Form 3 Supporting Statement.2018

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT INFORMATION COLLECTION
SUBMISSION 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, Analysis and Retrieval (EDGAR) computerized filing system.
4.

Duplication of Information

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

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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.
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

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, including social security numbers, will be
required under this collection of information. The information collection collects basic
Personally Identifiable Information (PII) that may include: name, address and zip code.
However, the agency has determined that the information collection does not constitute a
system of record for purposes of the Privacy Act. Information is not retrieved by a
personal identifier. 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 January
29, 2016, is provided as a supplemental document and is also available at
https://www.sec.gov/privacy.

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12.

Estimate of Respondent Reporting Burden

For purposes of the Paperwork Reduction Act (“PRA”), we estimate that Form 3
takes approximately 0.5 hours per response to comply with the collection of information
requirements and is filed by 21,968 respondents. We derived our burden hour estimates
by estimating the average number of hours it would take an issuer to compile the
necessary information and data, prepare and review disclosure, file documents and retain
records. In connection with rule amendments to the form, we occasionally receive PRA
estimates from public commenters about incremental burdens that are used in our burden
estimates. We believe that the actual burdens will likely vary among individual issuers
based on the nature of their operations. We further estimate that 100% of the collection
of information burden is carried by the reporting person. Based on our estimates, we
calculated the total reporting burden to be 10,984 hours (0.5 hours per response x 21,968
responses). For administrative convenience, the presentation of the total related to the
paperwork burden hours has been rounded to the nearest whole number. The estimated
burden hours are made solely for the purpose of the Paperwork Reduction Act.
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 hours of 2,556 is due to an adjustment. The increase in
burden hours reflects an increase in the number of respondents filing Forms 3 with the
Commission.
16.

Information Collection Planned for Statistical Purposes
Not applicable.

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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.