[Federal Register Volume 85, Number 111 (Tuesday, June 9, 2020)]
[Notices]
[Pages 35348-35351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12394]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-619, OMB Control No. 3235-0681]
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736.
Extension:
Rules 15Ba1-1 through 15Ba1-8
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collection of
information provided for in Rules 15Ba1-1 to 15Ba1-8 (17 CFR 240.15Ba1-
1 to 17 CFR 240.15Ba1-8)--Registration of Municipal Advisors, under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (the ``Act'').
The Commission plans to submit this existing collection of information
to the Office of Management and Budget for extension and approval.
On September 20, 2013 (see 78 FR 67468, November 12, 2013), the
Commission adopted Rules 15Ba1-1 through 15Ba1-8 and Rule 15Bc4-1 under
the Act to establish the rules by which a municipal advisor must
obtain, maintain, and terminate its registration with the Commission.
In addition, the rules interpret the definition of the term ``municipal
advisor,'' interpret the statutory exclusions from that definition, and
provide certain additional regulatory exemptions. The rules became
effective on January 13, 2014; however, on January 13, 2014, the
Commission temporarily stayed such rules until July 1, 2014 (see 79 FR
2777, January 16, 2014). Amendments to Form MA and Form MA-I designed
to eliminate aspects of the forms that request filers to provide
certain forms of personally identifiable information (``PII''),
including Social Security
[[Page 35349]]
numbers, dates of birth, or Foreign ID numbers became effective on May
14, 2018 (see 83 FR 22190, May 14, 2018). Section 15B(a)(1) of the Act
makes it unlawful for a municipal advisor to provide advice to or on
behalf of a municipal entity or obligated person with respect to
municipal financial products or the issuance of municipal securities,
or to undertake certain solicitations of a municipal entity or
obligated person, unless the municipal advisor is registered with the
Commission. The rules, among other things (i) require municipal
advisors to file certain forms (i.e., Form MA, Form MA-A, Form MA/A,
Form MA-I, Form MA-I/A, Form MA-NR, and Form MA-W) with the Commission
to obtain, maintain, or terminate their registration with the
Commission and maintain certain books and records in accordance with
the Act, and (ii) set forth how certain entities may meet the
requirements of the statutory exclusions or regulatory exemptions from
the definition of ``municipal advisor.''
Form MA
The Commission estimates that approximately 35 respondents will
submit new Form MA applications annually in each of the next three
years.\1\ The Commission further estimates that each submission will
take approximately 3.5 hours. Thus, the total annual burden borne by
respondents for submitting an initial Form MA application will be
approximately 123 hours.\2\ The Commission estimates that respondents
submitting new Form MA applications would, on average, consult with
outside counsel for one hour, at a rate of $400/hour. Thus, the
Commission estimates that the average total annual cost that may be
incurred by all respondents filing new Form MA applications will be
$14,000.\3\ In addition to filing initial Form MA applications, the
rules require municipal advisors to amend Form MA once annually (Form
MA-A) and after the occurrence of any enumerated material event (Form
MA/A). The requirement to amend Form MA applies to all registered
municipal advisors. There are currently approximately 535 municipal
advisors registered with the Commission and, as noted above, the
Commission anticipates receiving 105 new Form MA submissions over the
next three years. Therefore, the Commission expects that the rules'
requirement to amend Form MA will apply to approximately 570 municipal
advisors in year one, approximately 605 municipal advisors in year two,
and approximately 640 municipal advisors in year three. The Commission
estimates that completing an annual amendment would take a municipal
advisor approximately 1.5 hours and completing a material event
amendment would take 0.5 hours. The Commission further estimates that
each municipal advisor will submit two amendments per year (one Form
MA-A and one Form MA/A). Thus, the Commission estimates that the
average annual burden borne by respondents for amending Form MA during
the three-year period will be approximately 1,210 hours.\4\
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\1\ The estimate is derived by averaging the number of Form MA
filings over the last three years and rounding up. There were 39
Form MA submissions in 2017, 34 Form MA submissions in 2018, and 30
Form MA submissions in 2019.
\2\ 35 respondents x 3.5 hours = 122.5 hours.
\3\ 35 respondents x ($400/hour x 1 hour) = $14,000.
\4\ ((570 respondents x 2 hours) + (605 respondents x 2 hours) +
(640 respondents x 2 hours))/3 = 1,210 hours.
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Form MA-I
The Commission estimates that it will receive approximately 570 new
Form MA-I submissions annually.\5\ The Commission further estimates
that each Form MA-I submission will take approximately three hours to
complete. Thus, the total annual burden borne by respondents submitting
Form MA-I will be approximately 1,710 hours.\6\ The Commission also
estimates that a Form MA-I respondent will submit 2.95 updating
amendments per year (Form MA-I/A), and that each such amendment will
take approximately 0.5 hours to complete.\7\ There are currently
approximately 3,385 Form MA-Is on file with the Commission for natural
persons currently associated with a municipal advisor and, as noted
above, the Commission expects to receive 1,710 Form MA-I submissions
over the next three years.\8\ Therefore, the Commission expects the
rules' requirement to amend Form MA-I to apply to approximately 3,955
Form MA-Is in year one, approximately 4,525 Form MA-Is in year two, and
approximately 5,095 Form MA-Is in year three. Thus, the Commission
estimates that the average annual burden borne by respondents
submitting Form MA-I amendments during the three-year period will be
approximately 6,674 hours.\9\
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\5\ The estimate is derived by averaging the number of Form MA-I
submissions over the last three years. There were 619 Form MA-I
submissions in 2017, 466 Form MA-I submissions in 2018, and 624 Form
MA-I submissions in 2019.
\6\ 570 submissions x 3 hours = 1,710 hours.
\7\ The estimate is derived by averaging the number of updating
amendments submitted by respondents over the last three years. In
2017, the average number is 2,078 Form MA-I/A/574 municipal advisors
= 3.62. In 2018 the average number is 1,398 Form MA-I/A/555
municipal advisors = 2.52. In 2019, the average number is 1,442 Form
MA-I/A/535 municipal advisors = 2.70. Averaging the average number
of updating amendments for the last three years: 3.62 (2017) + 2.52
(2018) + 2.70 (2019)/3 = 2.95 updating amendments per year.
\8\ The estimated number of active Form MA-I filings is derived
by taking the total number of Form MA-I submissions with the
Commission as of December 31, 2019 and subtracting the number of
Form MA-I/A withdrawals as of the same date. 7,564 (Form MA-I
submissions)--4,179 (Form MA-I/A withdrawals) = 3,385 Form MA-Is on
file.
\9\ (((3,955 Form MA-I/As x (2.95 amendments x 0.5 hours)) +
((4,525 Form MA-I/As x (2.95 amendments x 0.5 hours)) + ((5,095 Form
MA-I/As x (2.95 amendments x 0.5 hours)))/3 = 6,674.375 hours.
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Form MA-W
The Commission estimates that it will receive 46 new Form MA-W
submissions annually.\10\ The Commission further estimates that each
Form MA-W submission will take approximately 0.5 hours to complete.
Thus, the total annual burden borne by respondents submitting Form MA-W
will be approximately 23 hours.\11\
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\10\ The estimate of 46 Form MA-W submissions is derived by
averaging the number of Form MA-W submissions over the last two
years. There were 46 Form MA-W submissions in 2018 and 2019
respectively. The filing number from 2017 was omitted because an
abnormally large number of Form MA-W submissions were submitted (116
submissions in 2017), likely due to the advent of the Municipal
Securities Rulemaking Board's Series 50 exam requirement which
became effective on September 12, 2017.
\11\ 46 respondents x 0.5 hours = 23 hours.
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Form MA-NR
The Commission estimates that three municipal advisors will have a
non-resident general partner, non-resident managing agent, or non-
resident associated person and such advisors will submit a total of
approximately five Form MA-NRs annually.\12\ The Commission further
estimates that each Form MA-NR submission will take approximately 1.5
hours to complete. Thus, the total annual burden borne by respondents
submitting Form MA-NR will be approximately 7.5 hours.\13\ In addition,
each respondent that submits a Form MA-NR must also provide an opinion
of counsel. The Commission estimates that such an opinion of counsel
would take three hours to complete, at a rate of $400/hour. Thus, the
Commission estimates that the total annual burden borne by respondents
providing an opinion of counsel will be approximately nine hours.\14\
The
[[Page 35350]]
estimated average total cost that may be incurred by all respondents
providing an opinion of counsel will be $3,600.\15\
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\12\ The estimate is derived by averaging the number of Form MA-
NR submissions over the last three years. There were seven Form MA-
NR submissions in 2017, four Form MA-NR submissions in 2018, and
five Form MA-NR submissions in 2019.
\13\ 3 respondents x (1.67 Form MA-NR submissions x 1.5 hours) =
7.5 hours.
\14\ 3 respondents x 3 hours = 9 hours.
\15\ 3 respondents x (3.0 hours x $400/hour) = $3,600.
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Consent to Service of Process
The Commission estimates that 35 new municipal advisors will have
to develop a template document to use in obtaining written consents to
service of process from their associated persons annually. The
Commission further estimates that each template document will take
approximately one hour to draft. Thus, the Commission estimates that
the total annual burden borne by respondents developing a template
document will be approximately 35 hours.\16\ In addition, the
Commission estimates that municipal advisors will need to obtain 570
new consents to service of process from associated persons annually.
The Commission further estimates that, after the written consents are
drafted, it will take municipal advisors approximately 0.10 hours to
obtain each consent. Thus, the Commission estimates that the total
annual burden borne by respondents obtaining consents to service of
process will be 92 hours.\17\
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\16\ 35 respondents x 1 hour = 35 hours.
\17\ 35 hours + (570 x 0.1 hours) = 92 hours.
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Books and Records To Be Maintained by Municipal Advisors
The Commission estimates 570, 605, and 640 municipal advisors will
be subject to the books and records rules during each of the next three
years, respectively. The Commission further estimates that the average
annual burden for a municipal advisor to comply with the books and
records requirement is approximately 182 hours. Thus, the Commission
estimates that the average annual burden borne by respondents to comply
with the books and records requirements during the three-year period
will be approximately 110,110 hours.\18\
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\18\ ((570 respondents x 182 hours) + (605 respondents x 182
hours) + (640 respondents x 182 hours))/3 = 110,110 hours.
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Independent Registered Municipal Advisor Exemption
The Commission estimates that approximately 231 persons will seek
to rely on the independent registered municipal advisor exemption
annually.\19\ The Commission further estimates that the one-time burden
of developing a written template disclosure document will be
approximately one hour. Thus, the Commission estimates that the total
one-time burden borne by respondents developing a template disclosure
document will be approximately 231 hours.\20\ The Commission also
recognizes that respondents will be subject to a recurring burden each
time they seek to rely on the exemption. The Commission estimates that
respondents may seek the exemption on approximately 8,211 transactions
annually.\21\ The Commission further estimates that the burden of
obtaining the written representations needed from the municipal entity
or obligated person client will be approximately 0.25 hours. Thus, the
Commission estimates that the total annual burden borne by respondents
seeking to rely on the independent registered municipal advisor
exemption will be approximately 2,053 hours.\22\
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\19\ Estimate based on information obtained from Mergent
Municipal Bond Securities Database. The estimate represents the
average number of underwriters that participated in negotiated
transactions from 2017 to 2019.
\20\ 231 respondents x 1 hour = 231 hours.
\21\ Estimate based on information obtained from Mergent
Municipal Bond Securities Database. The estimate represents the
average number of negotiated deals using an underwriter each year.
\22\ 8,211 transactions x 0.25 hours = 2,052.75 hours.
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Municipal Escrow Investments
The Commission estimates that approximately 694 respondents will
seek to rely on the municipal escrow investments exemption.\23\ The
Commission further estimates that the one-time burden of creating a
template document to use in obtaining the written representations
necessary to rely on the exemption will be approximately one hour.
Thus, the Commission estimates that the total one-time burden borne by
respondents developing a template document will be approximately 694
hours.\24\ The Commission also recognizes that respondents will be
subject to a recurring burden each time they seek to rely on the
exemption. The Commission estimates the respondents will seek to rely
on the exemption with approximately 2,321 municipal entity clients.\25\
The Commission further estimates that the burden of obtaining the
required written representations from the respondent's client will be
approximately 0.25 hours. Thus, the Commission estimates that the total
annual burden borne by respondents seeking to rely on the municipal
escrow investments exemption will be approximately 580 hours.\26\
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\23\ The Commission estimates in this section are based on
information reported directly by state-registered investment
advisers in Item 5.D.(i)(1) within Form ADV.
\24\ 694 respondents x 1 hour = 694 hours.
\25\ The Commission estimates in this section are based on
information reported directly by state-registered investment
advisers in Item 5.D.(i)(1) within Form ADV.
\26\ 2,321 clients x 0.25 hours = 580.25 hours.
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Proceeds of Municipal Securities
The Commission estimates that approximately 720 respondents will
seek to rely on the proceeds of municipal securities exemption.\27\ The
Commission further estimates that the one-time burden of creating a
template document to use in obtaining the written representations
necessary to rely on the exemption will be approximately one hour.
Thus, the Commission estimates that the total one-time burden borne by
respondents developing a template document will be approximately 720
hours.\28\ The Commission also recognizes that respondents will be
subject to a recurring burden each time they seek to rely on the
exemption. The Commission estimates that respondents will seek to rely
on the exemption in connection with services provided to approximately
4,056 clients.\29\ The Commission further estimates that the burden of
obtaining the required written consents from the respondent's client
will be approximately 0.25 hours. Thus, the Commission estimates that
the total annual burden borne by respondents seeking to rely on
proceeds of municipal securities exemption will be approximately 1,014
hours.\30\
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\27\ The Commission estimates in this section are based on
information reported directly by state-registered investment
advisers in Item 5.D.(f)(1) within Form ADV. The number of state-
registered investment advisers which have pooled investment vehicle
clients (other than investment company and business development
company clients) within Form ADV, Item 5.D.(f)(1) = 637. The
percentage of state-registered investment advisers which have
municipal government entity clients (other than investment company
and business development company clients) within Form ADV, Item
5.D.(f)(1) = 4%. (637 x .04) = 26. The number of state-registered
investment advisers relying on the exception to the definition of
``municipal escrow investment'' = 694. (26 + 694) = 720 respondents.
\28\ 720 respondents x 1 hour = 720 hours.
\29\ The number of municipal entity clients of state-registered
investment advisers relying on the exception to the definition of
``municipal escrow investment'' in Item 5.D.(i)(1) within Form ADV =
2,321 clients. The number of pooled investment vehicle clients
(other than investment company and business development company
clients) of state-registered investment advisers in Item 5.D.(f)(1)
within Form ADV = 1,735 clients. (2,321 + 1,735) = 4,056 clients.
\30\ 4,056 clients x 0.25 hours = 1,014 hours.
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Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
estimates of the burden of the proposed
[[Page 35351]]
collection of information; (c) ways to enhance the quality, utility,
and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology. Consideration will be given to
comments and suggestions submitted in writing within 30 days of this
publication.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
The public may view background documentation for this information
collection at the following website: www.reginfo.gov. Find this
particular information collection by selecting ``Currently under 30-day
Review--Open for Public Comments'' or by using the search function.
Written comments and recommendations for the proposed information
collection should be sent within 30 days of publication of this notice
to (i) www.reginfo.gov/public/do/PRAMain and (ii) David Bottom,
Director/Chief Information Officer, Securities and Exchange Commission,
c/o Cynthia Roscoe, 100 F Street NE, Washington, DC 20549, or by
sending an email to: [email protected].
Dated: June 3, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-12394 Filed 6-8-20; 8:45 am]
BILLING CODE 8011-01-P