Supporting Statement_Rule 19h-1 (2025 Extension)

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission
for Rule 19h-1 (OMB Control Number 3235-0259)
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44
U.S.C. Section 3501 et seq.
A.

Justification
1.

Necessity of Information Collection

Rule 19h-1 (the “Rule”) under the Securities Exchange Act of 1934 (the “Exchange Act”)
prescribes the form and content of notices and applications by self-regulatory organizations
(“SROs”) regarding proposed admissions to, or continuances in, membership, participation or
association with a member of any person subject to a statutory disqualification. The Rule was
adopted on July 8, 1977, in response to changes made by the Securities Act amendments of 1975,
and in order to codify procedures for Commission resolution of other issues relating to re-admission
to, or continuance in, the securities business of persons subject to statutory disqualification. Rule
19h-1 was adopted pursuant to authority granted the Commission in Sections 6, 11A, 15, 15A, 17,
17A, 19, and 23 of the Exchange Act, 15 U.S.C. 78f, 78k-1, 78o, 78o-3, 78q, 78q-1, 78s, and 78w.
2.

Purpose and Use of the Information Collection

The Commission uses the information provided in the submissions filed pursuant to Rule
19h-1 to review decisions of SROs to permit the entry into or continuance in the securities business
of persons who have committed misconduct. The filings submitted pursuant to the Rule also permit
inclusion of an application to the Commission for consent to associate with a member of an SRO
notwithstanding a Commission order barring such association.
The Commission reviews filings made pursuant to the Rule to ascertain whether it is in the
public interest to permit the employment in the securities business of persons subject to a statutory
disqualification. The filings contain information that is essential to the staff's review and ultimate
determination on whether an association or employment is in the public interest and consistent with
investor protection. Without these filings, persons subject to a statutory disqualification could
reenter or continue employment in the securities business without the Commission’s critical review
of their character, ability to act as a fiduciary, and their employer's plan of supervision. The failure
to collect and review this information could result in significant harm to the investing public.
3.

Consideration Given to Information Technology

The Commission now permits and receives from SROs electronic submissions under this
collection of information. The Commission believes that electronic submission of written notices
for review by the Commission is the least burdensome and most effective means for the SROs to
comply with the collections of information required by Rule 19h-1.
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4.

Duplication

Not applicable. There is no duplication of this submission process to the Commission.
5.

Effect on Small Entities

Not applicable. None of the SROs subject to the collection of information is a small
entity, as that term applies to this Item 5.
6.

Consequences of Not Conducting Collection

The principal purpose of Rule 19h-1 is to provide the Commission with an opportunity to
ensure persons subject to statutory disqualification are not permitted to enter or to continue in the
securities industry without the Commission’s review of whether the entry or continuance is
consistent with the public interest and the protection of investors. The information must be
provided when persons who are subject to statutory disqualification seek to enter or to continue in
the securities business. A less frequent reporting requirement would weaken the Commission’s
ability to ensure that investors are protected from persons who have committed misconduct that
might affect their ability to act as a fiduciary. Moreover, a less frequent collection of information is
not practical if the Commission is to have a meaningful and timely opportunity to review the
proposed employment or continuance in the industry of such persons.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Other than the reporting and record retention requirement described below, there are no
special circumstances, and the collection is consistent with the guidelines in 5 CFR 1320.5(d)(2).
Rule 19h-1 generally results in one SRO reporting information to the Commission more
often than quarterly. As the information is used for the Commission to review whether the entry or
continuance of persons subject to a statutory disqualification in the securities industry is consistent
with the public interest and the protection of investors, we believe it is appropriate that the
information be submitted as needed rather than on a quarterly or less-frequent basis.
Rule 19h-1 does not include a recordkeeping or retention requirement in the text of the rule.
That requirement is in Rule 17a-1 (3235-0208), which provides that all documents that a national
securities exchange or association makes respecting its self-regulatory activities be kept for a period
of not less than five years, the first two in an easily accessible place. We believe the extended
retention period is appropriate as it provides sufficient time for Commission inspections and
investigations of SROs.
8.

Consultations Outside the Agency

The required Federal Register notice with a 60-day comment period soliciting
comments on this collection of information was published. No public comments were
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received.
9.

Payment or Gift

Not applicable.
10.

Confidentiality

No assurance of confidentiality is provided.

11.

Sensitive Questions

The information collection collects elements of Personally Identifiable Information that
is covered by the Microsoft 365 Privacy Impact Assessment. The primary retrieval method is via
date and company name, and not by a unique identifier. Based on the business practice of
handling the information collection, the collection does not constitute a system of records under
the Privacy Act.
12.

Burden of Information Collection

i.
19h-1(a) - Notice of admission or continuance notwithstanding a statutory
disqualification
The notice required under Rule 19h-1(a) is an ongoing reporting burden. Although the
Commission estimates that this collection of information would technically apply to all SROs,
based on our experience, we estimate that only one SRO files the overwhelming majority of
these notices each year.1 The Commission estimates that this SRO would be required to submit a
notice under Rule 19h-1(a) approximately 38 times each year.2 Finally, the Commission estimates
that the SRO would spend on average approximately 80 hours submitting each notice required by
Rule 19h-1(a).
In summary, the Commission estimates that, the total reporting burden for completing and
submitting the notice required by Rule 19h-1(a) would be 3,040 hours per year (1 total respondent x
38 responses per year per respondent x 80 hours per response = 3,040 hours per year).
ii.
19h-1(a)(4) – Notification of proposed admission or continuance pursuant to an
exception from the notice requirements
We have updated the Total Number of Respondents to account for the fact that our experience reflects that the overwhelming majority of
these notices and notifications are submitted by a single SRO. Accordingly, for the purposes of entering the estimated burden into the OMB
ROCIS system, we are providing that there is a single respondent to calculate the Total Reporting Burden. See infra note 2.

1

There are, however, two or three other SROs that may infrequently (i.e., not every year) submit approximately one or two of these notices
to the Commission. In order to account for these infrequent submissions by these other SROs, we have included their submissions in our
estimates of the Total Number of Responses Per Year.

2

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The notification required under Rule 19h-1(a)(4) is an ongoing reporting burden.
Although the Commission estimates that this collection of information would technically apply to
all SROs, based on our experience, we estimate that only one SRO files the overwhelming
majority of these notices each year. 3 The Commission estimates that this SRO would be
required to submit a notification under Rule 19h-1(a)(4) approximately 2 times each year.
Finally, the Commission estimates that the SRO would spend on average approximately 80
hours submitting each notice required by Rule 19h-1(a)(4).
In summary, the Commission estimates that the total reporting burden for completing
and submitting the notification required by Rule 19h-1(a)(4) would be 160 hours per year when
(1 total respondent x 2 responses per year per respondent x 80 hours per response = 160 hours per
year).
iii.

19h-1(b) – Preliminary notifications

The notification required under Rule 19h-1(b) is an ongoing reporting burden. Although
the Commission estimates that this collection of information would technically apply to all SROs,
based on our experience, we estimate that only one SRO files the overwhelming majority of
these notices each year.4 The Commission estimates that this SRO would be required to submit
a notification under Rule 19h-1(b) approximately 40 times each year.5 Finally, the Commission
estimates that the SRO would spend on average approximately 13 hours submitting each notice
required by Rule 19h-1(b).
In summary, the Commission estimates that the total reporting burden for completing
and submitting the notification required by Rule 19h-1(b) would be 520 hours per year (1 total
respondent x 40 responses per year per respondent x 13 hours per response = 520 hours per year).
iv.
19h-1(d) – Application to the Commission for relief from certain statutory
disqualifications
The application required under Rule 19h-1(d) is an ongoing reporting burden. Although
the Commission estimates that this collection of information would technically apply to all SROs,
based on our experience, we estimate that only one SRO files the overwhelming majority of
these notices each year.6 The Commission estimates that applications under Rule 19h-1(d) will
be submitted by this SRO on behalf of the persons seeking relief.
The Commission estimates that this SRO would be required to submit an application

4

See supra note 1.
See supra note 1.

5

See supra note 2.

6

See supra note 1.

3

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under Rule 19h-1(d) approximately 3 times a year. Finally, the Commission estimates that the
SRO would spend on average approximately 80 hours submitting each application required by
Rule 19h-1(d).
In summary, the Commission estimates that the total reporting burden for completing and
submitting the application required by Rule 19h-1(d) would be 240 hours per year when (1 total
respondent x 3 responses per year per respondent x 80 hours per response = 240 hours per year).
The aggregate annual burden for all respondents is thus approximately 3,960 hours
(3,040+160+520+240).
v.

Summary of hourly burdens

Nature of Information
Collection Burden

19h-1(a) – Notice of
proposed admission or
continuance of a
person, notwithstanding
a statutory
Disqualification
19h-1(a)(4) –
Notification of proposed
admission or
continuance of a person
pursuant to an exception
from the notice
requirements provided in
19h1(a)(3)(ii), (iv), or (v)
19h-1(b) – Notification
of receipt of an
application for
admission to, or
continuance in,
participation or
membership which
would require a notice
under 19h-1(a)

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Type of
Burden

Total
Number of
Respond en ts 7

Total
Number of
Responses
Per Year

Initial
Burden Per
Response
Per Year
Per
Respondent

Ongoing
Burden Per
Response
Per Year
Per
Respond en t

Total
Burden Per
Year Per
Respond en t

Total
Reporting
Burden Per
Year for All
Respond en ts

Reporting

1

38 8

0

80

3,040

3,040

Reporting

1

2

0

80

160

160

Reporting

1

40 9

0

13

520

520

See supra notes 1–2.

The number of responses for 19h-1(a) was calculated by averaging the estimated number of responses we anticipate receiving for the years
2025, 2026, and 2027. More specifically, we anticipate an increase to 52 responses in 2025, followed by a return to the prior estimate of 32
responses in both 2026 and 2027 (i.e., (52+32+32)/3 = 38).

8

The number of responses for 19h-1(b) was calculated by averaging the estimated number of responses we anticipate receiving for the years
2025, 2026, and 2027. More specifically, we anticipate an increase to 54 responses in 2025, followed by a return to the prior estimate of 34
responses in both 2026 and 2027 (i.e., (54+34+34)/3 = 40).

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5

19h-1(d) – Application
for relief from certain
statutory
disqualificatio n s
TOTAL

13.

Reporting

1

3

0

80

240

240
3,960

Costs to Respondents

The Commission estimates that respondents will not seek outside assistance in completing
the collection of information, and therefore, respondents will not experience any external costs in
connection with the collection of information.
14.

Cost to Federal Government

Not applicable.
15.

Changes in Burden

The total burden decreased from 47,280 hours to 3,960 hours, primarily because the
Commission reduced the estimated number of respondents from 20 to 1 to account for the fact that
our experience reflects that the overwhelming majority of these notices and notifications are
submitted by a single SRO. 10
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

OMB Expiration Date Display Approval

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.
B.

Collection of Information Employing Statistical Methods
This collection does not involve statistical methods.

10

See supra notes 1–2.

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