4 11 TCR Supporting Statement

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT SUBMISSION FOR A CURRENT
INFORMATION COLLECTION
“ELECTRONIC DATA COLLECTION SYSTEM”

Justification
1.

Circumstances Making the Collection of Information Necessary

The Securities and Exchange Commission (“Commission”) is designing a new Electronic
Data Collection System (the “Database”) for the receipt, collection and analysis of tips,
complaints and referrals (“tips”). An individual wishing to provide the Commission with
information regarding an alleged violation of the federal securities laws may elect to submit
information through the Database.
The first phase of the Database was released as a pilot program in March 2011. The
Commission expects that the final version of the Database will be released in the Fall of 2011.
The public interface to the Database is available using the agency’s Tips, Complaints and Referrals
Portal.
2.

Purpose and Use of the Information Collection

The information in the Database will provide the ability for the SEC to review and
respond promptly and appropriately to information provided by the general public. In particular,
the Database will: (i) provide a simple, easy-to-use and convenient medium for individuals to
provide tips to the Commission; (ii) increase the likelihood that individuals will provide
essential, relevant information regarding their tips; (iii) allow the Commission to collect relevant
information regarding tips more effectively and efficiently (compared to information provided in
hard-copy); and (iv) allow the Commission to evaluate and analyze information regarding tips
more effectively and efficiently.
The information collected will primarily be used 1) to determine individuals and entities
to investigate or examine for potential securities laws violations; 2) for analysis to identify trends
in tips and complaints to highlight areas of risk; and 3) to identify patterns in behavior of
securities laws violators to discover other potential violators. The Database will also be used
throughout the Commission as a source of information for other Commission functions including
informing policy, helping on registration requests, and evaluation of required filings among
others.
3.

Consideration Given to Information Technology

The Database will be an e-filed dynamic report based on current technology. Based on
initial information provided by an individual submitting a tip (e.g., the nature of alleged violation

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or the characteristics of the persons or entities involved in the alleged violations), the Database
will pre-populate certain data fields and will determine the appropriate additional questions to
elicit relevant information regarding the tip. Pre-populating the answers to the questions reduces
burden and alleviates the need to enter a response to every question. The information collection
is voluntary.
4.

Duplication of Information

There is no other collection instrument available to collect the information necessary to
meet the purposes described in item 2 above.
5.

Reducing the Burden on Small Businesses

The burden of compliance with the information collection requirement does not impact
small businesses or other small entities.
6.

Consequences of Not Requiring Collection

Without this database, the SEC will not have timely information to review and respond
promptly to information provided by the general public. The information specified in the
complaint database is needed in order for the agency to determine whether the tips and related
allegations (i) are credible; (ii) indicate a potential violation of the federal securities laws, and
(iii) should be investigated further as well as for additional analyses consistent with the agency’s
overall mission and responsibilities.
7.

Inconsistencies with Guidelines in 5 CFR 1320.8(d)

There are no special circumstances. This collection is consistent with the guidelines in
5 CFR 1320.8(d).
8.

Consultations Outside the Agency

We have published the required Federal Register Notice allowing public comment. The
Commission will review and consider any public suggestions or recommendations regarding the
Database that are received during the pilot phase.
9.

Payment or Gift to Respondents
There are no such gifts or payments to respondents.

10.

Assurance of Confidentiality

The extent of confidentiality of information submitted to the Database by individuals may
depend upon whether the individual elects to participate in the Commission’s Whistleblower
Program, which is soon to be established pursuant to provisions of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Pub. L. No. 11-203, H.R. 4173).

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a. Information submitted by individuals not participating in the Whistleblower Program.
Individuals not participating in the Whistleblower Program who submit information to
the Commission may request that their identities be held in confidence. Absent compelling
cause, the Commission ordinarily does not disclose the identities of these persons. The Freedom
of Information Act (5 U.S.C. 552(b)(7)(D)), and the Privacy Act of l974 (5 U.S.C. 552a(k)(5))
permit agencies to withhold the identity of a confidential source. However, there may be
circumstances in which disclosure will nonetheless be legally required or will be essential for the
protection of the public interest. For example, in litigation a court may order disclosure, or the
Commission may have to present a bounty claimant as a witness in order to assure the success of
an enforcement action. Thus, while the Commission and its staff will give serious consideration
to requests for confidentiality of identity, no guarantees of confidentiality are possible.
b. Information submitted by individuals participating in the Whistleblower Program.
For information collected by individuals participating in the Whistleblower Program, the
information will not be made publicly available, except as provided by Section 21F(h)(2) of the
Exchange Act. That provision states that, except as expressly provided:
[T]he Commission and any officer or employee of the Commission
shall not disclose any information, including information provided
by a whistleblower to the Commission, which could reasonably be
expected to reveal the identity of a whistleblower, except in
accordance with the provisions of section 552a of title 5, United
States Code, unless and until required to be disclosed to a
defendant or respondent in connection with a public proceeding
instituted by the Commission [or certain specific entities listed in
subparagraph (C) of Section 21F(h)(2)].
Section 21F(h)(2) also allows the Commission to share information received from
whistleblowers with certain domestic and foreign regulatory and law enforcement agencies.
However, the statute requires the domestic entities to maintain such information as confidential,
and requires foreign entities to maintain such information in accordance with such assurances of
confidentiality as the Commission deems appropriate.
11.

Sensitive Questions

No questions will be asked that are of a personal or sensitive nature.

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12.

Estimate of Respondent Reporting Burden

The Commission anticipates that the burdens imposed by the Database will vary greatly
depending on the complexity of the alleged violations that are the subject of the tip and the
amount of information possessed by the individual submitting the tip. With that in mind, the
Commission estimates the burdens as follows:
Estimated number of annual responses = 25,000
Estimated annual reporting burden =

13.

12,500 hours (30 minutes per submission)

Estimate of Total Annualized Cost Burden
There are no costs associated with this information collection.

14.

Estimate of Cost to Federal Government
The estimated cost to the government that includes contract cost, design, development
and operations is $ 3,240,000. This estimate is solely for purposes of the Paperwork
Reduction Act.

15.

Explanation of Changes in Burden
This is a new collection of information.

16.

Information Collections Planned for Statistical Purposes

Not applicable. The information collected is not used for tabulation, statistical analysis
or publication.
17.

Display of OMB Approval Date

We request authorization to omit the expiration date on the electronic version of this
database for design and web development scheduling reasons. The OMB control number will be
displayed.
18.

Exceptions to Certification
This collection complies with the requirements in 5 CFR 1320.9.

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