FR 2021-02959

Summary of the Document

The document is a notice from the Securities and Exchange Commission (SEC) requesting approval from the Office of Management and Budget (OMB) to extend the process of collecting fingerprint information as mandated by Rule 17f-2(c) under the Securities Exchange Act of 1934. This process involves individuals in the securities industry having their fingerprints submitted to the Federal Bureau of Investigation (FBI) through self-regulatory organizations (SROs) such as national securities exchanges and associations. Annually, approximately 3,900 entities submit around 281,804 sets of fingerprints, which results in a significant collective time commitment. The associated costs for processing these fingerprints exceed $7 million each year.

Significant Issues and Concerns

Several issues arise from this document. Firstly, there is no detailed analysis of the costs associated with fingerprint processing, specifically the fees charged by SROs. The fees differ notably between electronic ($26) and hard copy ($41) submissions, yet the document lacks an explanation for this disparity. Transparency regarding these fees is essential to ascertain their reasonableness.

Moreover, it is noted that most fingerprints are processed through FINRA, but the rationale behind this predominance is not provided. This could imply a preference for FINRA over other SROs, needing further clarification to ensure fair treatment among different organizations.

Legal jargon and references, such as "44 U.S.C. 3501 et seq." and "15 U.S.C. 78a et seq.," are present but may be challenging for a general audience to understand. Simplifying these terms could improve comprehension. Additionally, the document does not break down the estimation of the total time burden of 70,451 hours, which would help in verifying the accuracy of this figure.

Impact on the Public and Stakeholders

Broadly, the document impacts the public by emphasizing the SEC's role in ensuring the securities industry's compliance with federal fingerprinting requirements. This supports security and integrity within the industry, which indirectly affects the general investing public through enhanced trust in securities markets.

Specific stakeholders, such as personnel involved in the securities industry, might face negative impacts due to the significant time and financial burdens imposed by the fingerprinting requirements. The fees, especially for smaller entities, could be substantial, thus affecting operational budgets. On the positive side, fingerprinting contributes to higher security standards, potentially benefiting all stakeholders by fostering a safer financial ecosystem.

In summary, while the initiative aims to reinforce security in the securities industry, the document presents several areas where clarity and transparency could be improved to ensure fair practices and reasonable costs for all involved.

In this Federal Register document, the financial references pertain to the fees charged for processing fingerprint cards under Rule 17f-2(c). These financial allocations are part of a procedural requirement for individuals in the securities industry to submit their fingerprints through self-regulatory organizations (SROs) as part of maintaining a secure operational environment. Several financial aspects are noted in the document.

Summary of Financial Allocations

The document outlines the costs associated with fingerprint card processing, which involve distinct fees for electronic and hard copy submissions. Specifically, the SROs charge an estimated $26 fee per electronic fingerprint card, culminating in a total annual cost of approximately $6,596,746 for all respondents. This equates to about $1,691 per respondent per year. Conversely, a $41 fee is levied for hard copy submissions, with a total annual cost amounting to $1,151,403, or approximately $295 per respondent annually. Thus, combining these expenses results in a total annual burden of approximately $7,748,149 for all respondents involved.

Relation to Identified Issues

Several issues arise from the manner in which these financial processes are detailed. Firstly, there is a lack of transparency regarding the rationale behind the $26 and $41 fees. Such justification would provide a clearer understanding of whether these charges are reasonable or potentially excessive. Furthermore, the document does not explain why electronic processing is cheaper than hard copy processing, which might indicate underlying operational efficiencies or other unexamined factors contributing to this price disparity.

Moreover, the majority of fingerprints being submitted through FINRA without further elaboration may suggest preferential operational conditions or efficiencies exclusive to this organization. A detailed cost analysis or rationale behind this practice could address any concerns of favoritism or imbalance within the system.

Concerning the document's references to the total time burden, equating to 70,451 hours annually, further explication is warranted to substantiate this figure thoroughly. Understanding whether the fees correlate with the estimated processing time could offer additional insight into the appropriateness of these financial allocations.

Overall, while the document does provide discrete financial references, greater clarity and justification surrounding these allocations would enhance transparency and enable stakeholders to more adequately assess the financial obligations associated with this regulatory requirement.