Proposed Collection; Comment Request, 11403-11405 [E7-4458]
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Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices
cprice-sewell on PROD1PC66 with NOTICES
Commission, Washington, DC 20555–
0001, Attention: Rulemaking and
Adjudications Staff; (2) courier, express
mail, and expedited delivery services:
Office of the Secretary, Sixteenth Floor,
One White Flint North, 11555 Rockville
Pike, Rockville, Maryland, 20852,
Attention: Rulemaking and
Adjudications Staff; (3) E-mail
addressed to the Office of the Secretary,
U.S. Nuclear Regulatory Commission,
HearingDocket@nrc.gov; or (4) facsimile
transmission addressed to the Office of
the Secretary, U.S. Nuclear Regulatory
Commission, Washington, DC,
Attention: Rulemakings and
Adjudications Staff at (301) 415–1101,
verification number is (301) 415–1966.
A copy of the request for hearing and
petition for leave to intervene should
also be sent to the Office of the General
Counsel, U.S. Nuclear Regulatory
Commission, Washington, DC 20555–
0001, and it is requested that copies be
transmitted either by means of facsimile
transmission to (301) 415–3725 or by email to OGCMailCenter@nrc.gov. A copy
of the request for hearing and petition
for leave to intervene should also be
sent to the attorney for the licensee.
Nontimely requests and/or petitions
and contentions will not be entertained
absent a determination by the
Commission or the presiding officer or
the Atomic Safety and Licensing Board
that the petition, request and/or the
contentions should be granted based on
a balancing of the factors specified in 10
CFR 2.309(a)(1)(i)–(viii).
Energy Northwest, Docket No. 50–397,
Columbia Generating Station, Benton
County, Washington
Date of amendment request: February
2, 2007.
Description of amendment request:
The amendment revised Technical
Specification 3.6.1.7, ‘‘Suppression
Chamber-to-Drywell Vacuum Breakers,’’
to allow a one-time extension to the
current closure verification surveillance
requirement for one of two redundant
disks in one of nine vacuum breakers
until reliable position indication can be
restored in the main control room
during the next refueling outage (R–18),
which is scheduled to begin on May 12,
2007.
Date of issuance: February 27, 2007.
Effective date: As of its date of
issuance and shall be implemented
within 14 days from the date of
issuance.
Amendment No.: 202.
Facility Operating License No.: NPF–
21: Amendment revises the technical
specifications and license.
Public comments requested as to
proposed no significant hazards
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consideration (NSHC): Yes. 72 FR 6606,
published February 12, 2007. The notice
provided an opportunity to submit
comments on the Commission’s
proposed NSHC determination. No
comments have been received. The
notice also provided an opportunity to
request a hearing within 60 days after
the date of publication of the notice, but
indicated that if the Commission makes
a final NSHC determination, any such
hearing would take place after issuance
of the amendment.
The Commission’s related evaluation
of the amendment, finding of exigent
circumstances, state consultation, and
final NSHC determination are contained
in a safety evaluation dated February 27,
2007.
Attorney for licensee: William A.
Horin, Esq., Winston & Strawn, 1700 K
Street, NW., Washington, DC 20006–
3817.
NRC Branch Chief: David Terao.
Dated at Rockville, Maryland, this 2nd day
of March 2007.
For the Nuclear Regulatory Commission.
Michael C. Cheok,
Acting Director, Division of Operating Reactor
Licensing, Office of Nuclear Reactor
Regulation.
[FR Doc. E7–4251 Filed 3–12–07; 8:45 am]
BILLING CODE 7590–01–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 17j–1, SEC File No. 270–239, OMB
Control No. 3235–0224.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l–3520), 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 (‘‘OMB’’) for
extension and approval.
Conflicts of interest between
investment company personnel (such as
portfolio managers) and their funds can
arise when these persons buy and sell
securities for their own accounts
(‘‘personal investment activities’’).
These conflicts arise because fund
personnel have the opportunity to profit
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11403
from information about fund
transactions, often to the detriment of
fund investors. Beginning in the early
1960s, Congress and the Securities and
Exchange Commission (‘‘Commission’’)
sought to devise a regulatory scheme to
effectively address these potential
conflicts. These efforts culminated in
the addition of section 17(j) to the
Investment Company Act of 1940 (the
‘‘Investment Company Act’’) (15 U.S.C.
80a–17(j)) in 1970 and the adoption by
the Commission of rule 17j–1 (17 CFR
270.17j–1) in 1980.1 The Commission
proposed amendments to rule 17j–1 in
1995 in response to recommendations
made in the first detailed study of fund
policies concerning personal investment
activities by the Commission’s Division
of Investment Management since rule
17j–1 was adopted. Amendments to rule
17j–1, which were adopted in 1999,
enhanced fund oversight of personal
investment activities and the board’s
role in carrying out that oversight.2
Additional amendments to rule 17j–1
were made in 2004, conforming rule
17j–1 to rule 204A–1 under the
Investment Advisers Act of 1940 (15
U.S.C. 80b), avoiding duplicative
reporting, and modifying certain
definitions and time restrictions.3
Section 17(j) makes it unlawful for
persons affiliated with a registered
investment company(‘‘fund’’) or with
the fund’s investment adviser or
principal underwriter (each a ‘‘17j–1
organization’’), in connection with the
purchase or sale of securities held or to
be acquired by the investment company,
to engage in any fraudulent, deceptive,
or manipulative act or practice in
contravention of the Commission’s rules
and regulations. Section 17(j) also
authorizes the Commission to
promulgate rules requiring 17j–1
organizations to adopt codes of ethics.
In order to implement section 17(j),
rule 17j–1 imposes certain requirements
on 17j–1 organizations and ‘‘Access
Persons’’ 4 of those organizations. The
1 Prevention of Certain Unlawful Activities with
Respect to Registered Investment Companies,
Investment Company Act Release No. 11421 (Oct.
31, 1980) (45 FR 73915 (Nov. 7, 1980)).
2 Personal Investment Activities of Investment
Company Personnel, Investment Company Act
Release No. 23958 (Aug. 20, 1999) (64 FR 46821–
01 (Aug. 27, 1999)).
3 Investment Adviser Codes of Ethics, Investment
Advisers Act Release No. 2256 (Jul. 2, 2004) (66 FR
41696 (Jul. 9, 2004)).
4 Rule 17j–1(a)(1) defines an ‘‘access person’’ as
‘‘Any advisory person of a Fund or of a Fund’s
investment adviser. If an investment adviser’s
primary business is advising Funds or other
advisory clients, all of the investment adviser’s
directors, officers, and general partners are
presumed to be Access Persons of any Fund advised
by the investment adviser. All of a Fund’s directors,
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Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices
cprice-sewell on PROD1PC66 with NOTICES
rule prohibits fraudulent, deceptive or
manipulative acts by persons affiliated
with a 17j–1 organization in connection
with their personal securities
transactions in securities held or to be
acquired by the fund. The rule requires
each 17j–1 organization, unless it is a
money market fund or a fund that does
not invest in Covered Securities,5 to: (i)
Adopt a written codes of ethics, (ii)
submit the code and any material
changes to the code, along with a
certification that it has adopted
procedures reasonably necessary to
prevent Access Persons from violating
the code of ethics, to the fund board for
approval, (iii) use reasonable diligence
and institute procedures reasonably
necessary to prevent violations of the
code, (iv) submit a written report to the
fund describing any issues arising under
the code and procedures and certifying
that the 17j–1 entity has adopted
procedures reasonably necessary to
prevent Access Persons from violating
the code, (v) identify Access Persons
and notify them of their reporting
obligations, and (vi) maintain and make
available to the Commission for review
certain records related to the code of
ethics and transaction reporting by
Access Persons.
The rule requires each Access Person
of a fund (other than a money market
fund or a fund that does not invest in
Covered Securities) and of an
investment adviser or principal
underwriter of the fund, who is not
subject to an exception,6 to file: (i)
officers, and general partners are presumed to be
Access Persons of the Fund.’’ The definition of
Access Person also includes ‘‘Any director, officer
or general partner of a principal underwriter who,
in the ordinary course of business, makes,
participates in or obtains information regarding, the
purchase or sale of Covered Securities by the Fund
for which the principal underwriter acts, or whose
functions or duties in the ordinary course of
business relate to the making of any
recommendation to the Fund regarding the
purchase or sale of Covered Securities.’’ Rule 17j–
1(a)(1).
5 A ‘‘Covered Security’’ is any security that falls
within the definition in section 2(a)(36) of the Act,
except for direct obligations of the U.S.
Government, bankers’ acceptances, bank certificates
of deposit, commercial paper and high quality
short-term debt instruments, including repurchase
agreements, and shares issued by open-end funds.
Rule 17j–1(a)(4).
6 Rule 17j–1(d)(2) contains the following
exceptions: (i) An Access Person need not file a
report for transactions effected for, and securities
held in, any account over which the Access Person
does not have control; (ii) an independent director
of the fund, who would otherwise not need to
report and who does not have information with
respect to the fund’s transactions in a particular
security, does not have to file an initial holdings
report or a quarterly transaction report; (iii) an
Access Person of a principal underwriter of the
fund does not have to file reports if the principal
underwriter is not affiliated with the fund (unless
the fund is a unit investment trust) or any
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Within 10 days of becoming an Access
Person, a dated initial holdings report
that sets forth certain information with
respect to the access person’s securities
and accounts; (ii) dated quarterly
transaction reports within 30 days of the
end of each calendar quarter providing
certain information with respect to any
securities transactions during the
quarter and any account established by
the Access Person in which any
securities were held during the quarter;
and (iii) dated annual holding reports
providing information with respect to
each Covered Security the Access
Person beneficially owns and accounts
in which securities are held for his or
her benefit. In addition, rule 17j–1
requires investment personnel of a fund
or its investment adviser, before
acquiring beneficial ownership in
securities through an initial public
offering (IPO) or in a private placement,
to obtain approval from the fund or the
fund’s investment adviser.
The requirements that the
management of a rule 17j–1 organization
provide the fund’s board with new and
amended codes of ethics and an annual
issues and certification report are
intended to enhance board oversight of
personal investment policies applicable
to the fund and the personal investment
activities of Access Persons. The
requirements that Access Persons
provide initial holdings reports,
quarterly transaction reports, and
annual holdings reports and request
approval for purchases of securities
through IPOs and private placements
are intended to help fund compliance
personnel and the Commission’s
examinations staff monitor potential
conflicts of interest and detect
potentially abusive activities. The
requirement that each rule 17j–1
organization maintain certain records is
intended to assist the organization and
the Commission’s examinations staff in
determining if there have been
violations of rule 17j–1.
We estimate that annually there are
approximately 75,363 respondents
under rule 17j–1, of which 5,363 are
rule 17j–1 organizations and 70,000 are
Access Persons. In the aggregate, these
investment adviser of the fund and the principal
underwriter of the fund does not have any officer,
director, or general partner who serves in one of
those capacities for the fund or any investment
adviser of the fund; (iv) an Access Person to an
investment adviser need not make quarterly reports
if the report would duplicate information provided
under the reporting provisions of the Investment
Adviser’s Act; and (v) an Access Person need not
make quarterly transaction reports if the
information provided in the report would duplicate
information received by the 17j–1 organization in
the form of broker trade confirmations or account
statements or information otherwise in the records
of the 17j–1 organization.
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respondents make approximately
113,970 responses annually. We
estimate that the total annual burden of
complying with the information
collection requirements in rule 17j–1 is
approximately 169,950 hours. This hour
burden represents time spent by Access
Persons that must file initial and annual
holdings reports and quarterly
transaction reports, investment
personnel that must obtain approval
before acquiring beneficial ownership in
any securities through an IPO or private
placement, and the responsibilities of
Rule 17j–1 organizations arising from
information collection requirements
under rule 17j–1. These include
notifying Access Persons of their
reporting obligations, preparing an
annual rule 17j–1 report and
certification for the board, documenting
their approval or rejection of IPO and
private placement requests, maintaining
annual rule 17j–1 records, maintaining
electronic reporting and recordkeeping
systems, amending their codes of ethics
as necessary, and, for new fund
complexes, adopting a code of ethics.
In addition, we estimate that there is
an additional annual cost burden of
approximately $2,000 per fund
complex, for a total of $1,100,000,
associated with complying with the
information collection requirements in
rule 17j–1, aside from the cost of the
burden hours discussed above.7 This
represents the costs of purchasing and
maintaining computers and software to
assist funds in carrying out rule 17j–1
recordkeeping.
These burden hour and cost estimates
are based upon the Commission staff’s
experience and discussions with the
fund industry. The estimates of average
burden hours and costs 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 will
have practical utility; (b) the accuracy of
the Commission’s estimate of the
burden 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 collection of information on
respondents, including through the use
7 The cost burden associated with filing of new
and amended codes of ethics on the Commission’s
Electronic Data Gathering, Analysis, and Retrieval
system (EDGAR) is included in the Paperwork
Reduction Act estimates for the relevant forms to
which these codes must be appended.
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Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices
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, Securities and
Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way,
Alexandria, Virginia, 22312; or send an
e-mail to: PRA_Mailbox@sec.gov.
Dated: March 5, 2007.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–4458 Filed 3–12–07; 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.
cprice-sewell on PROD1PC66 with NOTICES
Extension:
Rule 3a–4, SEC File No. 270–401, OMB
Control No. 3235–0459.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l–3520), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collections of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 3a–4 (17 CFR 270.3a–4) under
the Investment Company Act of 1940
(15 U.S.C. 80a) (‘‘Investment Company
Act’’ or ‘‘Act’’) provides a nonexclusive
safe harbor from the definition of
investment company under the Act for
certain investment advisory programs.
These programs, which include ‘‘wrap
fee’’ and ‘‘mutual fund wrap’’ programs,
generally are designed to provide
professional portfolio management
services to clients who are investing less
than the minimum usually required by
portfolio managers but more than the
minimum account size of most mutual
funds. Under wrap fee and similar
programs, a client’s account is typically
managed on a discretionary basis
according to pre-selected investment
objectives. Clients with similar
investment objectives often receive the
same investment advice and may hold
the same or substantially the same
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Jkt 211001
securities in their accounts. Some of
these investment advisory programs
may meet the definition of investment
company under the Act because of the
similarity of account management.
In 1997, the Commission adopted rule
3a–4, which clarifies that programs
organized and operated in a manner
consistent with the conditions of rule
3a–4 are not required to register under
the Investment Company Act or comply
with the Act’s requirements.1 These
programs differ from investment
companies because, among other things,
they provide individualized investment
advice to the client. The rule’s
provisions have the effect of ensuring
that clients in a program relying on the
rule receive advice tailored to the
client’s needs.
Rule 3a–4 provides that each client’s
account must be managed on the basis
of the client’s financial situation and
investment objectives and consistent
with any reasonable restrictions the
client imposes on managing the
account. When an account is opened,
the sponsor 2 (or its designee) must
obtain information from each client
regarding the client’s financial situation
and investment objectives, and must
allow the client an opportunity to
impose reasonable restrictions on
managing the account.3 In addition, the
sponsor (or its designee) annually must
contact the client to determine whether
the client’s financial situation or
investment objectives have changed and
whether the client wishes to impose any
reasonable restrictions on the
management of the account or
reasonably modify existing restrictions.
The sponsor (or its designee) also must
notify the client quarterly, in writing, to
contact the sponsor (or the designee)
regarding changes to the client’s
financial situation, investment
1 Status of Investment Advisory Programs Under
the Investment Company Act of 1940, Investment
Company Act Release No. 22579 (Mar. 24, 1997) (62
FR 15098 (Mar. 31, 1997)) (‘‘Adopting Release’’). In
addition, there are no registration requirements
under section 5 of the Securities Act of 1933 for
these programs. See 17 CFR 270.3a–4, introductory
note.
2 For purposes of rule 3a–4, the term ‘‘sponsor’’
refers to any person who receives compensation for
sponsoring, organizing or administering the
program, or for selecting, or providing advice to
clients regarding the selection of, persons
responsible for managing the client’s account in the
program.
3 Clients specifically must be allowed to designate
securities that should not be purchased for the
account or that should be sold if held in the
account. The rule does not require that a client be
able to require particular securities be purchased for
the account.
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11405
objectives, or restrictions on the
account’s management.4
The program must provide each client
with a quarterly statement describing all
activity in the client’s account during
the previous quarter. The sponsor and
personnel of the client’s account
manager who know about the client’s
account and its management must be
reasonably available to consult with the
client. Each client also must retain
certain indicia of ownership of all
securities and funds in the account.
Rule 3a–4 is intended primarily to
provide guidance regarding the status of
investment advisory programs under the
Investment Company Act. The rule is
not intended to create a presumption
about a program that is not operated
according to the rule’s guidelines.
The requirement that the sponsor (or
its designee) obtain information about
the client’s financial situation and
investment objectives when the account
is opened is designed to ensure that the
investment adviser has sufficient
information regarding the client’s
unique needs and goals to enable the
portfolio manager to provide
individualized investment advice. The
sponsor is required to contact clients
annually and provide them with
quarterly notices to ensure that the
sponsor has current information about
the client’s financial status, investment
objectives, and restrictions on
management of the account.
Maintaining current information enables
the program manager to evaluate the
client’s portfolio in light of the client’s
changing needs and circumstances. The
requirement that clients be provided
with quarterly statements of account
activity is designed to ensure the client
receives an individualized report, which
the Commission believes is a key
element of individualized advisory
services.
The Commission staff estimates that
approximately 64 wrap fee and mutual
fund wrap programs administered by 56
program sponsors use the procedures
under rule 3a–4.5 Although it is
impossible to determine the exact
number of clients that participate in
investment advisory programs, an
estimate can be made by dividing total
assets by the industry average account
4 The sponsor also must provide a means by
which clients can contact the sponsor (or its
designee).
5 These estimates are based on statistical
information on wrap fee and mutual fund wrap
programs provided by Cerulli Associates in 2003.
We request comment on whether the number of
wrap programs and program sponsors has changed.
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]]>Agencies
[Federal Register Volume 72, Number 48 (Tuesday, March 13, 2007)]
[Notices]
[Pages 11403-11405]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4458]
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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 17j-1, SEC File No. 270-239, OMB Control No. 3235-0224.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 350l-3520), 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 (``OMB'') for extension and approval.
Conflicts of interest between investment company personnel (such as
portfolio managers) and their funds can arise when these persons buy
and sell securities for their own accounts (``personal investment
activities''). These conflicts arise because fund personnel have the
opportunity to profit from information about fund transactions, often
to the detriment of fund investors. Beginning in the early 1960s,
Congress and the Securities and Exchange Commission (``Commission'')
sought to devise a regulatory scheme to effectively address these
potential conflicts. These efforts culminated in the addition of
section 17(j) to the Investment Company Act of 1940 (the ``Investment
Company Act'') (15 U.S.C. 80a-17(j)) in 1970 and the adoption by the
Commission of rule 17j-1 (17 CFR 270.17j-1) in 1980.\1\ The Commission
proposed amendments to rule 17j-1 in 1995 in response to
recommendations made in the first detailed study of fund policies
concerning personal investment activities by the Commission's Division
of Investment Management since rule 17j-1 was adopted. Amendments to
rule 17j-1, which were adopted in 1999, enhanced fund oversight of
personal investment activities and the board's role in carrying out
that oversight.\2\ Additional amendments to rule 17j-1 were made in
2004, conforming rule 17j-1 to rule 204A-1 under the Investment
Advisers Act of 1940 (15 U.S.C. 80b), avoiding duplicative reporting,
and modifying certain definitions and time restrictions.\3\
---------------------------------------------------------------------------
\1\ Prevention of Certain Unlawful Activities with Respect to
Registered Investment Companies, Investment Company Act Release No.
11421 (Oct. 31, 1980) (45 FR 73915 (Nov. 7, 1980)).
\2\ Personal Investment Activities of Investment Company
Personnel, Investment Company Act Release No. 23958 (Aug. 20, 1999)
(64 FR 46821-01 (Aug. 27, 1999)).
\3\ Investment Adviser Codes of Ethics, Investment Advisers Act
Release No. 2256 (Jul. 2, 2004) (66 FR 41696 (Jul. 9, 2004)).
---------------------------------------------------------------------------
Section 17(j) makes it unlawful for persons affiliated with a
registered investment company(``fund'') or with the fund's investment
adviser or principal underwriter (each a ``17j-1 organization''), in
connection with the purchase or sale of securities held or to be
acquired by the investment company, to engage in any fraudulent,
deceptive, or manipulative act or practice in contravention of the
Commission's rules and regulations. Section 17(j) also authorizes the
Commission to promulgate rules requiring 17j-1 organizations to adopt
codes of ethics.
In order to implement section 17(j), rule 17j-1 imposes certain
requirements on 17j-1 organizations and ``Access Persons'' \4\ of those
organizations. The
[[Page 11404]]
rule prohibits fraudulent, deceptive or manipulative acts by persons
affiliated with a 17j-1 organization in connection with their personal
securities transactions in securities held or to be acquired by the
fund. The rule requires each 17j-1 organization, unless it is a money
market fund or a fund that does not invest in Covered Securities,\5\
to: (i) Adopt a written codes of ethics, (ii) submit the code and any
material changes to the code, along with a certification that it has
adopted procedures reasonably necessary to prevent Access Persons from
violating the code of ethics, to the fund board for approval, (iii) use
reasonable diligence and institute procedures reasonably necessary to
prevent violations of the code, (iv) submit a written report to the
fund describing any issues arising under the code and procedures and
certifying that the 17j-1 entity has adopted procedures reasonably
necessary to prevent Access Persons from violating the code, (v)
identify Access Persons and notify them of their reporting obligations,
and (vi) maintain and make available to the Commission for review
certain records related to the code of ethics and transaction reporting
by Access Persons.
---------------------------------------------------------------------------
\4\ Rule 17j-1(a)(1) defines an ``access person'' as ``Any
advisory person of a Fund or of a Fund's investment adviser. If an
investment adviser's primary business is advising Funds or other
advisory clients, all of the investment adviser's directors,
officers, and general partners are presumed to be Access Persons of
any Fund advised by the investment adviser. All of a Fund's
directors, officers, and general partners are presumed to be Access
Persons of the Fund.'' The definition of Access Person also includes
``Any director, officer or general partner of a principal
underwriter who, in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or
sale of Covered Securities by the Fund for which the principal
underwriter acts, or whose functions or duties in the ordinary
course of business relate to the making of any recommendation to the
Fund regarding the purchase or sale of Covered Securities.'' Rule
17j-1(a)(1).
\5\ A ``Covered Security'' is any security that falls within the
definition in section 2(a)(36) of the Act, except for direct
obligations of the U.S. Government, bankers' acceptances, bank
certificates of deposit, commercial paper and high quality short-
term debt instruments, including repurchase agreements, and shares
issued by open-end funds. Rule 17j-1(a)(4).
---------------------------------------------------------------------------
The rule requires each Access Person of a fund (other than a money
market fund or a fund that does not invest in Covered Securities) and
of an investment adviser or principal underwriter of the fund, who is
not subject to an exception,\6\ to file: (i) Within 10 days of becoming
an Access Person, a dated initial holdings report that sets forth
certain information with respect to the access person's securities and
accounts; (ii) dated quarterly transaction reports within 30 days of
the end of each calendar quarter providing certain information with
respect to any securities transactions during the quarter and any
account established by the Access Person in which any securities were
held during the quarter; and (iii) dated annual holding reports
providing information with respect to each Covered Security the Access
Person beneficially owns and accounts in which securities are held for
his or her benefit. In addition, rule 17j-1 requires investment
personnel of a fund or its investment adviser, before acquiring
beneficial ownership in securities through an initial public offering
(IPO) or in a private placement, to obtain approval from the fund or
the fund's investment adviser.
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\6\ Rule 17j-1(d)(2) contains the following exceptions: (i) An
Access Person need not file a report for transactions effected for,
and securities held in, any account over which the Access Person
does not have control; (ii) an independent director of the fund, who
would otherwise not need to report and who does not have information
with respect to the fund's transactions in a particular security,
does not have to file an initial holdings report or a quarterly
transaction report; (iii) an Access Person of a principal
underwriter of the fund does not have to file reports if the
principal underwriter is not affiliated with the fund (unless the
fund is a unit investment trust) or any investment adviser of the
fund and the principal underwriter of the fund does not have any
officer, director, or general partner who serves in one of those
capacities for the fund or any investment adviser of the fund; (iv)
an Access Person to an investment adviser need not make quarterly
reports if the report would duplicate information provided under the
reporting provisions of the Investment Adviser's Act; and (v) an
Access Person need not make quarterly transaction reports if the
information provided in the report would duplicate information
received by the 17j-1 organization in the form of broker trade
confirmations or account statements or information otherwise in the
records of the 17j-1 organization.
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The requirements that the management of a rule 17j-1 organization
provide the fund's board with new and amended codes of ethics and an
annual issues and certification report are intended to enhance board
oversight of personal investment policies applicable to the fund and
the personal investment activities of Access Persons. The requirements
that Access Persons provide initial holdings reports, quarterly
transaction reports, and annual holdings reports and request approval
for purchases of securities through IPOs and private placements are
intended to help fund compliance personnel and the Commission's
examinations staff monitor potential conflicts of interest and detect
potentially abusive activities. The requirement that each rule 17j-1
organization maintain certain records is intended to assist the
organization and the Commission's examinations staff in determining if
there have been violations of rule 17j-1.
We estimate that annually there are approximately 75,363
respondents under rule 17j-1, of which 5,363 are rule 17j-1
organizations and 70,000 are Access Persons. In the aggregate, these
respondents make approximately 113,970 responses annually. We estimate
that the total annual burden of complying with the information
collection requirements in rule 17j-1 is approximately 169,950 hours.
This hour burden represents time spent by Access Persons that must file
initial and annual holdings reports and quarterly transaction reports,
investment personnel that must obtain approval before acquiring
beneficial ownership in any securities through an IPO or private
placement, and the responsibilities of Rule 17j-1 organizations arising
from information collection requirements under rule 17j-1. These
include notifying Access Persons of their reporting obligations,
preparing an annual rule 17j-1 report and certification for the board,
documenting their approval or rejection of IPO and private placement
requests, maintaining annual rule 17j-1 records, maintaining electronic
reporting and recordkeeping systems, amending their codes of ethics as
necessary, and, for new fund complexes, adopting a code of ethics.
In addition, we estimate that there is an additional annual cost
burden of approximately $2,000 per fund complex, for a total of
$1,100,000, associated with complying with the information collection
requirements in rule 17j-1, aside from the cost of the burden hours
discussed above.\7\ This represents the costs of purchasing and
maintaining computers and software to assist funds in carrying out rule
17j-1 recordkeeping.
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\7\ The cost burden associated with filing of new and amended
codes of ethics on the Commission's Electronic Data Gathering,
Analysis, and Retrieval system (EDGAR) is included in the Paperwork
Reduction Act estimates for the relevant forms to which these codes
must be appended.
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These burden hour and cost estimates are based upon the Commission
staff's experience and discussions with the fund industry. The
estimates of average burden hours and costs 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 will have practical
utility; (b) the accuracy of the Commission's estimate of the burden 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 collection of information on respondents,
including through the use
[[Page 11405]]
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, Securities and Exchange Commission, C/O
Shirley Martinson, 6432 General Green Way, Alexandria, Virginia, 22312;
or send an e-mail to: PRA--Mailbox@sec.gov.
Dated: March 5, 2007.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-4458 Filed 3-12-07; 8:45 am]
BILLING CODE 8010-01-P
