporting Statement.2014

SUPPORTING STATEMENT FOR FORM 3
A.

JUSTIFICATION
1.

Circumstances Making the Collection of Information Necessary

Pursuant to Section 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”),
every person who owns more than ten percent of any class of equity security (other than an
exempted security) which is requested under Section 12 of the Exchange Act, or who is a director
or an officer of the issuer of such security (collectively “reporting persons”) are required to file
statements disclosing their ownership of the issuer’s equity securities. Form 3 must be filed
within ten days after the event by which the person becomes a reporting person.
Congress enacted Section 16 in 1934 to combat the many abuses of insider trading.
Congress also updated the Section 16 reporting requirements through the Sarbanes-Oxley Act of
2002. Congress found evidence of officers, directors, and major shareholders who manipulated
stock prices and profited from information at their disposal. The section was intended to be a
defense to curb such abuses through disclosure and short-swing profit recovery.
2.

Purpose and Use of the Information Collection

The principal function of the Commission’s forms and rules under the disclosure
provisions of the federal securities laws is to make information available to the securities market.
Moreover, the information required by the Commission permits verification of compliance with
securities law requirements and assures the public availability and dissemination of such
information. The Commission uses little of the collected information itself (except on an
occasional basis in the enforcement of the securities laws). In this respect, these information
collections differ significantly from most other federal information collections that are primarily
used for the benefit of the collecting agency.
3.

Consideration Given to Information Technology

The Commission requires the electronic filing of Form 3 through the Electronic Data
Gathering and Retrieval (EDGAR) computerized filing system.
4.

Duplication of Information

Although some of the Form 3 disclosure requirements may overlap with Form 144 and
Schedule 13D and G reporting requirements; such requirements typically serve different purposes
and affect different classes of filers.
5.

Reducing the Burden on Small Entities

Only reporting persons of small entities that have securities registered under Exchange
Act Section 12 are subject to the information collection requirements of Forms 3

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6.

Consequences of Not Conducting Collection

The legislative intent behind this information collection could not be met by fewer
collections. The protection of investors as mandated by the federal securities laws requires
insiders of companies with securities registered under Section 12 to disclose basic information
about their securities ownership and transactions.
7.

Special Circumstances

There are no special circumstances at this time.
8.

Consultations with Persons Outside the Agency

Form 3 was proposed for public comment. No comments were received on this request
during the 60-days comment period prior to OMB’s review of this submission.
9.

Payment or Gift to Respondents

Not applicable.
10.

Confidentiality

Form 3 is a public document.
11.

Sensitive Questions

No information of a sensitive nature would be required under this collection of
information. The information collection collects basic Personally Identifiable Information (PII)
that may include name, business address, and residential address (for sole proprietor only),
telephone/cellular/facsimile number, email address, and Tax ID Number (TIN). The information
collection is covered under the System of Records Notices (SORN), which may be found at the
following link: http://www.sec.gov/about/privacy/sorn/secsorn5.pdf. The Privacy Impact
Assessment (PIA) is provided as a supplemental document.
12.

Estimate of Respondent Reporting Burden

Form 3 is filed by approximately 16,855 insiders annually and it takes approximately 0.5
hours to prepare for a total 8,428 annual burden hours. The estimated burden hours are solely for
the purpose of the Paperwork Reduction Act. They are not derived from a comprehensive or
even a representative survey or study of the cost of Commission rules and forms.

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13.

Estimate of Total Annualized Cost Burden

Our burden estimates do not include an annual cost estimates because we believe that
Form 3 is generally prepared by the filer or by corporate counsel as opposed to outside counsel.
14.

Costs to Federal Government

The estimated cost to the government is approximately $50,000 a year to administer
Forms 3. This estimate is solely for purposes of the Paperwork Reduction Act and is not derived
from a comprehensive or even a representative survey or study of the cost of Commission rules
and forms.
15.

Reason for Change in Burden

The increase in burden of 728 hours is due to an adjustment. The burden hour increase is
due to an increase in the number of Form 3 filed with the Commission.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

We request authorization to omit the expiration date on the electronic version of the form.
Including the expiration date on the electronic version of the form will result in increased costs,
because the need to make changes to the form may not follow the application’s scheduled version
release dates. The OMB control number will be displayed.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

Not applicable.

B.

STATISTICAL METHODS
Not applicable.