Proposed Collection; Comment Request, 30308-30310 [2015-12684]
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30308
Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices
replace their orders and prices as a
means of attempting to quote with their
orders. The Exchange believes that
Professionals should not be a priority
over non-professional public customer
order flow, which is why, the Exchange
notes, there are separate CBOE rules for
Professionals in the first place.10
The proposed change modifies the
definition of a ‘‘COA-eligible order’’ to
give the Exchange the flexibility to
distinguish between complex orders
from Professionals and complex orders
from non-professional public customer
order flow. Any changes to the COAeligible order parameters would be
announced via Regulatory Circular.
mstockstill on DSK4VPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.11 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 12 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 13 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the proposed change is in accordance
with the Act as it is merely intended to
provide the Exchange the flexibility to
distinguish between Professionals and
non-professional public customer orders
for the purposes of COA, which is
intended to benefit non-professional
public customers by providing a more
efficient COA for eligible complex
orders.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
10 See
Rules 1.1 (fff) and (ggg).
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
13 Id.
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16:45 May 26, 2015
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Although the
Exchange recognizes that the proposal
will allow the Exchange to exclude
Professionals from COA, the current
rules already allow the Exchange to
differentiate between order origin types
(i.e., non-broker-dealer public customer,
broker-dealers that are not MarketMakers or specialists on an options
exchange, and/or Market-Makers or
specialist on an options exchange). The
Exchange believes any perceived burden
on Professionals would be outweighed
by the potential benefits to public
customers. In addition, the proposal
would not permit the Exchange to
discriminate among individual market
participants of the same origin code
(e.g., the proposal would not allow the
Exchange to permit certain Professional
orders to the exclusion of orders from a
different Professional).14 The Exchange
does not believe the proposed changes
will have any burden on intermarket
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. By order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
14 See
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• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2015–045 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2015–045. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
offices of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2015–045, and should be submitted on
or before June 17, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12687 Filed 5–26–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
15 17
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CFR 200.30–3(a)(12).
27MYN1
Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices
100 F Street NE., Washington, DC
20549–2736.
Extension:
Rule 31a–2, OMB Control No. 3235–0179,
SEC File No. 270–174.
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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 (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Section 31(a)(1) of the Investment
Company Act of 1940 (the ‘‘Act’’) (15
U.S.C. 80a–30(a)(1)) requires registered
investment companies (‘‘funds’’) and
certain underwriters, broker-dealers,
investment advisers, and depositors to
maintain and preserve records as
prescribed by Commission rules. Rule
31a–1 under the Act (17 CFR 270.31a–
1) specifies the books and records that
each of these entities must maintain.
Rule 31a–2 under the Act (17 CFR
270.31a–2), which was adopted on April
17, 1944, specifies the time periods that
entities must retain certain books and
records, including those required to be
maintained under rule 31a–1.
Rule 31a–2 requires the following:
1. Every fund must preserve
permanently, and in an easily accessible
place for the first two years, all books
and records required under rule 31a–
1(b)(1)–(4).1
2. Every fund must preserve for at
least six years, and in an easily
accessible place for the first two years:
a. All books and records required
under rule 31a–1(b)(5)–(12); 2
b. all vouchers, memoranda,
correspondence, checkbooks, bank
statements, canceled checks, cash
reconciliations, canceled stock
certificates, and all schedules
evidencing and supporting each
1 These include, among other records, journals
detailing daily purchases and sales of securities,
general and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense
accounts, separate ledgers reflecting separately for
each portfolio security as of the trade date all
‘‘long’’ and ‘‘short’’ positions carried by the fund for
its own account, and corporate charters, certificates
of incorporation, by-laws and minute books.
2 These include, among other records, records of
each brokerage order given in connection with
purchases and sales of securities by the fund,
records of all other portfolio purchases or sales,
records of all puts, calls, spreads, straddles or other
options in which the fund has an interest, has
granted, or has guaranteed, records of proof of
money balances in all ledger accounts, files of all
advisory material received from the investment
adviser, and memoranda identifying persons,
committees, or groups authorizing the purchase or
sale of securities for the fund.
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16:45 May 26, 2015
Jkt 235001
computation of net asset value of fund
shares, and other documents required to
be maintained by rule 31a–1(a) and not
enumerated in rule 31a–1(b);
c. any advertisement, pamphlet,
circular, form letter or other sales
literature addressed or intended for
distribution to prospective investors;
d. any record of the initial
determination that a director is not an
interested person of the fund, and each
subsequent determination that the
director is not an interested person of
the fund, including any questionnaire
and any other document used to
determine that a director is not an
interested person of the company;
e. any materials used by the
disinterested directors of a fund to
determine that a person who is acting as
legal counsel to those directors is an
independent legal counsel; and
f. any documents or other written
information considered by the directors
of the fund pursuant to section 15(c) of
the Act (15 U.S.C. 80a–15(c)) in
approving the terms or renewal of a
contract or agreement between the fund
and an investment advisor.3
3. Every underwriter, broker, or dealer
that is a majority-owned subsidiary of a
fund must preserve records required to
be preserved by brokers and dealers
under rules adopted under section 17 of
the Securities Exchange Act of 1934 (15
U.S.C. 78q) (‘‘section 17’’) for the
periods established in those rules.
4. Every depositor of a fund, and
every principal underwriter of a fund
(other than a closed-end fund), must
preserve for at least six years records
required to be maintained by brokers
and dealers under rules adopted under
section 17 to the extent the records are
necessary or appropriate to record the
entity’s transactions with the fund.
5. Every investment adviser that is a
majority-owned subsidiary of a fund
must preserve the records required to be
preserved by investment advisers under
rules adopted under section 204 of the
Investment Advisers Act of 1940 (15
U.S.C. 80b–4) (‘‘section 204’’) for the
periods specified in those rules.
6. Every investment adviser that is not
a majority-owned subsidiary of a fund
must preserve for at least six years
records required to be maintained by
registered investment advisers under
rules adopted under section 204 to the
3 Section 15 of the Act requires that fund
directors, including a majority of independent
directors, annually approve the fund’s advisory
contract and that the directors first obtain from the
adviser the information reasonably necessary to
evaluate the contract. The information request
requirement in section 15 provides fund directors,
including independent directors, a tool for
obtaining the information they need to represent
shareholder interests.
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30309
extent the records are necessary or
appropriate to reflect the adviser’s
transactions with the fund.
The records required to be maintained
and preserved under this part may be
maintained and preserved for the
required time by, or on behalf of, a fund
on (i) micrographic media, including
microfilm, microfiche, or any similar
medium, or (ii) electronic storage media,
including any digital storage medium or
system that meets the terms of rule 31a–
2(f). The fund, or person that maintains
and preserves records on its behalf,
must arrange and index the records in
a way that permits easy location, access,
and retrieval of any particular record.4
We periodically inspect the
operations of all funds to ensure their
compliance with the provisions of the
Act and the rules under the Act. Our
staff spends a significant portion of its
time in these inspections reviewing the
information contained in the books and
records required to be kept by rule 31a–
1 and to be preserved by rule 31a–2.
There are 3146 funds currently
operating as of December 31, 2014, all
of which are required to comply with
rule 31a–2. Based on conversations with
representatives of the fund industry and
past estimates, our staff estimates that
each fund currently spends 220 total
hours per year complying with rule
31a–2. Our staff estimates that the 220
hours spent by typical fund would be
split evenly between administrative and
computer operation personnel,5 with
110 hours spent by a general clerk at a
rate of $57 per hour and 110 hours spent
by a senior computer operator at a rate
of $87 per hour.6 Based on these
4 In addition, the fund, or person who maintains
and preserves records for the fund, must provide
promptly any of the following that the Commission
(by its examiners or other representatives) or the
directors of the fund may request: (A) A legible,
true, and complete copy of the record in the
medium and format in which it is stored; (B) a
legible, true, and complete printout of the record;
and (C) means to access, view, and print the
records; and must separately store, for the time
required for preservation of the original record, a
duplicate copy of the record on any medium
allowed by rule 31a–2(f). In the case of records
retained on electronic storage media, the fund, or
person that maintains and preserves records on its
behalf, must establish and maintain procedures: (i)
To maintain and preserve the records, so as to
reasonably safeguard them from loss, alteration, or
destruction; (ii) to limit access to the records to
properly authorized personnel, the directors of the
fund, and the Commission (including its examiners
and other representatives); and (iii) to reasonably
ensure that any reproduction of a non-electronic
original record on electronic storage media is
complete, true, and legible when retrieved.
5 However, the hour burden may be incurred by
a variety of fund staff, and the type of staff position
used for compliance with the rule may vary widely
from fund to fund.
6 The estimated salary rates are derived from
SIFMA’s Office Salaries in the Securities Industry
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Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices
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estimates, our staff estimates that the
total annual burden for all funds to
comply with rule 31a–2 is 692,120
hours at an estimated cost of
$49,832,640.7
The hour burden estimates for
retaining records under rule 31a–2 are
based on our experience with registrants
and our experience with similar
requirements under the Act and the
rules under the Act. The number of
burden hours may vary depending on,
among other things, the complexity of
the fund, the issues faced by the fund,
and the number of series and classes of
the fund. The estimated average burden
hours are made solely for purposes of
the Paperwork Reduction Act and are
not derived from quantitative,
comprehensive, or even representative
survey or study of the burdens
associated with our rules and forms.
Based on conversations with
representatives of the fund industry and
past estimates, our staff estimates that
the average cost of preserving books and
records required by rule 31a–2 is
approximately $74,782 annually per
fund.8 As discussed previously, there
are 3146 funds currently operating, for
a total cost of preserving records as
required by rule 31a–2 of approximately
$235,264,172 per year.9 Our staff
understands, however, based on
previous conversations with
representatives of the fund industry,
that even in the absence of rule 31a–2
funds would already spend
approximately half of this amount
($117,632,086) to preserve these same
books and records, as they are also
necessary to prepare financial
statements, meet various state reporting
2013, modified by Commission staff to account for
an 1800-hour work-year and multiplied by 2.93 to
account for bonuses, firm size, employee benefits
and overhead.
7 This estimate is based on the following
calculations: 3146 funds × 220 hours = 692,120 total
hours; 692,120 hours/2 = 346,060 hours; 346,060 ×
$57 rate per hour for a clerk = $19,725,420; 346,060
× $87 rate per hour for a computer operator =
$30,107,220; $19,725,420 + $30,107,220 =
$49,832,640 total cost.
8 This estimate is based on staff’s 2012 estimate
of costs of preserving books and records required
by rule 31a–2 ($70,000), adjusted for inflation to
January 2015 values using the Personal
Consumption Expenditures Chain-Type Price Index
(‘‘PCE Index’’). The values of the PCE Index are
available from the Bureau of Economic Analysis, a
bureau of the Department of Commerce. See Bureau
of Economic Analysis, Table 2.8.6. Real Personal
Consumption Expenditures by Major Type of
Product, Monthly, Chained Dollars (Last Revised on
March 2, 2015), available at https://www.bea.gov/
iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=
3&isuri=1&903=83. Thus, $70,000 (2012 estimate) ×
11,163.6 (Jan. 2015 PCE Index value)/10,449.7 (2012
PCE Index value) = $74,782 (Jan. 2015 inflation
adjusted estimate).
9 This estimate is based on the following
calculation: 3146 funds × $74,782 = $235,264,172.
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Jkt 235001
requirements, and prepare their annual
federal and state income tax returns.
Therefore, we estimate that the total
annual cost burden for all funds as a
result of compliance with rule 31a–2 is
approximately $117,632,086 per year.
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act, and is not
derived from a comprehensive or even
a representative survey or study of the
costs of Commission rules and forms.
The collection of information under
rule 31a–2 is mandatory for all funds.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless it
displays a currently valid control
number.
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 will have practical utility;
(b) the accuracy of the Commission’s
estimate of the burden of the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information 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 60 days of this
publication.
Please direct your written comments
to Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Remi
Pavlik-Simon, 100 F Street NE.,
Washington, DC 20549; or send an email
to: PRA_Mailbox@sec.gov.
Dated: May 20, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12684 Filed 5–26–15; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75013; File No. SR–FINRA–
2014–048]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Designation
of a Longer Period for Commission
Action on Proceedings To Determine
Whether To Approve or Disapprove a
Proposed Rule Change to Adopt
FINRA Rule 2242 (Debt Research
Analysts and Debt Research Reports)
May 20, 2015.
I. Introduction
On November 14, 2014, Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and
Rule 19b–4 thereunder,2 a proposed rule
to adopt new FINRA Rule 2242 (Debt
Research Analysts and Debt Research
Reports) to address conflicts of interest
relating to the publication and
distribution of debt research reports.
The proposal was published for
comment in the Federal Register on
November 24, 2014.3 The Commission
received five comments on the
proposal.4 On February 19, 2015, FINRA
filed Amendment No. 1 responding to
the comments received to the proposal
as well as to propose amendments in
response to these comments. The
proposal, as amended by Amendment
No. 1, was published for comment in
the Federal Register on March 18,
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Exchange Act Release No. 73623 (Nov. 18,
2014); 79 FR 69905 (Nov. 24, 2014). On January 6,
2015, FINRA consented to extending the time
period for the Commission to either approve or
disapprove the proposed rule change, or to institute
proceedings to determine whether to approve or
disapprove the proposed rule change, to February
20, 2015.
4 Letter from Hugh D. Berkson, Executive Vice
President and President-Elect, Public Investors
Arbitration Bar Association, to Brent J. Fields,
Secretary, SEC, dated Dec. 15, 2014; Letter from
Kevin Zambrowicz, Associate General Counsel and
Managing Director, and Sean Davy, Managing
Director, Securities Industry and Financial Markets
Association, to Brent J. Fields, Secretary, SEC, dated
Dec. 15, 2014; Letter from Yoon-Young Lee, Wilmer
Cutler Pickering Hale and Dorr LLP, to Brent J.
Fields, Secretary, SEC, dated Dec. 16, 2014; Letter
from William Beatty, President, North American
Securities Administrators Association, Inc., Brent J.
Fields, Secretary, SEC, dated Dec. 19, 2014; and
Letter from Kurt N. Schacht, Managing Director,
Standards and Financial Market Integrity, and
Linda L. Rittenhouse, Director, Capital Markets
Policy, CFA Institute, to Brent J. Fields, Secretary,
SEC, dated Feb. 9, 2015.
2 17
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]]>Agencies
[Federal Register Volume 80, Number 101 (Wednesday, May 27, 2015)]
[Notices]
[Pages 30308-30310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12684]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services,
[[Page 30309]]
100 F Street NE., Washington, DC 20549-2736.
Extension:
Rule 31a-2, OMB Control No. 3235-0179, SEC File No. 270-174.
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 (the ``Commission'') is soliciting comments on the
collection of information summarized below. The Commission plans to
submit this existing collection of information to the Office of
Management and Budget for extension and approval.
Section 31(a)(1) of the Investment Company Act of 1940 (the
``Act'') (15 U.S.C. 80a-30(a)(1)) requires registered investment
companies (``funds'') and certain underwriters, broker-dealers,
investment advisers, and depositors to maintain and preserve records as
prescribed by Commission rules. Rule 31a-1 under the Act (17 CFR
270.31a-1) specifies the books and records that each of these entities
must maintain. Rule 31a-2 under the Act (17 CFR 270.31a-2), which was
adopted on April 17, 1944, specifies the time periods that entities
must retain certain books and records, including those required to be
maintained under rule 31a-1.
Rule 31a-2 requires the following:
1. Every fund must preserve permanently, and in an easily
accessible place for the first two years, all books and records
required under rule 31a-1(b)(1)-(4).\1\
---------------------------------------------------------------------------
\1\ These include, among other records, journals detailing daily
purchases and sales of securities, general and auxiliary ledgers
reflecting all asset, liability, reserve, capital, income and
expense accounts, separate ledgers reflecting separately for each
portfolio security as of the trade date all ``long'' and ``short''
positions carried by the fund for its own account, and corporate
charters, certificates of incorporation, by-laws and minute books.
---------------------------------------------------------------------------
2. Every fund must preserve for at least six years, and in an
easily accessible place for the first two years:
a. All books and records required under rule 31a-1(b)(5)-(12); \2\
---------------------------------------------------------------------------
\2\ These include, among other records, records of each
brokerage order given in connection with purchases and sales of
securities by the fund, records of all other portfolio purchases or
sales, records of all puts, calls, spreads, straddles or other
options in which the fund has an interest, has granted, or has
guaranteed, records of proof of money balances in all ledger
accounts, files of all advisory material received from the
investment adviser, and memoranda identifying persons, committees,
or groups authorizing the purchase or sale of securities for the
fund.
---------------------------------------------------------------------------
b. all vouchers, memoranda, correspondence, checkbooks, bank
statements, canceled checks, cash reconciliations, canceled stock
certificates, and all schedules evidencing and supporting each
computation of net asset value of fund shares, and other documents
required to be maintained by rule 31a-1(a) and not enumerated in rule
31a-1(b);
c. any advertisement, pamphlet, circular, form letter or other
sales literature addressed or intended for distribution to prospective
investors;
d. any record of the initial determination that a director is not
an interested person of the fund, and each subsequent determination
that the director is not an interested person of the fund, including
any questionnaire and any other document used to determine that a
director is not an interested person of the company;
e. any materials used by the disinterested directors of a fund to
determine that a person who is acting as legal counsel to those
directors is an independent legal counsel; and
f. any documents or other written information considered by the
directors of the fund pursuant to section 15(c) of the Act (15 U.S.C.
80a-15(c)) in approving the terms or renewal of a contract or agreement
between the fund and an investment advisor.\3\
---------------------------------------------------------------------------
\3\ Section 15 of the Act requires that fund directors,
including a majority of independent directors, annually approve the
fund's advisory contract and that the directors first obtain from
the adviser the information reasonably necessary to evaluate the
contract. The information request requirement in section 15 provides
fund directors, including independent directors, a tool for
obtaining the information they need to represent shareholder
interests.
---------------------------------------------------------------------------
3. Every underwriter, broker, or dealer that is a majority-owned
subsidiary of a fund must preserve records required to be preserved by
brokers and dealers under rules adopted under section 17 of the
Securities Exchange Act of 1934 (15 U.S.C. 78q) (``section 17'') for
the periods established in those rules.
4. Every depositor of a fund, and every principal underwriter of a
fund (other than a closed-end fund), must preserve for at least six
years records required to be maintained by brokers and dealers under
rules adopted under section 17 to the extent the records are necessary
or appropriate to record the entity's transactions with the fund.
5. Every investment adviser that is a majority-owned subsidiary of
a fund must preserve the records required to be preserved by investment
advisers under rules adopted under section 204 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-4) (``section 204'') for the
periods specified in those rules.
6. Every investment adviser that is not a majority-owned subsidiary
of a fund must preserve for at least six years records required to be
maintained by registered investment advisers under rules adopted under
section 204 to the extent the records are necessary or appropriate to
reflect the adviser's transactions with the fund.
The records required to be maintained and preserved under this part
may be maintained and preserved for the required time by, or on behalf
of, a fund on (i) micrographic media, including microfilm, microfiche,
or any similar medium, or (ii) electronic storage media, including any
digital storage medium or system that meets the terms of rule 31a-2(f).
The fund, or person that maintains and preserves records on its behalf,
must arrange and index the records in a way that permits easy location,
access, and retrieval of any particular record.\4\
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\4\ In addition, the fund, or person who maintains and preserves
records for the fund, must provide promptly any of the following
that the Commission (by its examiners or other representatives) or
the directors of the fund may request: (A) A legible, true, and
complete copy of the record in the medium and format in which it is
stored; (B) a legible, true, and complete printout of the record;
and (C) means to access, view, and print the records; and must
separately store, for the time required for preservation of the
original record, a duplicate copy of the record on any medium
allowed by rule 31a-2(f). In the case of records retained on
electronic storage media, the fund, or person that maintains and
preserves records on its behalf, must establish and maintain
procedures: (i) To maintain and preserve the records, so as to
reasonably safeguard them from loss, alteration, or destruction;
(ii) to limit access to the records to properly authorized
personnel, the directors of the fund, and the Commission (including
its examiners and other representatives); and (iii) to reasonably
ensure that any reproduction of a non-electronic original record on
electronic storage media is complete, true, and legible when
retrieved.
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We periodically inspect the operations of all funds to ensure their
compliance with the provisions of the Act and the rules under the Act.
Our staff spends a significant portion of its time in these inspections
reviewing the information contained in the books and records required
to be kept by rule 31a-1 and to be preserved by rule 31a-2.
There are 3146 funds currently operating as of December 31, 2014,
all of which are required to comply with rule 31a-2. Based on
conversations with representatives of the fund industry and past
estimates, our staff estimates that each fund currently spends 220
total hours per year complying with rule 31a-2. Our staff estimates
that the 220 hours spent by typical fund would be split evenly between
administrative and computer operation personnel,\5\ with 110 hours
spent by a general clerk at a rate of $57 per hour and 110 hours spent
by a senior computer operator at a rate of $87 per hour.\6\ Based on
these
[[Page 30310]]
estimates, our staff estimates that the total annual burden for all
funds to comply with rule 31a-2 is 692,120 hours at an estimated cost
of $49,832,640.\7\
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\5\ However, the hour burden may be incurred by a variety of
fund staff, and the type of staff position used for compliance with
the rule may vary widely from fund to fund.
\6\ The estimated salary rates are derived from SIFMA's Office
Salaries in the Securities Industry 2013, modified by Commission
staff to account for an 1800-hour work-year and multiplied by 2.93
to account for bonuses, firm size, employee benefits and overhead.
\7\ This estimate is based on the following calculations: 3146
funds x 220 hours = 692,120 total hours; 692,120 hours/2 = 346,060
hours; 346,060 x $57 rate per hour for a clerk = $19,725,420;
346,060 x $87 rate per hour for a computer operator = $30,107,220;
$19,725,420 + $30,107,220 = $49,832,640 total cost.
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The hour burden estimates for retaining records under rule 31a-2
are based on our experience with registrants and our experience with
similar requirements under the Act and the rules under the Act. The
number of burden hours may vary depending on, among other things, the
complexity of the fund, the issues faced by the fund, and the number of
series and classes of the fund. The estimated average burden hours are
made solely for purposes of the Paperwork Reduction Act and are not
derived from quantitative, comprehensive, or even representative survey
or study of the burdens associated with our rules and forms.
Based on conversations with representatives of the fund industry
and past estimates, our staff estimates that the average cost of
preserving books and records required by rule 31a-2 is approximately
$74,782 annually per fund.\8\ As discussed previously, there are 3146
funds currently operating, for a total cost of preserving records as
required by rule 31a-2 of approximately $235,264,172 per year.\9\ Our
staff understands, however, based on previous conversations with
representatives of the fund industry, that even in the absence of rule
31a-2 funds would already spend approximately half of this amount
($117,632,086) to preserve these same books and records, as they are
also necessary to prepare financial statements, meet various state
reporting requirements, and prepare their annual federal and state
income tax returns. Therefore, we estimate that the total annual cost
burden for all funds as a result of compliance with rule 31a-2 is
approximately $117,632,086 per year.
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\8\ This estimate is based on staff's 2012 estimate of costs of
preserving books and records required by rule 31a-2 ($70,000),
adjusted for inflation to January 2015 values using the Personal
Consumption Expenditures Chain-Type Price Index (``PCE Index''). The
values of the PCE Index are available from the Bureau of Economic
Analysis, a bureau of the Department of Commerce. See Bureau of
Economic Analysis, Table 2.8.6. Real Personal Consumption
Expenditures by Major Type of Product, Monthly, Chained Dollars
(Last Revised on March 2, 2015), available at https://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=83.
Thus, $70,000 (2012 estimate) x 11,163.6 (Jan. 2015 PCE Index
value)/10,449.7 (2012 PCE Index value) = $74,782 (Jan. 2015
inflation adjusted estimate).
\9\ This estimate is based on the following calculation: 3146
funds x $74,782 = $235,264,172.
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The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act, and is not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules and forms.
The collection of information under rule 31a-2 is mandatory for all
funds. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid control number.
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 will
have practical utility; (b) the accuracy of the Commission's estimate
of the burden of the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information 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 60
days of this publication.
Please direct your written comments to Pamela Dyson, Director/Chief
Information Officer, Securities and Exchange Commission, C/O Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email
to: PRA_Mailbox@sec.gov.
Dated: May 20, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12684 Filed 5-26-15; 8:45 am]
BILLING CODE 8011-01-P
