Rule 433 SupportingStatement.10-20-2020

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT INFORMATION COLLECTION
SUBMISSION FOR SECURITIES ACT RULE 433

A.

JUSTIFICATION
1

Circumstances Making the Collection of Information Necessary

The Commission adopted Rule 433 on July 19, 2005, in Release 33-8591
(“Securities Offering Reform”). The rule was designed to reduce current restrictions on
communications that issuers can make to investors during a registered offering of
securities. Specifically, it governs the use and filing of a free writing prospectus. Rule
433 applies to any free writing prospectus with respect to the securities of an issuer
(except as set forth in Rule 164), that are the subject of a registration statement that has
been filed under the Securities Act of 1933. The free writing prospectus can include
information that is not included in the registration statement. A free writing prospectus
that satisfies the conditions of Rule 433 will be a prospectus under Section 10(b) of the
Securities Act and will, for purposes of considering it a prospectus, be deemed to be
public, without regard to its method of use or distribution, because it is related to the
public offering of securities that are the subject of a filed registration statement. Rule 433
sets forth conditions that issuers must meet to use a free-writing prospectus.
2.

Purpose and Use of the Information Collection

The primary purpose of the rule is to relax restrictions on communications that
issuers can make to investors during a registered offering of securities.
3.

Consideration Given to Information Technology

Rule 433 communications are filed electronically on the Commission’s Electronic
Data Gathering, Analysis and Retrieval (EDGAR) system, except under limited
conditions set forth in Rule 433(d).
4.

Duplication of Information
There are no other filing requirements that duplicate this information.

5.

Reducing the Burden on Small Entities

All issuers, including small business issuers, have discretion as to whether or not
they want to disseminate written communications in the form of a free-writing
prospectus. Furthermore, Rule 433 was adopted in connection with other revisions, all of
which were intended to decrease costs and burdens for all issuers, including small
business issuers, and enhance communications between issuers and investors.

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6.

Consequences of Not Conducting Collection

Rule 433 requires filing of written communications only when issuers choose to
disseminate them in a free-writing prospectus. Less frequent collection could
compromise investor protection.
7.

Special Circumstances
There are no special circumstances.

8.

Consultations with Persons Outside the Agency

No comments were received on this request during the 60-day comment period
prior to OMB’s review of this submission.
9.

Payment or Gift to Respondents
No payment or gift has been provided to any respondents.

10.

Confidentiality

A free writing prospectus meeting the conditions of Rule 433(d)(1) must be filed
with the Commission and is publicly available.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be
required under this collection of information. The information collection does not collect
personally identifiable information (PII). The agency has determined that a system of
records notice (SORN) and privacy impact assessment (PIA) are not required in
connection with the collection of information.
12.

Estimate of Respondent Reporting Burden
Table of Reporting Burden Due to an Extension Request
Information
Collection
Title
Rule 433

OMB Control
Number

Number of
Responses

Burden
Hours

3235-0617

15,700

5,024

We estimate that that the information is filed by 2,906 companies approximately
5.4026 times a year for a total of approximately 15,700 responses. We derived our

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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 25% of the collection of information burden is carried by the issuer internally and
that 75% of the burden of preparation is carried by outside professionals retained by the
company. Based on our estimates, we calculated the total reporting burden to be 5,024
hours (0.32 hours per response x 15,700 responses). For administrative convenience, the
presentation of the totals related to the paperwork burden hours have been rounded to the
nearest whole number and the cost totals have been rounded to the nearest dollar. The
estimated burden hours are made solely for the purpose of the Paperwork Reduction Act.
13.

Estimate of Total Annualized Cost Burden
Table of Cost Burden Due to Extension Request
Information
Collection Title

OMB Control
Number

Number of
Responses

Cost
Burden

Rule 433

3235-0617

15,700

$6,028,800

We estimated that 75% of the 1.28 hours per response (0.96 hours) is prepared by
the issuer’s outside counsel. We estimate that Rule 433 compliance will cost $400 per
hour ($400 x 0.96 hours per response x 15,700 responses) for a total cost of $6,028,800.
We estimate an hourly cost of $400 for outside legal and accounting services used in
connection with public company reporting. This estimate is based on our consultations
with registrants and professional firms who regularly assist registrants in preparing and
filing disclosure documents with the Commission. Our estimates reflect average burdens,
and therefore, some companies may experience costs in excess of our estimates and some
companies may experience costs that are lower than our estimates. For administrative
convenience, the presentation of the totals related to the paperwork burden hours have
been rounded to the nearest whole number and the cost totals have been rounded to the
nearest dollar. The cost estimate is made solely for the purpose of the Paperwork
Reduction Act.
14.

Costs to Federal Government

The annual cost of reviewing and processing disclosure documents, including
registration statements, post-effective amendments, proxy statements, annual reports and
other filings of operating companies amounted to approximately $103,479,690 in fiscal
year 2019, based on the Commission’s computation of the value of staff time devoted to
this activity and related overhead.

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15.

Reason for Change in Burden
There is no change in burden.

16.

Information Collection Planned for Statistical Purposes
The information collection is not planned 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

There are no exceptions to certification for the Paperwork Reduction Act
submissions.
B.

STATISTICAL METHODS
The information collection does not employ statistical methods.