Proposed Collection; Comment Request, 11405-11406 [E7-4459]
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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
VerDate Aug<31>2005
14:58 Mar 12, 2007
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.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
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.
E:\FR\FM\13MRN1.SGM
13MRN1
11406
Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices
cprice-sewell on PROD1PC66 with NOTICES
size ($345.5 billion 6 divided by
$126,202),7 for a total of 2,737,675
clients. Additionally, an average
number of new accounts opened each
year can be estimated by dividing the
average annual increase in account
assets in 2003 through 2006, by the
average account size ($57.7 billion
divided by $126,202), for an average
annual number of new accounts of
457,204.8
The Commission staff estimates that
each program sponsor spends
approximately 1.25 hours annually in
preparing, conducting and/or reviewing
interviews for each new client; 30
minutes annually preparing, conducting
and/or reviewing annual interviews for
each continuing client; and one hour
preparing and mailing quarterly account
activity statements, including the notice
to update information to each client.
Based on the foregoing, the Commission
staff therefore estimates the total annual
burden of the rule’s paperwork
requirements for all program sponsors to
be 4,449,415.5 hours. This represents a
decrease of 2,063,087 hours from the
prior estimate of 6,512,502.5 hours. The
decrease results from a change in the
method of computation for the number
of clients that participate in these
investment advisory programs.
Previously, we have computed the
number of clients based on the
minimum account requirement for
participation in these programs. For this
estimate we computed the number of
clients based on the industry average
account size in these programs resulting
in a decrease in the estimated number
of clients in these investment advisory
programs.
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act. The estimate
is not derived from a comprehensive or
even a representative survey or study of
the costs of Commission rules and
forms.
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
6 See Cerulli Associates, The Cerulli Edge:
Managed Accounts Edition, Advisors Issue 10 (3d
quarter 2006).
7 Id. at 13.
8 The requirement for initial client contact and
evaluation is not a recurring obligation, but only
occurs when the account is opened. The estimated
annual hourly burden is based on the average
number of new accounts opened each year.
VerDate Aug<31>2005
14:58 Mar 12, 2007
Jkt 211001
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, 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. E7–4459 Filed 3–12–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copy Available
From: Securities and Exchange
Commission, Office of Filings and
Information Services, Washington, DC
20549.
Extension:
Form N–5, SEC File No. 270–172, OMB
Control No. 3235–0169.
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
(‘‘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.
Form N–5 (17 CFR 239.24 and
274.5)—Registration Statement of Small
Business Investment Companies Under
the Securities Act of 1933 (15 U.S.C. 77a
et seq.) and the Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.)
Form N–5 is the integrated registration
statement form adopted by the
Commission for use by a small business
investment company which has been
licensed as such under the Small
Business Investment Act of 1958 and
has been notified by the Small Business
Administration that the company may
submit a license application, to register
its securities under the Securities Act of
1933 (‘‘Securities Act’’), and to register
as an investment company under
section 8 of the Investment Company
Act of 1940 (‘‘Investment Company
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
Act’’). The purpose of registration under
the Securities Act is to ensure that
investors are provided with material
information concerning securities
offered for public sale that will permit
investors to make informed decisions
regarding such securities. The
Commission staff reviews the
registration statements for the adequacy
and accuracy of the disclosure
contained therein. Without Form N–5,
the Commission would be unable to
carry out the requirements of the
Securities Act and the Investment
Company Act for registration of small
business investment companies. The
respondents to the collection of
information are small business
investment companies seeking to
register under the Investment Company
Act and to register their securities for
sale to the public under the Securities
Act. The estimated number of
respondents is one and the proposed
frequency of response is annually. The
estimate of the total annual reporting
burden of the collection of information
is approximately 352 hours per
respondent, for a total of 352 hours.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’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 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. E7–4461 Filed 3–12–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copy Available
From: Securities and Exchange
E:\FR\FM\13MRN1.SGM
13MRN1
Agencies
[Federal Register Volume 72, Number 48 (Tuesday, March 13, 2007)]
[Notices]
[Pages 11405-11406]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4459]
-----------------------------------------------------------------------
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 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 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 objectives, or restrictions on the
account's management.\4\
---------------------------------------------------------------------------
\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.
\4\ The sponsor also must provide a means by which clients can
contact the sponsor (or its designee).
---------------------------------------------------------------------------
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
[[Page 11406]]
size ($345.5 billion \6\ divided by $126,202),\7\ for a total of
2,737,675 clients. Additionally, an average number of new accounts
opened each year can be estimated by dividing the average annual
increase in account assets in 2003 through 2006, by the average account
size ($57.7 billion divided by $126,202), for an average annual number
of new accounts of 457,204.\8\
---------------------------------------------------------------------------
\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.
\6\ See Cerulli Associates, The Cerulli Edge: Managed Accounts
Edition, Advisors Issue 10 (3d quarter 2006).
\7\ Id. at 13.
\8\ The requirement for initial client contact and evaluation is
not a recurring obligation, but only occurs when the account is
opened. The estimated annual hourly burden is based on the average
number of new accounts opened each year.
---------------------------------------------------------------------------
The Commission staff estimates that each program sponsor spends
approximately 1.25 hours annually in preparing, conducting and/or
reviewing interviews for each new client; 30 minutes annually
preparing, conducting and/or reviewing annual interviews for each
continuing client; and one hour preparing and mailing quarterly account
activity statements, including the notice to update information to each
client. Based on the foregoing, the Commission staff therefore
estimates the total annual burden of the rule's paperwork requirements
for all program sponsors to be 4,449,415.5 hours. This represents a
decrease of 2,063,087 hours from the prior estimate of 6,512,502.5
hours. The decrease results from a change in the method of computation
for the number of clients that participate in these investment advisory
programs. Previously, we have computed the number of clients based on
the minimum account requirement for participation in these programs.
For this estimate we computed the number of clients based on the
industry average account size in these programs resulting in a decrease
in the estimated number of clients in these investment advisory
programs.
The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act. The estimate is not derived
from a comprehensive or even a representative survey or study of the
costs of Commission rules and forms.
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, 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. E7-4459 Filed 3-12-07; 8:45 am]
BILLING CODE 8010-01-P