Rule 19d-1 justification

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 19d-1; 3235-0206
A.

JUSTIFICATION
1.

Necessity of Information Collection

Rule 19d-1 (“Rule”) under the Securities Exchange Act of 1934 (the “Exchange Act”),
prescribes the form and content of notices to be filed with the Securities and Exchange Commission
(“Commission”) by self-regulatory organizations (“SROs”) for which the Commission is the
appropriate regulatory agency concerning the following final SRO actions: (1) disciplinary actions
with respect to any person; (2) denial, bar, prohibition, or limitation of membership, participation or
association with a member or of access to services offered by an SRO or member thereof; (3)
summarily suspending a member, participant, or person associated with a member, or summarily
limiting or prohibiting any persons with respect to access to or services offered by the SRO or a
member thereof; and (4) delisting a security.
The Rule enables the Commission to obtain reports from the SROs containing information
regarding SRO determinations to delist a security, discipline members or associated persons of
members, deny membership or participation or association with a member, and similar adjudicated
findings. The Rule requires that such actions be promptly reported to the Commission. The Rule
also requires that the reports and notices supply sufficient information regarding the background,
factual basis and issues involved in the proceeding to enable the Commission: (1) to determine
whether the matter should be called up for review on the Commission’s own motion; and (2) to
ascertain generally whether the SRO has adequately carried out its responsibilities under the
Exchange Act. Rule 19d-1 was adopted on July 8, 1977, pursuant to authority granted the
Commission in Sections 6, 11A, 15, 15A, 19, and 23 of the Exchange Act, 15 U.S.C. 78f, 78k-1,
78o, 78o-3, 78q, 78q-1, 78s, and 78w.
2.

Purpose and Use of the Information Collection

The Commission uses the information provided in the submissions filed pursuant to Rule
19d-1 in its SRO and broker-dealer oversight programs. Rule 19(d)-1 under the Exchange Act
requires SROs to “promptly” file notice with the Commission of any final action covered by the
Rule. The Commission would not be able to comply with certain provisions of the Exchange Act
and to thoroughly oversee the disciplinary activities of the SROs if this information was not
reported.
3.

Consideration Given to Information Technology

The majority of SROs submit notices electronically to the Commission’s Rule 19d-1
Filing System. A small number of notices are received in paper format, but the information is
scanned and manually entered into the electronic system.

4.

Duplication

There is no duplication of this notification process to the Commission.
5.

Effect on Small Entities

Not applicable. Rule 19d-1 does not affect small entities because the SRO respondents do
not meet the definition of “small entities” found in Rule 0-10 of the Exchange Act.
6.

Consequences of Not Conducting Collection

The principal purpose of Rule 19d-1 is to provide the Commission with an opportunity to
help ensure that SRO enforcement of the federal securities laws is performed diligently and fairly.
Rule 19d-1 under the Exchange Act requires that these notices be filed “promptly.” Accordingly, a
less frequent reporting requirement would weaken the Commission’s ability to oversee the
disciplinary activities of the SROs in a timely fashion. Moreover, a less frequent collection of
information is not practical if the Commission is to have a meaningful and timely opportunity to
review any final action of an SRO.
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

There has been no decision to provide any payment of gift to respondents.
10.

Confidentiality

No assurance of confidentiality is given, as the SROs generally make their final disciplinary
actions available to the public as a matter of course.
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, employee ID, occupation, job title, work
address, certificate/license number, work history, civil or criminal history, and business
associates. The agency has determined that the information collection constitutes a system of
2

records for purposes of the Privacy Act and is covered under System of Records Notice (SORN)
SEC 70. The SEC-70 SORN, published on February 15, 2018, is available at
https://www.sec.gov/privacy. In accordance with Section 208 of the E-Government Act of 2002,
the agency has conducted a Privacy Impact Assessment (PIA) of the Rule 19d-1 Filing Tracking
system, in connection with this collection of information. The Rule 19d-1 Filing Tracking
System PIA, published on August 26, 2009 is provided as a supplemental document and is also
available at https://www.sec.gov/privacy.
12.

Burden of Information Collection

The Commission estimates that this rule imposes a total estimated industry burden of
1,350 hours per year. Based upon past submissions, we estimate that approximately eighteen
respondents will utilize this notification procedure annually, with a burden of approximately 1,350
total hours. This figure represents approximately 75 hours spent, per respondent. It is estimated
that each respondent will submit approximately 75 responses per year and it is estimated that each
respondent will spend approximately 1 hour per response. Based on available salary data, the
Commission estimates that the internal cost per SRO is approximately $298, per response. 1
Therefore, the internal labor cost of compliance for all respondents is approximately $402,300 (18
respondents x 75 responses x $298 per response).
Summary of Hourly Burdens (Annual)
Name of
Information
Collection

Type of
Burden

Rule 19d-1
Notices

Reporting

Number Number
Burden
of
of
per
Entities Responses Response
per Entity
18

75

1

Total
Burden
Per
Entity
75

Total
Total
Number
Industry
of
Burden
Responses
1,350

TOTAL BURDEN
13.

1,350
1,350

Costs to Respondents

It is not anticipated that respondents will have to incur any capital and start-up costs, nor
1

This estimate was calculated using a $298 per hour wage for a Compliance Manager, based on
the Security Industry and Financial Markets Association’s, Management & Professional
Earnings in the Securities Industry 2013, which has been modified by Commission staff to
account for an 1,800-hour work year as well as inflation, and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead.
3

any additional operational or maintenance costs (other than as provided in Item 12), to comply with
the collection of information.
14.

Costs to Federal Government

Not Applicable.
15.

Changes in Burden

The Commission revised the burden to reflect the recent number of notices received per
year. In 2017 there were a total of 1,210 submissions and 888 in 2018. As a conservative
measure, we are using an estimate that is approximately 10 percent higher (rounded up) than the
larger annual submissions number. In addition, as a conservative measure, we are increasing our
estimate for the average hourly burden per response from 0.5 hour per response to 1 hour per
response in case some submissions require more than a half hour to prepare. The overall change
is a decrease in the annual time burden from 2,250 hours to 1,350 hours. The 900 hour decrease
is due to the fact that while the time per response has increased from 0.5 hour to 1 hour, the
estimated number of responses per respondent has decreased from 250 to 75.
Summary of Change in Burden (Annual)
Previously
Approved
Burden
2,250

New Estimated
Burden

1,350

Change in Burden

The estimated number of responses
decreased based on data from recent
filings, and the hourly burden was
increased by half an hour as a
conservative measure.

-900

TOTAL CHANGE IN

BURDEN
16.

Reason for the Change

Information Collections Planned for Statistical Purposes

Not applicable. The information currently is not used for statistical purposes.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.
4

-900

B.

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

5