PRA Supporting Statement Adopting Final 9-26-2011

SUPPORTING STATEMENT FOR RULE AMENDMENTS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
This supporting statement is part of a submission under the Paperwork Reduction
Act of 1995, 44 U.S.C. §3501, et seq.
A.

JUSTIFICATION

1.

NECESSITY OF INFORMATION COLLECTION

Section 942(a) of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the “Dodd-Frank Act”) eliminated the automatic suspension of the duty to file under
Section 15(d) of the Securities Exchange Act of 19341 for asset-backed securities
(“ABS”) issuers and granted the Securities and Exchange Commission (the
“Commission”) the authority to issue rules providing for the suspension or termination of
such duty. In Securities Exchange Act Release 34-65148,2 the Commission adopted
amendments to the Securities Exchange Act of 1934 rules to permit suspension of the
reporting obligations for ABS issuers when there are no ABS of the class sold in a
registered transaction held by non-affiliates of the depositor and to amend rules relating
to the Exchange Act reporting obligations of ABS issuers in light of statutory changes
from Section 942(a) of the Act.
Certain provisions of the disclosure rules and forms applicable to ABS issuers
contain “collection of information” requirements within the meaning of the Paperwork
Reduction Act of 1995. While the amendments proposed today do not alter the
disclosure requirements set forth in these rules and forms, the amendment to Exchange
Act Section 15(d) effected by the Act will increase the number of filings made pursuant
to these rules and forms. The titles for affected collections of information are:
“Form 10-K” (OMB Control No. 3235-0063);
“Form 10-D” (OMB Control No. 3235-0604);
“Form 8-K” (OMB Control No. 3235-0288); and
“Form 15” (OMB Control No. 3235-0167).
The Forms are collections of information that were adopted under the Exchange Act and
set forth the disclosure requirements for periodic and current reports filed with respect to
ABS and other types of securities to inform investors. While we expect that some issuers
will be able to suspend their reporting obligations in the future as a result of the rules we
adopt today, we estimate that the rule amendments will not affect our PRA estimates over
the next three years.
2.

PURPOSE FOR THE INFORMATION COLLECTION

1

15 U.S.C. §78a et seq.

2

Release No. 34-65148 (Aug. 17, 2011) [76 FR 52549].

We are permitting ABS issuers to suspend their reporting obligation with respect
to a class of ABS as to any semi-annual fiscal period, if, at the beginning of the semiannual fiscal period, other than a period in the fiscal year within which the registration
statement became effective or, for shelf offerings, the takedown occurred, there are no
ABS of such class that were sold in a registered transaction held by non-affiliates of the
depositor and a certification on Form 15 has been filed. The purpose of the information
collections in the amendments is to continue to provide disclosure and transparency to
participants and investors in the ABS market, while permitting ABS issuers to suspend
their reporting obligation under these limited circumstances.
3.

ROLE OF IMPROVED TECHNOLOGY AND OBSTACLES TO
REDUCING BURDEN

All of the above forms are filed electronically with the Commission using the
Commission’s Electronic Data Gathering and Retrieval (EDGAR) system.
4.

DUPLICATION

We are not aware of any rules that conflict with or substantially duplicate the
amendments.
5.

METHODS USED TO MINIMIZE BURDEN ON SMALL BUSINESSES

The amendments relate to the ongoing reporting requirements for ABS issuers
under the Exchange Act. Rules in the Securities Act and the Exchange Act define an
issuer, other than an investment company, to be a “small business” or “small
organization” if it had total assets of $5 million or less on the last day of its most recent
fiscal year. As the depositor and issuing entity are most often limited purpose entities in
an ABS transaction, we focused on the sponsor in analyzing the potential impact on small
entities. Based on our data, we only found one sponsor that could meet the definition of a
small broker-dealer. Under Section 605(b) of the Regulatory Flexibility Act, we certified
that, when adopted, the proposals would not have a significant economic impact on a
substantial number of small entities.
6.

DESCRIPTION OF CONSEQUENCES OF LESS FREQUENT
COLLECTION

The objectives of ongoing disclosure requirements under the Exchange Act could
not be met with less frequent collection of this information for ABS.

2

7.

EXPLANATION OF SPECIAL CIRCUMSTANCES/INCONSISTENCIES
WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
None.

8.

CONSULTATION OUTSIDE THE AGENCY

The Commission issued a release soliciting comment on the new “collection of
information” requirements and the associated paperwork burdens. Comments on
Commission releases are generally received from registrants, investors and other market
participants. In addition, the Commission and staff participate in an ongoing dialogue
with representatives of various market participants through public conferences, meetings,
and informal exchanges. The Commission considered all comments received prior to
publishing the final rule as required by 1320.11(f). See the comments received at:
http://www.sec.gov/comments/s7-02-11/s70211.shtml. The Commission received no
comments relating to our Paperwork Reduction Act analysis.
9.

PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

10.

ASSURANCE OF CONFIDENTIALITY

The information in each of the collections of information discussed above is made
publicly available.
11.

SENSITIVE QUESTIONS
Not applicable.

12/13. ESTIMATES OF HOUR AND BURDEN COSTS
Our PRA burden estimate for Form 10-K, Form 8-K and Form 15 is based on an
average of the time and cost incurred by all types of public companies, not just ABS
issuers, to prepare the collection of information. Form 10-D is a form that is only
prepared and filed by ABS issuers. Form 10-D is filed within 15 days of each required
distribution date on the ABS, as specified in the governing documents for such securities,
containing periodic distribution and pool performance information.
Our PRA burden estimates for the collections of information are based on
information that we receive on entities assigned to Standard Industrial Classification
Code 6189, the code used by ABS issuers, as well as information from outside data
sources. When possible, we base our estimates on an average of the data that we have
available for years 2005 through 2010.

3

Statutory Effects
Prior to the amendment to Exchange Act Section 15(d), except for master trust
issuers, the requirement to file Form 10-K for ABS issuers was typically suspended after
the year of initial issuance because the issuer had fewer than 300 security holders of
record. The Dodd-Frank Act amended Exchange Act Section 15(d) to remove issuers of
a class of ABS from automatic suspension of the filing requirement. Subsequent to the
enactment of the Dodd-Frank Act, the number of Forms 10-K and 10-D filed by ABS
issuers is expected to increase each year by the number of ABS registered offerings and
the number of Forms 15 filed by ABS issuers is expected to decrease by a similar
number.
In conjunction with the proposing release, we provided PRA estimates. In the
proposing release we based our estimates for the number of ABS issuers on an average of
the data that we have available for years 2004 through 2009. We are revising our
estimates to reflect 2010 data regarding ABS filings. The yearly average of ABS
registered offerings with the Commission over the period from 2004 to 2009 was 958.
The yearly average of ABS registered offerings with the Commission over the period
from 2005 to 2010, a similar 6-year period, was 751.3 As a result, for PRA purposes, we
are updating our estimates of annual increases in Form 10-K filings to 751 filings,4 in
Form 10-D filings to 4,506 filings,5 and in Form 8-K to 1,127 filings6 and reducing the
annual decrease in Form 15 filings to 751 filings.7 In addition, consistent with our
3

We have chosen to continue using a six year average to estimate the number of ABS registered
offerings despite the significant drop off in filings after 2007. As discussed in the proposing
release, in order to estimate the number of Forms 10-K, 10-D, 8-K, and 15 filed by ABS issuers
for PRA purposes, we average the estimate of the number of those forms over three years. For the
first year of our average, we are using an updated number of 751 as an estimate for the number of
issuers we expect to file Forms 10-K, 10-D and 8-K. In the second year, we increase our estimate
by 751 to a total of 1,502 and in the third year, the addition of another 751 brings the total to
2,253. The average number of issuers that we expect to file forms over three years would,
therefore, be 1,502, however 751 of those issuers would have filed forms prior to the statutory
change. We reduce the estimated increase by 751 to account for those issuers. We are therefore
increasing our estimate by 751 issuers to account for the increase in the number of issuers that will
be required to file reports as a result of the statutory change.

4

As discussed above, we estimate that an additional 751 issuers will be required to file reports as a
result of the statutory change. We continue to estimate that each ABS issuer would have one
annual Form 10-K filing.

5

We continue to estimate that each ABS issuer would have six annual Form 10-D filings resulting
in 4,506 additional Form 10-D filings (751 ABS issuers x 6 filings) as a result of the statutory
change.

6

We continue to estimate that each ABS issuer would have 1.5 annual Form 8-K filings resulting in
1,127 additional Form 8-K filings (751 ABS issuers x 1.5 filings) as a result of the statutory
change.

7

As indicated in the proposing release, we assume that in any given year the issuers of all registered
ABS issued in the prior year would have suspended reporting using Form 15. After the
implementation of the Act, issuers are no longer able to automatically suspend reporting;
therefore, Form 15 will no longer be used by these ABS issuers as it was in the past. As a result,
for the purposes of PRA, we estimate a decrease in Form 15 filings of 751.

4

estimate in the proposing release that an average of six Form 10-D filings will be filed
annually instead of ten Form 10-D filings, which forms the basis of the current PRA
inventory for Form 10-D, we are reducing our current inventory of annual responses to
Form 10-D by 4,000 to reflect the new annual estimate.8
We estimate that, for Exchange Act reports generally, 75% of the burden of
preparation is carried by the company internally and that 25% of the burden is carried by
outside professionals retained by the registrant at an average cost of $400 per hour.
Consistent with our estimates in 2004, we estimate that 120 hours would be needed to
complete and file a Form 10-K for an ABS issuer, 30 hours would be needed to complete
and file a Form 10-D for an ABS issuer, 5 hours would be needed to complete and file a
Form 8-K for an ABS issuer, and 1.5 hours would be needed to complete and file a Form
15 for an ABS issuer.
In summation, we estimate, for PRA purposes, increases of 90,120 total burden
hours for Form 10-K (751 Forms 10-K times 120 burden hours per filing), 135,180 total
burden hours for Form 10-D (4,506 Forms 10-D times 30 burden hours per filing), and
5,635 total burden hours for Form 8-K (1,127 Forms 8-K times 5 burden hours per
filing), as well as a decrease of 1,127 total burden hours for Form 15 (751 Forms 15
times 1.5 burden hours per filing) as a result of the statutory changes to Exchange Act
Section 15(d).9 We allocate 75% of those hours (an increase of 67,590 hours for Form
10-K, 101,385 hours for Form 10-D, and 4,226 hours for Form 8-K) to internal burden
and the remaining 25% to external costs using a rate of $400 per hour (an increase of
$9,012,000 for Form 10-K, $13,518,000 for Form 10-D and $563,500 for Form 8-K). In
addition, we estimate, for PRA purposes, a decrease in total burden hours due to a change
in agency estimate of the number of annual Form 10-D filings of 120,000 (4,000 Form
10-D filings times 30 burden hours per filing). We allocate 75% of those hours to
internal burden (a decrease of 90,000) and the remaining 25% to external costs using a
rate of $400 per hour (a decrease of $12,000,000).
Effects of the Rules
We amended the rules to permit suspension of the reporting obligations for ABS
issuers when there are no ABS of the class sold in a registered transaction held by nonaffiliates of the depositor. While we expect that issuers will be able to suspend their
reporting obligations in the future, based on average expected deal life data, for purposes
of the PRA, we estimate that the amendments will not affect our PRA estimates over the
next three years. We also amended Exchange Act Rule 15d-22 relating to reporting and
shelf registration and Exchange Act Rules 12h-3 and 12h-6 and Form 15 to conform the

8

In our review of the Form 83-I for Form 10-D, the Form 83-I failed to indicate that the Form 10-D
is filed more than once annually. Rather the Form 83-I reflected our estimate of the total number
of annual responses. We are revising the Form 83-I to reflect our current estimate of six annual
Form 10-D filings per respondent.

9

We allocate all of the burden for Form 15 filings to internal burden hours.

5

rules and form to amended Exchange Act Section 15(d) and the amended rules. We do
not believe that these amendments will affect our PRA estimates.
Summary of Changes to Annual Burden Compliance in Collection of Information
The table illustrates the changes in annual compliance burden in the collection of
information in hours and costs for existing reports for ABS issuers.

Form

10-K10
10-D
8-K11
1512

14.

Current
Annual
Responses

Proposed
Annual
Responses

Current
Burden
Hours

Decrease
or Increase
in Burden
Hours

Proposed
Burden
Hours

13,545
10,000
116,860
3,000

14,296
10,506
117,987
2,249

21,361,898
225,000
502,839
4,500

67,590
11,385
4,226
(1,126)

21,429,488
236,385
507,065
3,374

Current
Professional
Costs

Decrease or
Increase in
Professional
Costs

Proposed
Professional
Costs

2,848,253,000
30,000,000
67,045,200
0

9,012,000
1,518,000
563,500
0

2,857,265,000
31,518,000
67,608,700
0

ESTIMATE OF COST TO FEDERAL GOVERNMENT
We estimate costs to the federal government will be $50,000.

15.

EXPLANATION OF CHANGES IN BURDEN

The Dodd-Frank Act amended Exchange Act Section 15(d) to remove issuers of a
class of ABS from automatic suspension of the filing requirement. Subsequent to the
enactment of the Dodd-Frank Act, the number of Forms 10-K and 10-D filed by ABS
issuers is expected to increase each year by the number of ABS registered offerings and
the number of Forms 15 filed by ABS issuers is expected to decrease by a similar
number. The changes that we are estimating are all related to these statutory effects.
While we expect that issuers will be able to suspend their reporting obligations in
the future, based on average expected deal life data, for purposes of the PRA, we do not
estimate, and we do not expect, that the amendments will affect our PRA estimates over
the next three years.
16.

INFORMATION COLLECTION PLANNED FOR STATISTICAL
PURPOSES

10

The number for Current Professional Cost on the Form 83-I is $2,848,253,001 due to rounding in
the Form 83-I.

11

The number for Current Professional Costs was inadvertently retained from the proposing release
leading to an understatement in the Proposed Professional Costs for Form 8-K in the adopting
release. However, the incremental burden remains the same and both the adopting release and this
table accurately reflect the increase in professional costs. The attached table and the analysis in
the supporting statement for the proposed amendments accurately reflect our estimates.

12

The Decrease in Burden Hours and the Proposed Burden Hours in the adopting release are
1,127and 3,373 and 1,126 and 3,374 in the Form 83-I and this table. This reflects a rounding
discrepancy.

6

Not applicable.
17.

EXPLANATION AS TO WHY EXPIRATION DATE WILL NOT BE
DISPLAYED

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

EXCEPTIONS TO CERTIFICATION
Not applicable.

B.

COLLECTION OF INFORMATION EMPLOYING SATISTICAL
METHODS
Not applicable.

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