Amendments to Forms and Schedules to Remove Voluntary Provision of Social Security Numbers — SEC — US

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 239, 240, 249 and 269

[Release No. 33-7424; 34-38771; 35-26733; 39-2354; IC-22727]

Amendments to Forms and Schedules to Remove Voluntary Provision of Social Security Numbers

AGENCY: Securities and Exchange Commission.

ACTION: Final rules.

SUMMARY: The Securities and Exchange Commission is adopting revisions to forms and schedules filed under the Securities Act of 1933, the Securities Exchange Act of 1934, related provisions of the Investment Company Act of 1940 and the Public Utility Holding Company Act of 1935, and the Trust Indenture Act of 1939, to eliminate the portion of those forms that requests filers who are natural persons to furnish their Social Security numbers.

EFFECTIVE DATE: The rule revisions are effective July 1, 1997.

FOR FURTHER INFORMATION CONTACT: Marija Willen, Regulatory Counsel, Division of Corporation Finance, (202) 942-1805; Richard C. Strasser, Special Counsel, Division of Market Regulation, (202) 942-0073, U.S. Securities and Exchange Commission, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The U.S. Securities and Exchange Commission (the “Commission”) is adopting amendments to the following forms and schedules under the Securities Act of 1933 (the “Securities Act”),1 the Securities Exchange Act of 1934 (the “Exchange Act”),2 and the Trust Indenture Act of 1939 (the “Trust Indenture Act”): 3 Form 144; 4 Schedule 13D; 5 Schedule 13G; 6 Schedule 14D-1; 7 Form 3; 8 Form 4; 9 Form 5; 10 Form MSD; 11 Form TA-1; 12 and Form T-2.13

[1] 15 U.S.C. 77a et seq.

[2] 15 U.S.C. 78a et seq.

[3] 15 U.S.C. 77aaa-77bbb.

[4] 17 CFR 239.144.

[5] 17 CFR 240.13d-101.

[6] 17 CFR 240.13d-102.

[7] 17 CFR 240.14d-100.

[8] 17 CFR 249.103.

[9] 17 CFR 249.104.

[10] 17 CFR 249.105.

[11] 17 CFR 249.1100.

[12] 17 CFR 249b.100.

[13] 17 CFR 269.2.

I. Discussion

Commission rules and regulations require the filing and public disclosure of information by natural persons as well as corporate and other entities. The Commission is amending forms that request individual filers to disclose their Social Security numbers. These forms will no longer include any reference to Social Security numbers, and as appropriate, the forms will be revised to delete the portion of the form where filers included this information.

The Commission is taking this action in response to increasing concern about the improper use of Social Security numbers for access to otherwise non-public information.14 The forms on which individuals can disclose their Social Security numbers are available to the public. In the past, this has not led to significant abuse. However, with the growth of the EDGAR database and its availability to millions of viewers on the Commission's web site, the Commission is concerned that these numbers are too readily available. This is especially true where impersonal electronic

commercial transactions made possible by recent developments in technology encourage potential impostors. The Commission has determined that the usefulness of Social Security numbers filers voluntarily provide on these forms is outweighed by the risk of misuse created by the disclosure of those numbers.

[14] Some of the forms being amended also call for disclosure of the I.R.S. identification number of the filing party—in most cases on a voluntary basis—if the filing party is an entity rather than an individual. The forms as amended retain this information. The disclosure of I.R.S. identification number of entities does not raise the same concerns as Social Security numbers. In fact, a number of the Commission's forms require disclosure of the I.R.S. identification number of the filing party.

A Social Security number can be the key to obtaining personal and private information about individuals. In recent years, the use of Social Security numbers as a universal identifier has increased significantly. With a Social Security number and certain other publicly-available information, it is possible to retrieve sensitive personal and financial information about people from a variety of sources, both legal and illegal. These sources include the Internet, which has increased both the amount and type of information available and the level of concern about the privacy of personal information.

Generally, the forms that the Commission is amending do not require that filers disclose their Social Security numbers. The forms include cautionary notes stating that the information is public and explaining how it may be used. For example, Social Security numbers may be used to help to identify filers. Because the forms make the inclusion of the number voluntary, however, some filers include the number and some do not. As a result, Social Security numbers cannot be used as a consistent mechanism for tracking the information provided about individuals in the Commission's forms. The Commission staff, and others who analyze the information disclosed in the forms, must use other means to track the individuals for analysis of the information. The Social Security number is not otherwise necessary for the evaluation of the information disclosed.

At this time, the Commission will continue to request that filers voluntarily disclose Social Security numbers on three Exchange Act forms: Form BD (uniform application for registration as a broker-dealer or to amend such an application), Form BDW (notice of withdrawal from registration as a broker-dealer) and Form X-17A-19 (report by national securities exchanges and registered national securities associations of changes in the membership status of any of their members). These forms are used not only by the Commission but also by state regulators and self-regulatory organizations. Other users of the forms have independent authority to establish their own forms and have determined that Social Security numbers are useful for their purposes. Historically, they have not supported amending the forms to remove the request for Social Security numbers. Because it is important that these forms remain uniform, the Commission has decided to continue to request that filers voluntarily disclose Social Security numbers on these forms. Currently, these forms are not filed on EDGAR or disseminated over the Internet. Should the information begin to be published on the Internet, the issue will need to be reconsidered by the Commission and by the other users of the forms.

In addition, the Commission is not now amending Forms ADV (uniform application for registration as an investment adviser or to amend such application) and ADV-W (notice of withdrawal from registration as an investment adviser), which are filed by investment advisers under the Investment Advisers Act of 1940.15 These forms, like those mentioned in the previous paragraph, are used by state regulators as well as the Commission. Forms ADV and ADV-W are not available on EDGAR or on the Internet. The Commission currently is reviewing Forms ADV and ADV-W and anticipates proposing substantial revisions to the forms. In connection with the review process, the Commission will consider eliminating Social Security numbers from the forms. State regulators have independent authority to establish their own forms, however, and may determine that Social Security numbers are useful for their purposes. The Commission, therefore, may decide to continue to request that filers voluntarily disclose Social Security numbers on Forms ADV and ADV-W so that the forms remain uniform.

[15] 15 U.S.C. 80b-1-80b-21.

II. Effective Date

These changes are effective on the date of their publication in the Federal Register. The Commission's Publications Unit is printing new forms. The current forms will continue to be valid, but filers using those forms are requested not to include their Social Security numbers.

III. Certain Findings

Since the amendments to the forms and schedules to delete the voluntary provision of Social Security numbers relate solely to agency organization, procedure, or practice, publication for notice and comment is not required under the Administrative Procedure Act.16 It follows that the requirements of the Regulatory Flexibility Act do not apply.

[16] 5 U.S.C. 553(b).

[17] 5 U.S.C. 601-612.

The rules relating to the disclosure of Social Security numbers are effective upon publication in the Federal Register. The Commission finds that there is good cause to dispense with the 30-day delay between publication and effectiveness normally required by the Administrative Procedure Act.18 There would be no hardship imposed on the filers of the affected forms, since the amendments simply would eliminate space on the forms for information that filers were providing voluntarily for the Commission's use, or on users of the information since the Social Security number information has been provided voluntarily. Balancing the possible harm to filers from the disclosure of their Social Security numbers against any possible hardship to filers or investors and other end-users, the Commission finds good cause for making these rules immediately effective.

[18] 5 U.S.C. 553(d).

The amendments to these forms do not come within the scope of the Paperwork Reduction Act of 1995 19 because the amendments are not a substantive or material change to a collection of information.20

[19] 44 U.S.C. 3501 et seq.

[20] 5 CFR 1320.5(g).

Under 5 U.S.C. 804, this rule is exempt from the definition of the term “rule” for purposes of Chapter 8, entitled “Congressional Review of Agency Rulemaking,” since the rule is a rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties.

Section 23(a)(2) of the Exchange Act 21 requires the Commission to consider the anti-competitive effects of any rules it adopts thereunder, and to balance them against the benefits that further the purposes of the Act. Because the amendments here do not effect any substantive change, they do not have any anti-competitive effects.

[21] 15 U.S.C. 78w(a)(2).

IV. Cost-Benefit Analysis

Because these amendments are procedural rules, and will impact the Commission rather than any filer, a traditional cost-benefit analysis appears unnecessary. The amendments will benefit individual filers by eliminating the possibility of the disclosure of confidential information and there do not appear to be any significant costs to the public as a result of making these changes.

Furthermore, section 2 of the Securities Act 22 and Section 3 of the Exchange Act,23 as amended by the recently enacted National Securities Markets Improvement Act of 1996,24 provide that whenever the Commission is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission also shall consider, in addition to the protection of investors, whether the act will promote efficiency, competition, and capital formation. Because the amendments will help to protect individual filers from the disclosure of otherwise confidential information, the amendments are in the public interest and will not affect efficiency, competition or capital formation.

[22] 15 U.S.C. 77b.

[23] 15 U.S.C. 78c.

[24] Pub. L. 104-290, secs. 106, 110 Stat. 3416 (1996).

V. Statutory Basis

The amendments to Form 144 are being adopted by the Commission pursuant to sections 2(11), 4(1) and 19(a) of the Securities Act. The amendments to Schedule 13D, Schedule 13G, Schedule 14D-1, Form 3, Form 4 and Form 5 are being adopted by the Commission pursuant to sections 3(a)(11), 3(a)(12), 3(b), 9(b), 10(a), 12(h), 13, 14, 16 and 23 of the Exchange Act. As Forms 3, 4 and 5 relate to the Investment Company Act of 1940 25 and the Public Utility Holding Company Act of 1935,26 the changes to those forms are also adopted pursuant to Investment Company Act sections 30 and 38 and Public Utility Holding Company Act sections 17 and 20, respectively. The amendments to Form MSD are being adopted by the Commission pursuant to sections 15, 15B(a), 17(a) and 23(a) of the Exchange Act. The amendments to Form TA-1 are being adopted by the Commission pursuant to sections 17, 17(A)(c) and 23(a) of the Exchange Act. The amendments to Form T-2 are being adopted pursuant to the authority set forth in sections 304, 305, 307, 308, 310, 314 and 319 of the Trust Indenture Act.

[25] 15 U.S.C. 80a-1 et seq.

[26] 15 U.S.C. 79a et seq.

List of Subjects in 17 CFR Parts 239, 240, 249 and 269

Reporting and recordkeeping, Securities.

Text of the Amendments

In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:

PART 239—FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

The authority citation for part 239 continues to read, in part, as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll(d), 79e, 79f, 79g, 79j, 79l, 79m, 79n, 79q, 79t, 80a-8, 80a-29, 80a-30 and 80a-37, unless otherwise noted. * * * * *

By amending Sec. 239.144, paragraph (c), by revising the second and last sentences to read as follows:

Sec. 239.144 Form 144, for notice of proposed sale of securities pursuant to Sec. 230.144 of this chapter.

(c) * * * Disclosure of the information specified in this form is mandatory before processing notices of proposed sale of securities under Sec. 230.144 of this chapter. * * * Failure to disclose the information requested by Form 144 would make an exception under Sec. 230.144 of this chapter unavailable and may result in civil or criminal action for violations of the Federal securities laws.

Sec. 239.14 [Form 144 Amended]

By amending Form 144 (referenced in Sec. 239.144) by revising the caption to Item 2(b) and revising Instruction 2(b) to the cover page to read as follows:

Note: The text of Form 144 does not, and the amendments will not, appear in the Code of Federal Regulations.

Form 144

Notice of Proposed Sale of Securities

Pursuant to Rule 144 Under the Securities Act of 1933

Item 2(b). I.R.S. Ident. No. * * * * *

Instructions:

(a) * * *

(b) Such person's I.R.S. identification number, if such person is an entity * * * * *

PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934

The general authority citation for part 240 is revised to read as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-11, unless otherwise noted. * * * * *

By amending Sec. 240.13d-101 by revising Item (1) on the cover page and the heading and the last sentence of Instruction (1) for the cover page, by removing the phrase “Social Security or” in the second, third and fourth undesignated paragraphs under SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D, by revising the words “regulatory statements” to read “regulatory statutes” in the third undesignated paragraph under SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D, and in the fourth undesignated paragraph under SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D by correcting the word “resuly” to read “result”, to read as follows:

Sec. 240.13d-101 Schedule 13D—Information to be included in statements filed pursuant to Sec. 240.13d-1(a) and amendments thereto filed pursuant to Sec. 240.13d-2(a).

(1) Names of reporting persons.

I.R.S. Identification Nos. of above persons (entities only). * * * * *

Instructions for Cover Page

(1) Names and I.R.S. Identification Numbers of Reporting Persons-- * * * Reporting persons that are entities are also requested to furnish their I.R.S. identification numbers, although disclosure of such numbers is voluntary, not mandatory (see “SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D” below). * * * * *

By amending Sec. 240.13d-102 by revising Item (1) on the cover page and the heading and last sentence to Instruction No. 1 for the cover page, and adding SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13G following the third undesignated paragraph under “NOTES:” and before “Instructions” to read as follows:

Sec. 240.13d-102 Schedule 13G—Information to be included in statements filed pursuant to Sec. 240.13d-1 (b) and (c) and amendments thereto filed pursuant to Sec. 240.13d-2(b).

(1) Names of reporting persons.

I.R.S. Identification Nos. of above persons (entities only). * * * * *

Instructions for Cover Page

(1) Names and I.R.S. Identification Numbers of Reporting Persons—* * * Reporting persons that are entities are also requested to furnish their I.R.S. identification numbers, although disclosure of such numbers is voluntary, not mandatory (see “SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13G” below). * * * * *

SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13G

Under Sections 13(d), 13(g) and 23 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, the Commission is authorized to solicit the information required to be supplied by this schedule by certain security holders of certain issuers.

Disclosure of the information specified in this schedule is mandatory, except for I.R.S. identification numbers, disclosure of which is voluntary. The information will be used for the primary purpose of determining and disclosing the holdings of certain beneficial owners of certain equity securities. This statement will be made a matter of public record. Therefore, any information given will be available for inspection by any member of the public.

Because of the public nature of the information, the Commission can use it for a variety of purposes, including referral to other governmental authorities or securities self-regulatory organizations for investigatory purposes or in connection with litigation involving the Federal securities laws or other civil, criminal or regulatory statutes or provisions. I.R.S. identification numbers, if furnished, will assist the Commission in identifying security holders and, therefore, in promptly processing statements of beneficial ownership of securities.

Failure to disclose the information requested by this schedule, except for I.R.S. identification numbers, may result in civil or criminal action against the persons involved for violation of the Federal securities laws and rules promulgated thereunder. * * * * *

By amending Sec. 240.14d-100 by revising Item (1) on the cover page and the heading and last sentence to Instruction No. 1 for the cover page, and in the second, third and fourth undesignated paragraphs under SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 14D-1 removing the phrase “Social Security or” to read as follows:

Sec. 240.14d-100 Schedule 14D-1. Tender offer statement pursuant to section 14(d)(1) of the Securities Exchange Act of 1934.

(1) Names of reporting persons.

I.R.S. Identification Nos. of above persons (entities only). * * * * *

Instructions for Cover Page

PART 249—FORMS, SECURITIES EXCHANGE ACT OF 1934

PART 249b—FURTHER FORMS, SECURITIES EXCHANGE ACT OF 1934

The authority citation for parts 249 and 249b continues to read in part as follows:

Authority: 15 U.S.C. 78a, et seq., unless otherwise noted; * * * * *

By amending Sec. 249.103 by revising the third sentence to read as follows:

Sec. 249.103 Form 3, initial statement of beneficial ownership of securities.

- - Disclosure of information specified on this Form is mandatory, except for disclosure of the I.R.S. identification number by entities, which is voluntary. * * *

Sec. 249.103 [Form 3 amended]

By amending Form 3 (referenced in Sec. 249.103) by revising the first sentence of the second undesignated paragraph of the introductory statement to the General Instructions and by revising Item 3 to the information preceding Table 1 to read as follows:

Note: The text of Form 3 does not, and the amendments will not, appear in the Code of Federal Regulations.

Form 3 Initial Statement of Beneficial Ownership of Securities

Disclosure of information specified on this form is mandatory, except for disclosure of the I.R.S. identification number of the reporting person if such person is an entity, which is voluntary. * * * * * * * *

3. I.R.S. Identification Number of Reporting Person, if an entity (Voluntary) * * * * *

11. By amending Sec. 249.104 by revising the third sentence to read as follows:

Sec. 249.104 Form 4, statement of changes in beneficial ownership of securities.

- - Disclosure of information specified on this Form is mandatory, except for disclosure of the I.R.S. identification number by entities, which is voluntary. * * *

Sec. 249.104 [Form 4 amended]

By amending Form 4 (referenced in Sec. 249.104) by revising the first sentence of the second undesignated paragraph of the introductory statement to the General Instructions and by revising Item 3 to the information preceding Table 1 to read as follows:

Note: The text of Form 4 does not, and the amendments will not, appear in the Code of Federal Regulations.

Form 4 Statement of Changes of Beneficial Ownership of Securities

3. I.R.S. Identification Number of Reporting Person, if an entity (Voluntary) * * * * *

13. By amending Sec. 249.105 by revising the third sentence to read as follows:

Sec. 249.105 Form 5, annual statement of beneficial ownership of securities.

- - Disclosure of information specified on this Form is mandatory, except for disclosure of the I.R.S. identification number by entities, which is voluntary. * * *

Sec. 249.105 [Form 5 amended]

By amending Form 5 (referenced in Sec. 249.105) by revising the first sentence of the second undesignated paragraph of the introductory statement to the General Instructions and by revising Item 3 to the information preceding Table 1 to read as follows:

Note: The text of Form 5 does not, and the amendments will not, appear in the Code of Federal Regulations.

Form 5 Annual Statement of Beneficial Ownership of Securities

I.R.S. Identification Number of Reporting Person, if an entity (Voluntary) * * * * *

Sec. 249.1100 [Form MSD amended]

By amending General Instruction M to Form MSD (referenced in Sec. 249.1100), by removing the words “, except social security numbers, disclosure of which is voluntary” in the second sentence.

Note: The text of Form MSD does not, and the amendments will not, appear in the Code of Federal Regulations.

Sec. 249b.100 Form TA-1 amended]

By amending Form TA-1 (referenced in Sec. 249b.100) to remove the second column entitled “Social Security Number” in Schedules A, B and C.

Note: The text of Form TA-1 does not, and the amendments will not, appear in the Code of Federal Regulations.

PART 269—FORMS PRESCRIBED UNDER THE TRUST INDENTURE ACT OF 1939

The authority citation for part 269 continues to read as follows:

Authority: 15 U.S.C. 77ddd(c), 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77sss, 78ll(d), unless otherwise noted.

By amending Sec. 269.2 by revising the third sentence, removing the eighth sentence and revising the ninth sentence to read as follows:

Sec. 269.2 Form T-2, for statement of eligibility and qualification for individual trustees.

- - Disclosure of the information specified in this form is mandatory before processing statements of eligibility and qualification. * * * Failure to disclose the information requested by this form may result in enforcement action by the Commission to compel compliance with the Federal securities laws.

Sec. 269.2 [Form T-2 amended]

By amending Form T-2 (referenced in Sec. 269.2), in SPECIAL INSTRUCTIONS FOR COMPLETING FORM T-2, removing the phrase “, except for social security account numbers, disclosure of which is voluntary” in the first sentence of the second paragraph, removing the second sentence of the third paragraph, and removing the phrase “, except for social security account numbers” in the fourth paragraph, and in the Form by removing the second line, “(Social Security Number)”.

Note: The text of Form T-2 does not and the amendments will not appear in the Code of Federal Regulations.

Dated: June 25, 1997.

By the Commission. Margaret H. McFarland, Deputy Secretary.

[FR Doc. 97-17104 Filed 6-30-97; 8:45 am]

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