FR 2024-28124

The document in question is a notice from the Securities and Exchange Commission (SEC) regarding an administrative process under the Paperwork Reduction Act of 1995. It highlights the SEC's request for the Office of Management and Budget (OMB) to extend its approval to collect information as specified in Rule 17f-1(b) of the Securities Exchange Act of 1934. This rule deals with an initiative called the Lost and Stolen Securities Program.

General Summary

The notice indicates that approximately 9,500 entities in the securities industry are currently part of this program, which mandates these entities to register and report any missing, lost, counterfeit, or stolen securities. Additionally, the SEC predicts that about four new entities will join the program annually. The notice provides a brief overview of the compliance burden and associated costs for these new entities, estimating that registration and reporting require half an hour and cost approximately $172 per entity every year.

The public can submit comments on this request from December 3, 2024, to January 2, 2025, by visiting a specified online platform or emailing a designated government address.

Significant Issues

One of the noticeable issues in this notice is the lack of clarity concerning the estimation of internal compliance costs. The document cites that compliance staff cost $344 per hour but does not elaborate on whether this rate is uniform across the industry or specific to particular sectors. This lack of detail could confuse stakeholders trying to assess the impact of proposed compliance requirements.

Further, the document assumes some prior knowledge of the Lost and Stolen Securities Program and Rule 17f-1(b). For those not well-versed in financial regulations, understanding both the regulatory history and practical implications might be challenging.

Additionally, the process for public comments might not be straightforward to those unfamiliar with federal regulatory procedures. The notice does not offer a detailed explanation of how to navigate the submission process, which could hinder public participation.

Broad Public Impact

The notice could broadly impact the public by supporting a regulatory framework designed to secure financial transactions and protect against securities fraud. By maintaining and extending the program, the SEC aims to ensure market integrity, which benefits investors and financial institutions alike.

However, for new entities entering the securities industry, this requirement introduces an additional layer of compliance that requires resources and financial commitment. While the direct public impact might not be immediately noticeable, ensuring that such programs keep the securities market robust indirectly serves every stakeholder reliant on a stable economy.

Impact on Specific Stakeholders

Entities within the securities industry represent the primary stakeholder group directly impacted by this notice. For these businesses, particularly new entrants anticipated each year, fulfilling this registration requirement involves added administrative tasks and costs. Although relatively minor in scale, these could present challenges for small firms with limited resources.

On the positive side, participation grants these entities access to a confidential database, potentially aiding in their internal processes for verification and fraud prevention. This access can be a significant benefit, adding an additional layer of protection to their operations.

In conclusion, while this notice is mainly procedural, the lack of clarity on specific issues and potential obstacles in public involvement underscore the need for clearer communication. Such transparency ensures that stakeholders are not only informed but also equipped to comply effectively with regulatory expectations.

The document provides specific information regarding the internal cost of compliance for entities under Rule 17f-1(b) of the Securities Exchange Act of 1934. This rule pertains to entities registered in the Lost and Stolen Securities Program. The text states that the Commission staff estimates the internal cost of compliance at an hourly wage of $344, leading to a per entity annual cost of $172. This calculation is based on the estimation of half an hour needed to comply with the requirements for each new entity registering in the program.

Financial Implications

The document highlights that four new entities are expected to register each year, resulting in an aggregate annual internal cost of compliance of $688. This is determined by multiplying the $172 per entity cost by the four entities expected to join the program. The calculations might suggest to the reader that the cost is minimal in the broader context of financial compliance, considering the minimal time burden—half an hour per entity per year.

Analysis of Financial Details

The financial figures presented, such as the $344 hourly wage, prompt several questions that are not directly addressed in the document. It is unclear why this specific amount was chosen or if it reflects a standard rate across the securities industry. This lack of transparency may cause confusion or criticism, especially if this figure significantly deviates from what entities typically experience.

The document does not elaborate on the reasoning behind the wage rate, potentially implying that this rate might be standard practice within similar compliance contexts or specific to certain entities with potentially variable internal financial assessments. Understanding whether this value holds industry-wide relevance or if it is specific to a category of entities would provide clarity and context to those reviewing the compliance costs.

Suggestions for Clarity

In addressing these financial aspects, the document could benefit from additional context or a note explaining the basis for the $344 hourly rate. Providing such background would help readers, especially those less familiar with industry standards or the internal financial processes of securities firms. Transparency in this calculation would likely facilitate a more thorough understanding among stakeholders regarding the potential financial implications.

Furthermore, while the document mentions the financial obligations of compliance, it may be beneficial for future documents to include why these costs are justified concerning regulatory compliance or the benefits entities receive from being part of the Lost and Stolen Securities Program. This information could assist entities in evaluating the cost-benefit balance of program registration and help the general public understand the broader significance of regulatory financial commitments.