Submission for OMB Review; Comment Request, 25787-25788 [E8-10046]

Download as PDF Federal Register / Vol. 73, No. 89 / Wednesday, May 7, 2008 / Notices 17(a) prohibits the transaction; and the advisory contracts of the subadviser entering into the transaction, and any subadviser that is advising the purchasing portion of the fund, must prohibit the subadvisers from consulting with each other concerning securities transactions of the fund, and limit their responsibility to providing advice with respect to discrete portions of the fund’s portfolio.1 The Commission staff estimates that 3583 portfolios of approximately 649 fund complexes use the services of one or more subadvisers. Based on discussions with industry representatives, the staff estimates that it requires approximately 6 hours to draft and execute revised subadvisory contracts allowing funds and subadvisers to rely on the exemptions in rule 17a–10.2 The staff assumes that all existing funds amended their advisory contracts following the adoption of rule 17a–10 in 2003 that conditioned certain exemptions upon these contractual alterations, and therefore there is no continuing burden for those funds.3 Based on an analysis of fund filings, the staff estimates that approximately 600 fund portfolios enter into new subadvisory agreements each year.4 Based on discussions with industry representatives, the staff estimates that it will require approximately 3 attorney hours 5 to draft and execute additional clauses in new subadvisory contracts in order for funds and subadvisers to be able to rely on the exemptions in rule 17a–10. Because these additional clauses are identical to the clauses that a fund would need to insert in their subadvisory contracts to rely on rules 10f–3, 12d3–1, and 17e–1, and because we believe that funds that use one such 1 See 17 CFR 270.17a–10(a)(2). 12d3–1, 10f–3, 17a–10, and 17e–1 require virtually identical modifications to fund advisory contracts. The Commission staff assumes that funds would rely equally on the exemptions in these rules, and therefore the burden hours associated with the required contract modifications should be apportioned equally among the four rules. 3 We assume that funds formed after 2002 that intended to rely on rule 17a–10 would have included the required provision as a standard element in their initial subadvisory contracts. 4 The use of subadvisers has grown rapidly over the last several years, with approximately 600 portfolios that use subadvisers registering between December 2005 and December 2006. Based on information in Commission filings, we estimate that 31 percent of funds are advised by subadvisers. 5 The Commission staff’s estimates concerning the wage rates for attorney time are based on salary information for the securities industry compiled by the Securities Industry Association. The $292 per hour figure for an attorney is from the SIA Report on Management & Professional Earnings in the Securities Industry 2006, modified to account for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. sroberts on PROD1PC70 with NOTICES 2 Rules VerDate Aug<31>2005 21:00 May 06, 2008 Jkt 214001 rule generally use all of these rules, we apportion this 3 hour time burden equally among all four rules. Therefore, we estimate that the burden allocated to rule 17a–10 for this contract change would be 0.75 hours.6 Assuming that all 600 funds that enter into new subadvisory contracts each year make the modification to their contract required by the rule, we estimate that the rule’s contract modification requirement will result in 450 burden hours annually, with an associated cost of approximately $131,400.7 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. Complying with this collection of information requirement is necessary to obtain the benefit of relying on rule 17a–10. 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. Please direct general comments regarding the above information to the following persons: (i) Desk Officer for the Securities and Exchange Commission, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or e-mail to: Alexander_T._Hunt@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-mail to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: April 30, 2008. Florence E. Harmon, Deputy Secretary. [FR Doc. E8–10045 Filed 5–6–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Investor 6 This estimate is based on the following calculation (3 hours ÷ 4 rules = .75 hours). 7 These estimates are based on the following calculations: (0.75 hours × 600 portfolios = 450 burden hours); ($292 per hour × 450 hours = $131,400 total cost). PO 00000 Frm 00147 Fmt 4703 Sfmt 4703 25787 Education and Advocacy, Washington, DC 20549–0213. Extension: Rule 482; SEC File No. 270–508; OMB Control No. 3235–0565. 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’’) has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below. Like most issuers of securities, when an investment company 1 (‘‘fund’’) offers its shares to the public, its promotional efforts become subject to the advertising restrictions of the Securities Act of 1933, (15 U.S.C. 77) as amended (the ‘‘Securities Act’’). In recognition of the particular problems faced by funds that continually offer securities and wish to advertise their securities, the Commission has previously adopted advertising safe harbor rules. The most important of these is Rule 482 (17 CFR 230.482) under the Securities Act, which, under certain circumstances, permits funds to advertise investment performance data, as well as other information. Rule 482 advertisements are deemed to be ‘‘prospectuses’’ under section 10(b) of the Securities Act.2 Rule 482 contains certain requirements regarding the disclosure that funds are required to provide in qualifying advertisements. These requirements are intended to encourage the provision to investors of information that is balanced and informative, particularly in the area of investment performance. For example, a fund is required to include disclosure advising investors to consider the fund’s investment objectives, risks, charges and expenses, and other information described in the fund’s prospectus or accompanying profile (if applicable), and highlighting the availability of the fund’s prospectus. In addition, rule 482 advertisements that include performance data of open-end funds or insurance company separate accounts offering variable annuity contracts are required to include certain standardized performance information, information about any sales loads or other nonrecurring fees, and a legend warning that past performance does not guarantee future results. Such funds including performance information in rule 482 advertisements are also 1 ‘‘Investment company’’ refers to both investment companies registered under the Investment Company Act of 1940, as amended, and business development companies. 2 15 U.S.C. 77j(b). E:\FR\FM\07MYN1.SGM 07MYN1 25788 Federal Register / Vol. 73, No. 89 / Wednesday, May 7, 2008 / Notices sroberts on PROD1PC70 with NOTICES required to make available to investors month-end performance figures via Web site disclosure or by a toll-free telephone number, and to disclose the availability of the month-end performance data in the advertisement. The rule also sets forth requirements regarding the prominence of certain disclosures, requirements regarding advertisements that make tax representations, requirements regarding advertisements used prior to the effectiveness of the fund’s registration statement, requirements regarding the timeliness of performance data, and certain required disclosures by money market funds. Rule 482 advertisements must be filed with the Commission or, in the alternative, with Financial Industry Regulatory Authority (‘‘FINRA’’).3 This information collection differs from many other federal information collections that are primarily for the use and benefit of the collecting agency. As discussed above, rule 482 contains requirements that are intended to encourage the provision to investors of information that is balanced and informative, particularly in the area of investment performance. The Commission is concerned that in the absence of such provisions fund investors may be misled by deceptive rule 482 performance advertisements and may rely on less-than-adequate information when determining in which funds they should invest their money. As a result, the Commission believes it is beneficial for funds to provide investors with balanced information in fund advertisements in order to allow investors to make better-informed decisions. The Commission estimates that 89,077 responses are filed annually pursuant to rule 482 by 4,106 investment companies offering 37,265 portfolios. Respondents consist of all the investment companies that take advantage of the safe harbor offered by the rule for their advertisements. The burden associated with rule 482 is presently estimated to be 5.16 hours per response. The hourly burden is therefore approximately 459,637 hours (89,077 responses × 5.16 hours per response). 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 3 See Rule 24b–3 under the Investment Company Act (17 CFR 270.24b–3), which provides that any sales material, including rule 482 advertisements, shall be deemed filed with the Commission for purposes of Section 24(b) of the Investment Company Act upon filing with FINRA. VerDate Aug<31>2005 21:00 May 06, 2008 Jkt 214001 a representative survey or study of the costs of Commission rules and forms. Cost burden is the cost of services purchased to comply with rule 482, such as for the services of computer programmers, outside counsel, financial printers, and advertising agencies. The Commission attributes no cost burden to rule 482. The provision of information under rule 482 is necessary to obtain the benefits of the safe harbor offered by the rule. The information provided is not 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. Please direct general comments regarding the above information to the following persons: (i) Desk Officer for the Securities and Exchange Commission, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or e-mail to: Alexander_T._Hunt@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-mail to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: April 30, 2008. Florence E. Harmon, Deputy Secretary. [FR Doc. E8–10046 Filed 5–6–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549–0213. Extension: Rule 27d–2; SEC File No. 270–500; OMB Control No. 3235–0566. 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’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of the collections of information under the Investment Company Act of 1940 (15 U.S.C. 80a) (‘‘Act’’) summarized below. PO 00000 Frm 00148 Fmt 4703 Sfmt 4703 Rule 27d–2 (17 CFR 270.27d–2) is entitled ‘‘Insurance Company Undertaking in Lieu of Segregated Trust Account.’’ Rule 27d–1 (17 CFR 270.27d– 1) 1 under the Act requires the depositor or principal underwriter for an issuer of periodic payment plans to deposit funds into a segregated trust account to provide assurance of its ability to fulfill its refund obligations under sections 27(d) and 27(f).2 Rule 27d–2 provides an exemption from rule 27d–1 under the Act for depositors or principal underwriters for the issuers of periodic payments plans. In order to comply with the rule: (i) The depositor or principal underwriter must secure from an insurance company a written guarantee of the refund requirements; (ii) the insurance company must satisfy certain financial criteria; and (iii) the depositor or principal underwriter must file as an exhibit to the issuer’s registration statement, a copy of the written undertaking, an annual statement that the insurance company has met the requisite financial criteria on a monthly basis, and an annual audited balance sheet. Rules 27d–1 and 27d–2, which were explicitly authorized by statute, provide assurance that depositors and principal underwriters of issuers have access to sufficient cash to meet the demands of certificate holders who reconsider their decisions to invest in a periodic payment plan. The information collection requirements in rules 27d–1 and 27d–2 enable the Commission to monitor compliance with reserve rules. Rules 27d–1 and 27d–2, which were explicitly authorized by statute, provide assurance that depositors and principal underwriters of issuers have access to sufficient cash to meet the demands of certificate holders who reconsider their decisions to invest in a periodic payment plan. The information collection requirements in rules 27d–1 and 27d–2 enable the Commission to monitor compliance with reserve rules. 1 The information collection requirements for rule 27d–1 and Form N–27D–1 are covered in a separate Federal Register notice under OMB Control No. 3235–0560. 2 The rule sets forth minimum reserve amounts and guidelines for the management and disbursement of the assets in the account. Rule 27d–1(j) directs depositors and principal underwriters annually to make an accounting of their segregated trust accounts on Form N–27D–1, which is filed with the Commission. The form requires depositors and principal underwriters to report deposits to a segregated trust account, including those made pursuant to paragraphs (c) and (e) of the rule. Withdrawals pursuant to paragraph (f) of the rule also must be reported. In addition, the form solicits information regarding the minimum amount required to be maintained under paragraphs (d) and (e) of rule 27d–1. E:\FR\FM\07MYN1.SGM 07MYN1

Agencies

[Federal Register Volume 73, Number 89 (Wednesday, May 7, 2008)]
[Notices]
[Pages 25787-25788]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-10046]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon written request, copies available from: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension:
    Rule 482; SEC File No. 270-508; OMB Control No. 3235-0565.

    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'') has submitted to the Office of Management and Budget a 
request for extension of the previously approved collection of 
information discussed below.
    Like most issuers of securities, when an investment company \1\ 
(``fund'') offers its shares to the public, its promotional efforts 
become subject to the advertising restrictions of the Securities Act of 
1933, (15 U.S.C. 77) as amended (the ``Securities Act''). In 
recognition of the particular problems faced by funds that continually 
offer securities and wish to advertise their securities, the Commission 
has previously adopted advertising safe harbor rules. The most 
important of these is Rule 482 (17 CFR 230.482) under the Securities 
Act, which, under certain circumstances, permits funds to advertise 
investment performance data, as well as other information. Rule 482 
advertisements are deemed to be ``prospectuses'' under section 10(b) of 
the Securities Act.\2\
---------------------------------------------------------------------------

    \1\ ``Investment company'' refers to both investment companies 
registered under the Investment Company Act of 1940, as amended, and 
business development companies.
    \2\ 15 U.S.C. 77j(b).
---------------------------------------------------------------------------

    Rule 482 contains certain requirements regarding the disclosure 
that funds are required to provide in qualifying advertisements. These 
requirements are intended to encourage the provision to investors of 
information that is balanced and informative, particularly in the area 
of investment performance. For example, a fund is required to include 
disclosure advising investors to consider the fund's investment 
objectives, risks, charges and expenses, and other information 
described in the fund's prospectus or accompanying profile (if 
applicable), and highlighting the availability of the fund's 
prospectus. In addition, rule 482 advertisements that include 
performance data of open-end funds or insurance company separate 
accounts offering variable annuity contracts are required to include 
certain standardized performance information, information about any 
sales loads or other nonrecurring fees, and a legend warning that past 
performance does not guarantee future results. Such funds including 
performance information in rule 482 advertisements are also

[[Page 25788]]

required to make available to investors month-end performance figures 
via Web site disclosure or by a toll-free telephone number, and to 
disclose the availability of the month-end performance data in the 
advertisement. The rule also sets forth requirements regarding the 
prominence of certain disclosures, requirements regarding 
advertisements that make tax representations, requirements regarding 
advertisements used prior to the effectiveness of the fund's 
registration statement, requirements regarding the timeliness of 
performance data, and certain required disclosures by money market 
funds.
    Rule 482 advertisements must be filed with the Commission or, in 
the alternative, with Financial Industry Regulatory Authority 
(``FINRA'').\3\ This information collection differs from many other 
federal information collections that are primarily for the use and 
benefit of the collecting agency.
---------------------------------------------------------------------------

    \3\ See Rule 24b-3 under the Investment Company Act (17 CFR 
270.24b-3), which provides that any sales material, including rule 
482 advertisements, shall be deemed filed with the Commission for 
purposes of Section 24(b) of the Investment Company Act upon filing 
with FINRA.
---------------------------------------------------------------------------

    As discussed above, rule 482 contains requirements that are 
intended to encourage the provision to investors of information that is 
balanced and informative, particularly in the area of investment 
performance. The Commission is concerned that in the absence of such 
provisions fund investors may be misled by deceptive rule 482 
performance advertisements and may rely on less-than-adequate 
information when determining in which funds they should invest their 
money. As a result, the Commission believes it is beneficial for funds 
to provide investors with balanced information in fund advertisements 
in order to allow investors to make better-informed decisions.
    The Commission estimates that 89,077 responses are filed annually 
pursuant to rule 482 by 4,106 investment companies offering 37,265 
portfolios. Respondents consist of all the investment companies that 
take advantage of the safe harbor offered by the rule for their 
advertisements. The burden associated with rule 482 is presently 
estimated to be 5.16 hours per response. The hourly burden is therefore 
approximately 459,637 hours (89,077 responses x 5.16 hours per 
response).
    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.
    Cost burden is the cost of services purchased to comply with rule 
482, such as for the services of computer programmers, outside counsel, 
financial printers, and advertising agencies. The Commission attributes 
no cost burden to rule 482.
    The provision of information under rule 482 is necessary to obtain 
the benefits of the safe harbor offered by the rule. The information 
provided is not 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.
    Please direct general comments regarding the above information to 
the following persons: (i) Desk Officer for the Securities and Exchange 
Commission, Office of Management and Budget, Room 10102, New Executive 
Office Building, Washington, DC 20503 or e-mail to: Alexander--T.--
Hunt@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief Information 
Officer, Securities and Exchange Commission, C/O Shirley Martinson, 
6432 General Green Way, Alexandria, VA 22312; or send an e-mail to: 
PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days 
of this notice.

    Dated: April 30, 2008.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-10046 Filed 5-6-08; 8:45 am]
BILLING CODE 8010-01-P