Proposed Collection; Comment Request, 71339-71340 [E5-6539]
Download as PDF
<![CDATA[
Federal Register / Vol. 70, No. 227 / Monday, November 28, 2005 / Notices
Any fund that relies on one of the
exemptive rules must comply with the
requirements in the definition of
‘‘independent legal counsel’’ under rule
0–1. We assume that approximately
3870 funds rely on at least one of the
exemptive rules annually.7 We further
assume that the independent directors
of approximately one-third (1290) of
those funds would need to make the
required determination in order for their
counsel to meet the definition of
independent legal counsel.8 We
estimate that each of these 1290 funds
would be required to spend, on average,
0.75 hours annually to comply with the
recordkeeping requirement associated
with this determination, for a total
annual burden of approximately 968
hours. Based on this estimate, the total
annual cost for all funds’ compliance
with this rule is approximately $66,126.
To calculate this total annual cost, the
Commission staff assumed that twothirds of the total annual hour burden
(645 hours) would be incurred by
compliance staff with an average hourly
wage rate of $89 per hour,9 and onethird of the annual hour burden (323
hours) would be incurred by clerical
staff with an average hourly wage rate
of $27 per hour.10
These burden hour estimates are
based upon the Commission staff’s
experience and discussions with the
fund industry. The estimates of average
burden hours are made solely for the
purposes of the Paperwork Reduction
Act. These estimates are not derived
from a comprehensive or even a
representative survey or study of the
costs of Commission rules.
Written comments are invited on: (a)
Whether the collection of information is
necessary for the proper performance of
the functions of the Commission,
including whether the information has
practical utility; (b) the accuracy of the
Commission’s estimate of the burdens of
the collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burdens 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 R. Corey Booth, Director/Chief
Information Officer, Office of
Information Technology, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549.
7 Based on statistics compiled by Commission
staff, we estimate that there are approximately 4300
funds that could rely on one or more of the
exemptive rules. Of those funds, we assume that
approximately 90 percent (3870) actually rely on at
least one exemptive rules annually.
8 We assume that the independent directors of the
remaining two-thirds of those funds will choose not
to have counsel, or will rely on counsel who has
not recently represented the fund’s management
organizations or control persons. In both
circumstances, it would not be necessary for the
fund’s independent directors to make a
determination about their counsel’s independence.
9 The staff estimates concerning the wage rate for
professional time and for clerical time are based on
salary information complied by the Securities
Industry Association. We use the annual salaries
listed for the Director of Compliance and Executive
Secretary positions to make our estimates. See
Securities Industry Association, Report on
Management and Professional Earnings in the
Securities Industry (2004) (available in part at
https://www.careerjournal.com/salaryhiring (last
visited Sept. 14, 2005)). Note that the average
hourly wage rate estimates are modified for an
1800-hour work-year, 2.7% inflation and adjusted
upward by 35% to reflect possible overhead costs
and employee benefits.
10 (645 × $89/hour) + (323 × $27/hour) = $66,126.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collections of information
summarized below. The Commission
plans to submit these existing
collections of information to the Office
of Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 17a–7 [17 CFR 270.17a–7] under
the Investment Company Act of 1940
(the ‘‘Act’’) is entitled ‘‘Exemption of
certain purchase or sale transactions
between an investment company and
certain affiliated persons thereof.’’ It
provides an exemption from section
17(a) of the Act for purchases and sales
of securities between registered
investment companies (‘‘funds’’), that
are affiliated persons (‘‘first-tier
affiliates’’) or affiliated persons of
affiliated persons (‘‘second-tier
VerDate Aug<31>2005
15:28 Nov 25, 2005
Jkt 208001
Dated: November 16, 2005.
Jonathan G. Katz,
Secretary.
[FR Doc. E5–6538 Filed 11–25–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon written request, copies available
from: Securities and Exchange
Commission, Office of Filings and
Information Services, Washington, DC
20549.
Extension:
Rule 17a–7; SEC File No. 270–238; OMB
Control No. 3235–0214.
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
71339
affiliates’’), or between a fund and a
first-or second-tier affiliate other than
another fund, when the affiliation arises
solely because of a common investment
adviser, director, or officer. Rule 17a–7
requires funds to keep various records
in connection with purchase or sale
transactions effected in reliance on the
rule. The rule requires the fund’s board
of directors to establish procedures
reasonably designed to ensure that the
rule’s conditions have been satisfied.
The board is also required to determine,
at least on a quarterly basis, that all
affiliated transactions effected during
the preceding quarter in reliance on the
rule were made in compliance with
these established procedures. If a fund
enters into a purchase or sale
transaction with an affiliated person, the
rule requires the fund to compile and
maintain written records of the
transaction.1 The Commission’s
examination staff uses these records to
evaluate for compliance with the rule.
The Commission estimates that
approximately 968 funds enter into
transactions effected in reliance on rule
17a–7 each year and, therefore, are
subject to the rule’s information
collection requirements.2 The average
annual burden for rule 17a–7 is
estimated to be approximately two
burden hours per respondent, for an
annual total of 1935 burden hours for all
respondents.3 The estimates of burden
hours are made solely for the purposes
of the Paperwork Reduction Act, and are
not derived from a comprehensive or
even a representative survey or study of
the costs of Commission rules.
Rule 17a–7 requires investment
companies to maintain and preserve
permanently a written copy of the
procedures governing rule 17a–7
transactions. In addition, investment
companies are required to maintain
written records of each rule 17a–7
1 The written records are required to set forth a
description of the security purchased or sold, the
identity of the person on the other side of the
transaction, and the information or materials upon
which the board of directors’ determination that the
transaction was in compliance with the procedures
was made.
2 These estimates are based on conversations with
the examination and inspections staff of the
Commission and fund representatives. Based on
these conversations, the Commission staff estimates
that most investment companies (3870 of the
estimated 4300 registered investment companies)
have adopted procedures for compliance with rule
17a–7. Of these 3870 investment companies, the
Commission staff estimates that each year
approximately 25% (968) enter into transactions
affected by rule 17a–7.
3 This estimate is based in turn on the staff’s
estimate that the approximately 968 funds that rely
on rule 17a–7 annually engage in an average of 8
rule 17a–7 transactions and spend approximately
15 minutes per transaction on recordkeeping
required by the rule.
E:\FR\FM\28NON1.SGM
28NON1
71340
Federal Register / Vol. 70, No. 227 / Monday, November 28, 2005 / Notices
transaction for a period of not less than
six years from the end of the fiscal year
in which the transaction occurred. The
collection of information required by
rule 17a–7 is necessary to obtain the
benefits of the rule. Responses will not
be kept confidential. 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 collections of information
are necessary for the proper
performance of the functions of the
Commission, including whether the
information has practical utility; (b) the
accuracy of the Commission’s estimate
of the burdens of the collections of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burdens of the collections
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 R. Corey Booth, Director/Chief
Information Officer, Office of
Information Technology, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549.
Dated: November 17, 2005.
Jonathan G. Katz,
Secretary.
[FR Doc. E5–6539 Filed 11–25–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon written request, copies available
from: Securities and Exchange
Commission, Office of Filings and
Information Services, Washington, DC
20549.
Extension:
Rule 30a–8; SEC File No. 270–516; OMB
Control No. 3235–0574.
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 collections of information
summarized below. The Commission
plans to submit these existing
collections of information to the Office
of Management and Budget (‘‘OMB’’),
for extension and approval.
VerDate Aug<31>2005
15:28 Nov 25, 2005
Jkt 208001
Rule 3a–8 of the Investment Company
Act of 1940 (the ‘‘Act’’), serves as a
nonexclusive safe harbor from
investment company status for certain
research and development companies
(‘‘R&D companies’’). The rule requires
that the board of directors of an R&D
company seeking to rely on the safe
harbor adopt an appropriate resolution
evidencing that the company is
primarily engaged in a non-investment
business and record that resolution
contemporaneously in its minute books
or comparable documents.1 An R&D
company seeking to rely on the safe
harbor must retain these records only as
long as such records must be
maintained in accordance with state
law.
Rule 3a–8 contains an additional
requirement that is also a collection of
information within the meaning of the
PRA. The board of directors of a
company that relies on the safe harbor
under rule 3a–8 must adopt a written
policy with respect to the company’s
capital preservation investments. We
expect that the board of directors will
base its decision to adopt the resolution
discussed above, in part, on investment
guidelines that the company will follow
to ensure its investment portfolio is in
compliance with the rule’s
requirements.
The collection of information
imposed by rule 3a–8 is voluntary
because the rule is an exemptive safe
harbor, and therefore, R&D companies
may choose whether or not to rely on it.
The purposes of the information
collection requirements in rule 3a–8 are
to ensure that: (i) The board of directors
of an R&D company is involved in
determining whether the company
should be considered an investment
company and subject to regulation
under the Act, and (ii) adequate records
are available for Commission review, if
necessary. Rule 3a–8 would not require
the reporting of any information or the
filing of any documents with the
Commission.
Commission staff estimates that there
is no annual recordkeeping burden
associated with the rule’s requirements.
Nevertheless, the Commission requests
authorization to maintain an inventory
of one burden hour for administrative
purposes.
There are approximately 33,000 R&D
companies in the United States.2 Rule
3a–8 impacts non-manufacturing R&D
1 Rule 3a–8(a)(6). This requirement is modeled on
the requirement in rule 3a–2 under the Act that
provides a temporary exemption from the Act for
transient investment companies. 17 CFR 270.3a–2.
2 See National Science Board, Science and
Engineering Indicators 2004 (‘‘NSB Indicators’’)
(available at https://www.nsf.gov/statistics/seind04/).
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
companies that would fall within the
definition of investment company
pursuant to section 3(a)(1)(C) of the Act
[15 U.S.C. 80a–3(a)(1)(C)].3 Of the
16,170 non-manufacturing R&D
Companies, the Commission believes
that companies in scientific R&D
services are more likely to use the
exemption provided by rule 3a–8.4 This
field comprises companies that
specialize in conducting R&D for other
organizations, such as many
biotechnology companies.5 It accounts
for 18%, or approximately 2910
companies.6 Given that the board
resolutions and investment guidelines
will generally need to be adopted only
once (unless relevant circumstances
change),7 the Commission believes that
all the companies that seek to rely on
rule 3a–8 would have adopted their
board resolutions and established
written investment guidelines in 2003
when the rule was adopted. We expect
that newly formed R&D companies
would adopt the board resolution and
investment guidelines simultaneously
with their formation documents in the
ordinary course of business.8 Therefore,
we estimate that rule 3a–8 will not
create additional time burdens.
Written comments are invited on: (a)
Whether the proposed collection of
3 The Act provides certain exclusions from the
definition of investment company for a company
that is primarily engaged in a non-investment
business. 15 U.S.C. 80a–3(b)(1). For purposes of this
PRA analysis, we assume that all manufacturing
R&D companies are primarily engaged in the
manufacturing industry and, therefore, may rely on
the exclusion for companies primarily engaged in
a non-investment business. For example, the top
two manufacturing R&D companies in terms of
dollars spent are Ford Motor Company and General
Motors, which are primarily engaged in motor
vehicle manufacturing. See NSB Indicators, supra
note 2.
4 We believe that R&D Companies in this field are
most likely to rely on the rule because they often
raise and invest large amounts of capital to fund
their research and product development and may
make strategic investments in other R&D companies
to develop products jointly. These activities may
cause the R&D companies to fall within the
definition of investment company and fail to
qualify for statutory exclusions under the Act when
using the Commission’s traditional analysis. See
Certain Research and Development Companies,
Release No. 26077 (Jun. 16, 2003) [68 FR 37045
(Jun. 20, 2003)], at n. 12 and accompanying text
(‘‘Rule 3a–8 Release’’).
5 See NSB Indicators, supra note 2.
6 Id.
7 In the event of changed circumstances, the
Commission believes that the board resolution and
investment guidelines will be amended and
recorded in the ordinary course of business and
would not create additional time burdens.
8 In order for these companies to raise sufficient
capital to fund their product development stage, we
believe they will need to present potential investors
with investment guidelines. Investors would want
to be assured that the company’s funds are invested
consistent with the goals of capital preservation and
liquidity.
E:\FR\FM\28NON1.SGM
28NON1
]]>Agencies
[Federal Register Volume 70, Number 227 (Monday, November 28, 2005)]
[Notices]
[Pages 71339-71340]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-6539]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon written request, copies available from: Securities and Exchange
Commission, Office of Filings and Information Services, Washington, DC
20549.
Extension:
Rule 17a-7; SEC File No. 270-238; OMB Control No. 3235-0214.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange
Commission (the ``Commission'') is soliciting comments on the
collections of information summarized below. The Commission plans to
submit these existing collections of information to the Office of
Management and Budget (``OMB'') for extension and approval.
Rule 17a-7 [17 CFR 270.17a-7] under the Investment Company Act of
1940 (the ``Act'') is entitled ``Exemption of certain purchase or sale
transactions between an investment company and certain affiliated
persons thereof.'' It provides an exemption from section 17(a) of the
Act for purchases and sales of securities between registered investment
companies (``funds''), that are affiliated persons (``first-tier
affiliates'') or affiliated persons of affiliated persons (``second-
tier affiliates''), or between a fund and a first-or second-tier
affiliate other than another fund, when the affiliation arises solely
because of a common investment adviser, director, or officer. Rule 17a-
7 requires funds to keep various records in connection with purchase or
sale transactions effected in reliance on the rule. The rule requires
the fund's board of directors to establish procedures reasonably
designed to ensure that the rule's conditions have been satisfied. The
board is also required to determine, at least on a quarterly basis,
that all affiliated transactions effected during the preceding quarter
in reliance on the rule were made in compliance with these established
procedures. If a fund enters into a purchase or sale transaction with
an affiliated person, the rule requires the fund to compile and
maintain written records of the transaction.\1\ The Commission's
examination staff uses these records to evaluate for compliance with
the rule.
---------------------------------------------------------------------------
\1\ The written records are required to set forth a description
of the security purchased or sold, the identity of the person on the
other side of the transaction, and the information or materials upon
which the board of directors' determination that the transaction was
in compliance with the procedures was made.
---------------------------------------------------------------------------
The Commission estimates that approximately 968 funds enter into
transactions effected in reliance on rule 17a-7 each year and,
therefore, are subject to the rule's information collection
requirements.\2\ The average annual burden for rule 17a-7 is estimated
to be approximately two burden hours per respondent, for an annual
total of 1935 burden hours for all respondents.\3\ The estimates of
burden hours are made solely for the purposes of the Paperwork
Reduction Act, and are not derived from a comprehensive or even a
representative survey or study of the costs of Commission rules.
---------------------------------------------------------------------------
\2\ These estimates are based on conversations with the
examination and inspections staff of the Commission and fund
representatives. Based on these conversations, the Commission staff
estimates that most investment companies (3870 of the estimated 4300
registered investment companies) have adopted procedures for
compliance with rule 17a-7. Of these 3870 investment companies, the
Commission staff estimates that each year approximately 25% (968)
enter into transactions affected by rule 17a-7.
\3\ This estimate is based in turn on the staff's estimate that
the approximately 968 funds that rely on rule 17a-7 annually engage
in an average of 8 rule 17a-7 transactions and spend approximately
15 minutes per transaction on recordkeeping required by the rule.
---------------------------------------------------------------------------
Rule 17a-7 requires investment companies to maintain and preserve
permanently a written copy of the procedures governing rule 17a-7
transactions. In addition, investment companies are required to
maintain written records of each rule 17a-7
[[Page 71340]]
transaction for a period of not less than six years from the end of the
fiscal year in which the transaction occurred. The collection of
information required by rule 17a-7 is necessary to obtain the benefits
of the rule. Responses will not be kept confidential. 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 collections of
information are necessary for the proper performance of the functions
of the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burdens
of the collections of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burdens of the collections 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 R. Corey Booth, Director/
Chief Information Officer, Office of Information Technology, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549.
Dated: November 17, 2005.
Jonathan G. Katz,
Secretary.
[FR Doc. E5-6539 Filed 11-25-05; 8:45 am]
BILLING CODE 8010-01-P
