Form BDW Supporting Statement (2017)

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.

1

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

2

17 CFR 249.501a.

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In addition, a notice-registered broker-dealer 3 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 brokerdealers 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 noticeregistered 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 noticeregistered 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.

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.

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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.

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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.
In accordance with Section 208 of the E-Government Act of 2002, the agency has
conducted a Privacy Impact Assessment (PIA) of the EDGAR system, in connection with
this collection of information. The EDGAR PIA, published on 1/29/2016, is provided as a
supplemental document and is also available at
https://www.sec.gov/about/privacy/pia/pia-edgar.pdf .

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 380 broker-dealers withdraw from
Commission registration annually. 6 Therefore, the 380 broker-dealers that withdraw
4

17 CFR 249.501a.

5

Id.

6

This estimate is based on Form BDW data collected over the past three years for fully registered
broker-dealers. This estimate is based on the numbers of forms filed; therefore, the number may
include multiple forms per broker-dealer if the broker-dealer’s initial filing was incomplete. In
fiscal year (from 10/1 through 9/30) 2014, 454 broker-dealers withdrew from registration. In

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from registration by filing Form BDW would incur an aggregate annual reporting burden
of approximately 380 hours. 7
The Commission believes that a broker-dealer would have a Chief Compliance
Officer, at $507 per hour, 8 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 $192,660, 9 or $64,220 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 380 hours reflects a 108 hour decrease from the current
OMB inventory of 488 hours. This is due to a decrease in the number of respondents
from 488 to 380.
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.

fiscal year 2015, 327 broker-dealers withdrew from registration. In fiscal year 2016, 360 brokerdealers withdrew from registration. (454 + 327 + 360) / 3 = 380.
7

(380 x 1 hour) = 380 hours.

8

According to the SIFMA publication titled Management & Professional Earnings in the Securities
Industry 2013, modified by Commission staff to account for an 1,800-hour work-year and
inflation, multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead,
the hourly cost of a Chief Compliance Officer is approximately $507/hour.

9

380 hours x $507 = $192,660.

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B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
This collection does not involve statistical methods.