Proposed Collection; Comment Request, 63213-63215 [E8-25244]
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Federal Register / Vol. 73, No. 206 / Thursday, October 23, 2008 / Notices
Electronic copies of DG–1205 are
available through the NRC’s public Web
site under Draft Regulatory Guides in
the ‘‘Regulatory Guides’’ collection of
the NRC’s Electronic Reading Room at
https://www.nrc.gov/reading-rm/doccollections/. Electronic copies are also
available in ADAMS (https://
www.nrc.gov/reading-rm/adams.html),
under Accession No. ML082140114.
In addition, regulatory guides are
available for inspection at the NRC’s
Public Document Room (PDR), which is
located at 11555 Rockville Pike,
Rockville, Maryland. The PDR’s mailing
address is USNRC PDR, Washington, DC
20555–0001. The PDR can also be
reached by telephone at (301) 415–4737
or (800) 397–4205, by fax at (301) 415–
3548, and by e-mail to
pdr.resource@nrc.gov.
Regulatory guides are not
copyrighted, and Commission approval
is not required to reproduce them.
Dated at Rockville, Maryland, this 17 day
of October 2008.
For the Nuclear Regulatory Commission.
Andrea D. Valentin,
Chief, Regulatory Guide Development Branch,
Division of Engineering, Office of Nuclear
Regulatory Research.
[FR Doc. E8–25292 Filed 10–22–08; 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 Investor
Education and Advocacy,
Washington, DC 20549–0213.
dwashington3 on PRODPC61 with NOTICES
Extension:
Rule 3a–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 the existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 3a–8 (17 CFR 270.3a–8) of the
Investment Company Act of 1940 (15
U.S.C. 80a) (the ‘‘Act’’), serves as a
nonexclusive safe harbor from
investment company status for certain
research and development companies
(‘‘R&D companies’’).
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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.
Commission staff estimates that
approximately 500 R&D companies may
rely on rule 3a–8. Given that the board
resolutions and investment guidelines
will generally need to be adopted only
once (unless relevant circumstances
change),2 the Commission believes that
all the companies that rely on rule
3a–8 adopted their board resolutions
and established written investment
1 Rule
3a–8(a)(6) (17 CFR 270.3a–8(6)).
2 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.
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63213
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.3 Therefore, we estimate that
rule 3a–8 will not create additional time
burdens.
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 Lewis W. Walker, Acting Director/
CIO, 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.
Dated: October 16, 2008.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8–25238 Filed 10–22–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 0–1, SEC File No. 270–472, OMB
Control No. 3235–0531.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) plans to submit to the
Office of Management and Budget a
3 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\23OCN1.SGM
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63214
Federal Register / Vol. 73, No. 206 / Thursday, October 23, 2008 / Notices
request for extension of the previous
approved collection of information
discussed below.
The Investment Company Act of 1940
(the ‘‘Act’’) 1 establishes a
comprehensive framework for regulating
the organization and operation of
investment companies (‘‘funds’’). A
principal objective of the Act is to
protect fund investors by addressing the
conflicts of interest that exist between
funds and their investment advisers and
other affiliated persons. The Act places
significant responsibility on the fund
board of directors in overseeing the
operations of the fund and policing the
relevant conflicts of interest.2
In one of its first releases, the
Commission exercised its rulemaking
authority pursuant to sections 38(a) and
40(b) of the Act by adopting rule 0–1 (17
CFR 270.0–1).3 Rule 0–1, as
subsequently amended on numerous
occasions, provides definitions for the
terms used by the Commission in the
rules and regulations it has adopted
pursuant to the Act. The rule also
contains a number of rules of
construction for terms that are defined
either in the Act itself or elsewhere in
the Commission’s rules and regulations.
Finally, rule 0–1 defines terms that
serve as conditions to the availability of
certain of the Commission’s exemptive
rules. More specifically, the term
‘‘independent legal counsel,’’ as defined
in rule 0–1, sets out conditions that
funds must meet in order to rely on any
of ten exemptive rules (‘‘exemptive
rules’’) under the Act.4
The Commission amended rule 0–1 to
include the definition of the term
‘‘independent legal counsel’’ in 2001.5
This amendment was designed to
enhance the effectiveness of fund boards
of directors and to better enable
investors to assess the independence of
those directors. The Commission also
amended the exemptive rules to require
that any person who serves as legal
counsel to the independent directors of
any fund that relies on any of the
exemptive rules must be an
1 15
U.S.C. 80a.
example, fund directors must approve
investment advisory and distribution contracts. See
15 U.S.C. 80a–15(a), (b), and (c).
3 Investment Company Act Release No. 4 (Oct. 29,
1940) (5 FR 4316 (Oct. 31, 1940)). Note that rule 0–
1 was originally adopted as rule N–1.
4 The relevant exemptive rules are: rule 10f–3 (17
CFR 270.10f–3), rule 12b–1 (17 CFR 270.12b–1),
rule 15a–4(b)(2) (17 CFR 270.15a–4(b)(2)), rule 17a–
7 (17 CFR 270.17a–7), rule 17a–8 (17 CFR 270.17a–
8), rule 17d–1(d)(7) (17 CFR 270.17d–1(d)(7)), rule
17e–1(c) (17 CFR 270.17e–1(c)), rule 17g–1 (17 CFR
270.17g–1), rule 18f–3 (17 CFR 270.18f–3), and rule
23c–3 (17 CFR 270.23c–3).
5 See Role of Independent Directors of Investment
Companies, Investment Company Act Release No.
24816 (Jan. 2, 2001) (66 FR 3735 (Jan. 16, 2001)).
dwashington3 on PRODPC61 with NOTICES
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‘‘independent legal counsel.’’ This
requirement was added because
independent directors can better
perform the responsibilities assigned to
them under the Act and the rules if they
have the assistance of truly independent
legal counsel.
If the board’s counsel has represented
the fund’s investment adviser, principal
underwriter, administrator (collectively,
‘‘management organizations’’) or their
‘‘control persons’’ 6 during the past two
years, rule 0–1 requires that the board’s
independent directors make a
determination about the adequacy of the
counsel’s independence. A majority of
the board’s independent directors are
required to reasonably determine, in the
exercise of their judgment, that the
counsel’s prior or current representation
of the management organizations or
their control persons was sufficiently
limited to conclude that it is unlikely to
adversely affect the counsel’s
professional judgment and legal
representation. Rule 0–1 also requires
that a record for the basis of this
determination is made in the minutes of
the directors’ meeting. In addition, the
independent directors must have
obtained an undertaking from the
counsel to provide them with the
information necessary to make their
determination and to update promptly
that information when the person begins
to represent a management organization
or control person, or when he or she
materially increases his or her
representation. Generally, the
independent directors must reevaluate
their determination no less frequently
than annually.
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
4128 funds rely on at least one of the
exemptive rules annually.7 We further
assume that the independent directors
of approximately one-third (1376) 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
6 A ‘‘control person’’ is any person—other than a
fund—directly or indirectly controlling, controlled
by, or under common control, with any of the
fund’s management organizations. See 17 CFR
270.01(a)(6)(iv)(B).
7 Based on statistics compiled by Commission
staff, we estimate that there are approximately 4586
funds that could rely on one or more of the
exemptive rules. Of those funds, we assume that
approximately 90 percent (4128) actually rely on at
least one exemptive rule 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
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estimate that each of these 1376 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 1032
hours. Based on this estimate, the total
annual cost for all funds’ compliance
with this rule is approximately
$145,168. To calculate this total annual
cost, the Commission staff assumed that
approximately two-thirds of the total
annual hour burden (688 hours) would
be incurred by compliance staff with an
average hourly wage rate of $180 per
hour,9 and one-third of the annual hour
burden (344 hours) would be incurred
by clerical staff with an average hourly
wage rate of $62 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 Lewis W. Walker, Acting Director/
CIO, Securities and Exchange
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 estimated hourly wages used in this PRA
analysis were derived from reports prepared by the
Securities Industry and Financial Markets
Association. See Securities Industry and Financial
Markets Association, Report on Management and
Professional Earnings in the Securities Industry—
2007 (2007), modified to account for an 1800-hour
work year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead;
and Securities Industry and Financial Markets
Association, Office Salaries in the Securities
Industry—2007 (2007), modified to account for an
1800-hour work year and multiplied by 2.93 to
account for bonuses, firm size, employee benefits
and overhead.
10 (688 x $180/hour) + (344 x $62/hour) =
$145,168).
E:\FR\FM\23OCN1.SGM
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Federal Register / Vol. 73, No. 206 / Thursday, October 23, 2008 / Notices
Commission, c/o Shirley Martinson,
6432 General Green Way, Alexandria,
VA 22312; or send an e-mail to:
PRA_Mailbox@sec.gov.
Dated: October 16, 2008.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8–25244 Filed 10–22–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
dwashington3 on PRODPC61 with NOTICES
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
(‘‘Commission’’) is soliciting comments
on the collections of information
summarized below. The Commission
plans to submit the existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 17a–7 (17 CFR 270.17a–7) (the
‘‘rule’’) under the Investment Company
Act of 1940 (15 U.S.C. 80a–1 et seq.)
(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
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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.
While most funds do not commonly
engage in transactions covered by rule
17a–7, the Commission staff estimates
that nearly all funds have adopted
procedures for complying with the
rule.2 Of the approximately 3891
currently active funds, the staff
estimates that virtually all have already
adopted procedures for compliance with
rule 17a–7. This is a one-time burden,
and the staff therefore does not estimate
an ongoing burden related to the
policies and procedures requirement of
the rule for funds.3 The staff estimates
that there are approximately 150 new
funds that register each year, and that
each of these funds adopts the relevant
polices and procedures. The staff
estimates that it takes approximately 4
hours to develop and adopt these
policies and procedures, as follows; 3
hours spent by a compliance attorney,
and 1 hour collectively spent by the
board of directors. Therefore, the total
annual burden related to developing
and adopting these policies and
procedures would be approximately 600
hours.4
Of the 3891 existing funds, the staff
assumes that approximately 25% (or
973), enter into transactions affected by
rule 17a–7 each year (either by the fund
directly or through one of the fund’s
series), and that the same percentage
(25%, or 38 funds) of the estimated 150
funds that newly register each year will
also enter into these transactions, for a
total of 1011 5 companies that are
affected by the recordkeeping
requirements of rule 17a–7. These funds
must keep records of each of these
transactions, and the board of directors
must quarterly determine that all
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 Unless stated otherwise, these estimates are
based on conversations with the examination and
inspections staff of the Commission and fund
representatives.
3 Based on our reviews and conversations with
fund representatives, we understand that funds
rarely, if ever, need to make changes to these
policies and procedures once adopted, and
therefore we do not estimate a paperwork burden
for such updates.
4 This estimate is based on the following
calculations: (4 hours × 150 = 600 hours).
5 This estimate is based on the following
calculation: (973 + 38 = 1011).
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63215
relevant transactions were made in
compliance with the company’s policies
and procedures. The rule generally
imposes a minimal burden of collecting
and storing records already generated
for other purposes.6 The staff estimates
that the burden related to making these
records and for the board to review all
transactions would be 3 hours annually
for each respondent, (2 hours spent by
compliance attorneys and 1 hour spent
by the board of directors) 7 or 3033 total
hours each year.8
Based on these estimates, the staff
estimates the combined total annual
burden hours associated with rule 17a–
7 is 3633 hours.9 The staff also estimates
that there are approximately 1161
respondents and 8238 total responses.10
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. 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
6 Commission staff believes that rule 17a–7 does
not impose any costs associated with record
preservation in addition to the costs that funds
already incur to comply with the record
preservation requirements of rule 31a–2 under the
Act. Rule 31a–2 requires companies to preserve
certain records for specified periods of time.
7 The staff estimates that funds that rely on rule
17a–7 annually enter into an average of 8 rule 17a–
7 transactions each year. The staff estimates that the
compliance attorneys of the companies spend
approximately 15 minutes per transaction on this
recordkeeping, and the board of directors spends a
total of 1 hour annually in determining that all
transactions made that year were done in
compliance with the company’s policies and
procedures.
8 This estimate is based on the following
calculation: (3 hours × 1011 companies = 3033
hours).
9 This estimate is based on the following
calculations: (600 hours + 3033 hours = 3633 total
hours).
10 This estimate is based on the following
calculations: (150 newly registered funds + 1011
funds that engage in rule 17a–7 transactions =
1161); (1011 funds that engage in rule 17a–7
transactions × 8 times per year = 8088); (8088 + 150
= 8238 responses).
E:\FR\FM\23OCN1.SGM
23OCN1
]]>Agencies
[Federal Register Volume 73, Number 206 (Thursday, October 23, 2008)]
[Notices]
[Pages 63213-63215]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-25244]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 0-1, SEC File No. 270-472, OMB Control No. 3235-0531.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 350l et seq.), the Securities and Exchange
Commission (``Commission'') plans to submit to the Office of Management
and Budget a
[[Page 63214]]
request for extension of the previous approved collection of
information discussed below.
The Investment Company Act of 1940 (the ``Act'') \1\ establishes a
comprehensive framework for regulating the organization and operation
of investment companies (``funds''). A principal objective of the Act
is to protect fund investors by addressing the conflicts of interest
that exist between funds and their investment advisers and other
affiliated persons. The Act places significant responsibility on the
fund board of directors in overseeing the operations of the fund and
policing the relevant conflicts of interest.\2\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 80a.
\2\ For example, fund directors must approve investment advisory
and distribution contracts. See 15 U.S.C. 80a-15(a), (b), and (c).
---------------------------------------------------------------------------
In one of its first releases, the Commission exercised its
rulemaking authority pursuant to sections 38(a) and 40(b) of the Act by
adopting rule 0-1 (17 CFR 270.0-1).\3\ Rule 0-1, as subsequently
amended on numerous occasions, provides definitions for the terms used
by the Commission in the rules and regulations it has adopted pursuant
to the Act. The rule also contains a number of rules of construction
for terms that are defined either in the Act itself or elsewhere in the
Commission's rules and regulations. Finally, rule 0-1 defines terms
that serve as conditions to the availability of certain of the
Commission's exemptive rules. More specifically, the term ``independent
legal counsel,'' as defined in rule 0-1, sets out conditions that funds
must meet in order to rely on any of ten exemptive rules (``exemptive
rules'') under the Act.\4\
---------------------------------------------------------------------------
\3\ Investment Company Act Release No. 4 (Oct. 29, 1940) (5 FR
4316 (Oct. 31, 1940)). Note that rule 0-1 was originally adopted as
rule N-1.
\4\ The relevant exemptive rules are: rule 10f-3 (17 CFR
270.10f-3), rule 12b-1 (17 CFR 270.12b-1), rule 15a-4(b)(2) (17 CFR
270.15a-4(b)(2)), rule 17a-7 (17 CFR 270.17a-7), rule 17a-8 (17 CFR
270.17a-8), rule 17d-1(d)(7) (17 CFR 270.17d-1(d)(7)), rule 17e-1(c)
(17 CFR 270.17e-1(c)), rule 17g-1 (17 CFR 270.17g-1), rule 18f-3 (17
CFR 270.18f-3), and rule 23c-3 (17 CFR 270.23c-3).
---------------------------------------------------------------------------
The Commission amended rule 0-1 to include the definition of the
term ``independent legal counsel'' in 2001.\5\ This amendment was
designed to enhance the effectiveness of fund boards of directors and
to better enable investors to assess the independence of those
directors. The Commission also amended the exemptive rules to require
that any person who serves as legal counsel to the independent
directors of any fund that relies on any of the exemptive rules must be
an ``independent legal counsel.'' This requirement was added because
independent directors can better perform the responsibilities assigned
to them under the Act and the rules if they have the assistance of
truly independent legal counsel.
---------------------------------------------------------------------------
\5\ See Role of Independent Directors of Investment Companies,
Investment Company Act Release No. 24816 (Jan. 2, 2001) (66 FR 3735
(Jan. 16, 2001)).
---------------------------------------------------------------------------
If the board's counsel has represented the fund's investment
adviser, principal underwriter, administrator (collectively,
``management organizations'') or their ``control persons'' \6\ during
the past two years, rule 0-1 requires that the board's independent
directors make a determination about the adequacy of the counsel's
independence. A majority of the board's independent directors are
required to reasonably determine, in the exercise of their judgment,
that the counsel's prior or current representation of the management
organizations or their control persons was sufficiently limited to
conclude that it is unlikely to adversely affect the counsel's
professional judgment and legal representation. Rule 0-1 also requires
that a record for the basis of this determination is made in the
minutes of the directors' meeting. In addition, the independent
directors must have obtained an undertaking from the counsel to provide
them with the information necessary to make their determination and to
update promptly that information when the person begins to represent a
management organization or control person, or when he or she materially
increases his or her representation. Generally, the independent
directors must reevaluate their determination no less frequently than
annually.
---------------------------------------------------------------------------
\6\ A ``control person'' is any person--other than a fund--
directly or indirectly controlling, controlled by, or under common
control, with any of the fund's management organizations. See 17 CFR
270.01(a)(6)(iv)(B).
---------------------------------------------------------------------------
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 4128 funds rely on at
least one of the exemptive rules annually.\7\ We further assume that
the independent directors of approximately one-third (1376) 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 1376 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 1032 hours. Based on this estimate, the total
annual cost for all funds' compliance with this rule is approximately
$145,168. To calculate this total annual cost, the Commission staff
assumed that approximately two-thirds of the total annual hour burden
(688 hours) would be incurred by compliance staff with an average
hourly wage rate of $180 per hour,\9\ and one-third of the annual hour
burden (344 hours) would be incurred by clerical staff with an average
hourly wage rate of $62 per hour.\10\
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\7\ Based on statistics compiled by Commission staff, we
estimate that there are approximately 4586 funds that could rely on
one or more of the exemptive rules. Of those funds, we assume that
approximately 90 percent (4128) actually rely on at least one
exemptive rule 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 estimated hourly wages used in this PRA analysis were
derived from reports prepared by the Securities Industry and
Financial Markets Association. See Securities Industry and Financial
Markets Association, Report on Management and Professional Earnings
in the Securities Industry--2007 (2007), modified to account for an
1800-hour work year and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead; and Securities Industry
and Financial Markets Association, Office Salaries in the Securities
Industry--2007 (2007), modified to account for an 1800-hour work
year and multiplied by 2.93 to account for bonuses, firm size,
employee benefits and overhead.
\10\ (688 x $180/hour) + (344 x $62/hour) = $145,168).
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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 Lewis W. Walker, Acting
Director/CIO, Securities and Exchange
[[Page 63215]]
Commission, c/o Shirley Martinson, 6432 General Green Way, Alexandria,
VA 22312; or send an e-mail to: PRA_Mailbox@sec.gov.
Dated: October 16, 2008.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8-25244 Filed 10-22-08; 8:45 am]
BILLING CODE 8011-01-P
