Mandatory Electronic Submission of Applications for Orders Under the Investment Company Act and Filings Made Pursuant to Regulation E, 65516-65526 [E8-26183]
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Federal Register / Vol. 73, No. 214 / Tuesday, November 4, 2008 / Rules and Regulations
Accordingly, there is no requirement
that the customer’s assets be margining
commodity contracts on the day that the
bankruptcy petition is filed. Therefore,
all assets contained in such an account
are properly included within the
customer’s net equity.
Part 190 of the Commission’s
Regulations divides accounts into
several classes, specifically: Futures
accounts, foreign futures accounts,
leverage accounts, commodity option
accounts, and delivery accounts.12
In October 2004, the Commission
issued an interpretation regarding the
appropriate account class for funds
attributable to contracts traded on nondomestic boards of trade, and the assets
margining such contracts, that are
included in accounts segregated in
accordance with Section 4d of the Act
pursuant to Commission Order.13 In that
context, the Commission concluded that
the claim is properly against the Section
4d account class because customers
whose assets are deposited in such an
account pursuant to Commission Order
should benefit from that pool of assets.
The same rationale supports the
Commission’s conclusion that a claim
arising out of a cleared-only contract, or
the property margining such a contract,
would be includable in the futures
account class where, pursuant to
Commission Order, the contract or
property is included in an account
segregated in accordance with Section
4d of the Act.
*
*
*
*
*
Issued in Washington, DC, on September
26, 2008, by the Commodity Futures Trading
Commission.
David Stawick,
Secretary of the Commission.
[FR Doc. E8–26199 Filed 11–3–08; 8:45 am]
dwashington3 on PRODPC61 with RULES
BILLING CODE 6351–01–P
12 See
17 CFR 190.01.
Interpretative Statement Regarding Funds
Determined To Be Held in the Futures Account
Type of Customer Account Class, 69 FR 69510
(Nov. 30, 2004).
13 See
15:01 Nov 03, 2008
17 CFR Parts 232 and 270
[Release Nos. 33–8981; 34–58874; IC–28476
File No. S7–25–07]
RIN 3235–AJ81
Account Classes
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SECURITIES AND EXCHANGE
COMMISSION
Jkt 217001
Mandatory Electronic Submission of
Applications for Orders Under the
Investment Company Act and Filings
Made Pursuant to Regulation E
Securities and Exchange
Commission.
ACTION: Final rule.
AGENCY:
SUMMARY: We are adopting several
amendments to rules regarding our
Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) system. Specifically,
we are amending our rules to make
mandatory the electronic submission on
EDGAR of applications for orders under
any section of the Investment Company
Act of 1940 (‘‘Investment Company
Act’’) as well as Regulation E filings of
small business investment companies
and business development companies.
We also are amending the electronic
filing rules to make the temporary
hardship exemption unavailable for
submission of applications under the
Investment Company Act. Finally, we
are amending Rule 0–2 under the
Investment Company Act, eliminating
the requirement that certain documents
accompanying an application be
notarized and the requirement that
applicants submit a draft notice as an
exhibit to an application.
DATES: Effective Date: January 1, 2009.
FOR FURTHER INFORMATION CONTACT: If
you have questions about the rules,
please contact one of the following
members of our staff in the Division of
Investment Management, at the
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–0506: in the Office of Legal and
Disclosure, Ruth Armfield Sanders,
Senior Special Counsel (EDGAR), at
(202) 551–6989; in the Office of
Investment Company Regulation,
Michael W. Mundt, Assistant Director,
at (202) 551–6821; or, in the Office of
Insurance Products, Keith Carpenter,
Senior Special Counsel, at (202) 551–
6766; for technical questions relating to
the EDGAR system, in the Office of
Information Technology, Richard D.
Heroux, EDGAR Program Manager, at
(202) 551–8168.
SUPPLEMENTARY INFORMATION: The
Securities and Exchange Commission
(‘‘Commission’’) is adopting
amendments to Rules 101 and 201 of
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Regulation S–T 1 relating to electronic
filing on the EDGAR system and to Rule
0–2 2 under the Investment Company
Act.3
I. Background
In the last several years, we initiated
a series of amendments to keep EDGAR
current technologically and to make it
more useful to the investing public and
Commission staff.4 In April 2000, we
adopted rule and form amendments in
connection with the modernization of
EDGAR.5 In the Modernization
Proposing Release, we noted that, as the
use of electronic databases grows, it
becomes increasingly important for
members of the public to have
electronic access to our filings. We also
stated that we were contemplating
future rulemaking to require more of our
filings to be filed on EDGAR. In May
2002, we adopted rules requiring foreign
private issuers and foreign governments
to file most of their documents
electronically.6 In May 2003, we
adopted rules requiring electronic filing
of beneficial ownership reports filed by
officers, directors and principal security
holders under section 16(a) 7 of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’).8 In July 2005, we
adopted rules requiring certain openend management investment companies
and insurance companies separate
accounts to identify in their EDGAR
submissions information relating to
their series and classes (or contracts, in
the case of separate accounts) and
mandating that fidelity bonds filed
under section 17(g) 9 and sales literature
filed with us under section 24(b) 10 be
1 17
CFR 232.101 and 232.201.
CFR 270.0–2.
3 We proposed these amendments in November
2007. See Rulemaking for EDGAR System;
Mandatory Electronic Submission of Applications
for Orders under the Investment Company Act and
Filings Made Pursuant to Regulation E, Release No.
33–8859 (Nov. 1, 2007) [72 FR 63513 (Nov. 9, 2007)]
(‘‘Proposing Release’’).
4 We recently announced the successor to the
EDGAR Database. The new system is called IDEA,
short for Interactive Data Electronic Applications,
and will at first supplement and then eventually
replace the EDGAR system. See ‘‘SEC Announces
Successor to EDGAR Database; ‘‘IDEA’’ Will Make
Company and Fund Information Interactive,’’ Press
Release No. 2008–179, Aug. 19, 2008.
5 See Rulemaking for EDGAR System, Release No.
33–7855 (Apr. 27, 2000) [65 FR 24788] (the
‘‘Modernization Adopting Release’’). See also
Release No. 33–7803 (Mar. 3, 2000) [65 FR 11507]
(‘‘Modernization Proposing Release’’).
6 See Mandated EDGAR Filing for Foreign Issuers,
Release No. 33–8099 (May 14, 2002) [67 FR 36678].
7 15 U.S.C. 78p(a).
8 See Mandated EDGAR Filing and Web Site
Posting for Forms 3, 4 and 5, Release No. 33–8230
(May 7, 2003) [68 FR 25788] (the ‘‘EDGAR Section
16 Release’’).
9 15 U.S.C. 80a–17(g).
10 15 U.S.C. 80a–24(b).
2 17
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65517
company status, among other entities.16
These applications were submitted in
paper and available only from the
Commission’s public reference room or
electronically from private services.
Private services usually charge fees for
electronic copies of applications; also,
there is a delay of about thirty days
between the submission of applications
to the Commission and their electronic
availability from the private sources.
We are amending certain provisions
of Regulation S–T and Investment
Company Act Rule 0–2 17 to require
electronic submission on EDGAR of
applications pursuant to Rule 0–2 under
the Investment Company Act. We are
amending Rule 101(a)(1)(iv) of
Regulation S–T to include within its
mandatory electronic filing provisions
any application for an order under any
section of the Investment Company
Act.18
In the Proposing Release, we
requested comment on the impact of our
making the submission of requests for
orders under the Investment Company
Act mandatory electronic submissions
and whether we should implement this
rule. We requested comment on whether
it would be burdensome for us to
require applicants to submit
applications electronically. We also
sought comments as to which
applications the rule should apply. We
II. Mandatory Electronic Submission of asked commenters to address the issue
Investment Company Applications
of what the transition period should be
for investment companies and other
The rules under Regulation S–T
applicants to prepare for the mandatory
previously provided that applications
electronic submission of these
for exemptive relief under any section of
applications.
the Investment Company Act shall not
We requested comment not only on
14 The only
be made in electronic format.
the specific issues that we discussed in
applications under the Investment
the Proposing Release, but on any other
Company Act that were mandatory
approaches or issues that we should
EDGAR submissions were applications
consider in connection with the
for deregistration filed by investment
submission of applications for orders
companies.15 Applicants for orders
and Regulation E filings on the EDGAR
under the Investment Company Act can system. We sought comment from any
include registered investment
interested person, including those
companies, affiliated persons of
required to file information with us on
registered investment companies, and
16 There are several sections of the Investment
issuers seeking to avoid investment
Company Act pursuant to which entities may make
applications for relief. For example, Section 6(c) [15
U.S.C. 80a–6(c)] provides the Commission with
authority to exempt persons, securities or
transactions from any provision of the Investment
Company Act, or the regulations thereunder, if and
to the extent that such exemption is in the public
interest and consistent with the protection of
investors and the purposes fairly intended by the
policy and provisions of the Investment Company
Act.
17 Rule 0–2 is the Investment Company Act rule
under which applications are submitted.
18 See amendment to Rule 101(a)(1)(iv) under
Regulation S–T. Paragraph (11) of Rule 101(c)
provided that filings under Section 6(c) of the
Investment Company Act, i.e., applications for
orders, be submitted in paper format only. As
proposed, we are removing and reserving this
paragraph.
the EDGAR system, as well as investors,
disseminators of EDGAR data, EDGAR
filing agents, and other members of the
public who have access to and use
information from the EDGAR system.
We asked commenters to provide
detailed information on any difficulties
and considerations unique to these
proposed requirements. In the event
commenters believed that any aspect of
the proposed requirements would be
burdensome, we asked for specific
details and alternative approaches.
We received two comment letters in
response to our requests for comment.
Both commenters expressed support for
the rulemaking proposal to require that
all applications be submitted
electronically through the EDGAR
system.19 Both commenters expressed
views about applications that are sent to
the staff in draft that have not been
officially filed. One commenter inquired
about applications made under both the
Investment Company Act and the
Investment Advisers Act of 1940
(‘‘Investment Advisers Act’’) 20 and had
certain concerns about amendments to
Rule 0–2.21 We received no comments
in connection with the portion of our
proposal related to Regulation E filings.
We are adopting these amendments,
in light of the primary goals of the
EDGAR system, to facilitate the rapid
dissemination of financial and business
information in connection with filings,
including filings by investment
companies. Requiring applications to be
submitted electronically will benefit
members of the investing public and the
financial community by making
information contained in these filings
readily available and more easily
searchable. In this age of information,
we believe that filings and applications
made with the Commission are more
valuable to the public if they are
available in electronic form and that
adding applications to the EDGAR
database will provide a more complete
picture for the investing public. We
believe that the amendments will
benefit the public by making the EDGAR
19 In support of the proposal, one commenter
stated:
Like the Commission, the Institute believes that
the proposal will help to facilitate both the efficient
submission of applications and the retrieval of
those applications by interested parties. We also
applaud this effort by the Commission to improve
its ability to track and process exemptive
applications, which are of vital importance to the
fund industry and, ultimately, to fund investors.
See Comment Letter dated Dec. 14, 2007, of
Karrie McMillan, General Counsel, Investment
Company Institute (the ‘‘ICI Comment Letter’’). See
also Comment Letter dated Dec. 14, 2007, of Mercer
Bullard, Founder and President, Fund Democracy
(the ‘‘Fund Democracy Comment Letter’’).
20 15 U.S.C. 80b–1 et seq.
21 See ICI Comment Letter.
made by electronic submission on the
EDGAR system.11 In December 2006, we
adopted amendments to the rules and
forms under section 17A of the
Exchange Act requiring that the forms
filed with respect to transfer agent
registration, annual reporting, and
withdrawal from registration be filed
with the Commission electronically on
EDGAR.12 On February 6, 2008, we
adopted amendments to make
mandatory the electronic submission of
Form D on the EDGAR system.13
Today, we are amending our rules to
require that applicants submit
electronically on the EDGAR system
their applications for orders under any
section of the Investment Company Act
(‘‘applications’’). In addition, we are
adding Regulation E filings to the list of
those that must be filed electronically
through EDGAR. These amendments are
designed to facilitate the efficient
submission of applications and
Regulation E filings, to enable the public
to access them more quickly and search
them more easily, and to improve the
Commission’s ability to track and
process such applications and
Regulation E filings. We are also making
related amendments to Regulation S–T,
our electronic filing rules, and revising
Rule 0–2.
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11 See
Rulemaking for EDGAR System, Release
No. 33–8590 (July 18, 2005) [70 FR 43558 (July 27,
2005)].
12 See Electronic Filing of Transfer Agent Forms,
Release No. 34–54864 (Dec. 4, 2006) [71 FR 74698
(Dec. 12, 2006)].
13 See Electronic Filing and Revisions of Form D,
Release No. 33–8891 (Feb. 6, 2008) [73 FR 10592
(Feb. 27, 2008)].
14 Rule 101(a)(1)(iv) and (c)(11) of Regulation S–
T [17 CFR 232.101(a)(1)(iv) and (c)(11)].
15 These include applications and amendments
submitted on Form N–8F [17 CFR 274.218] (EDGAR
submission types N–8F and N–8F/A) and those
submitted pursuant to Investment Company Act
Rule 0–2 [17 CFR 270.0–2] (EDGAR submission
types 40–8F–2 and 40–8F–2/A). See Release No. IC–
23786 (Apr. 15, 1999) [76 19469 (Apr. 21, 1999)].
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Federal Register / Vol. 73, No. 214 / Tuesday, November 4, 2008 / Rules and Regulations
page of our Web site a more
comprehensive resource for most
information on file with us related to
the operation of investment companies.
Both of the commenters on the
Proposing Release raised the issue of
applications submitted to the
Commission’s staff in draft form. One
commenter strongly believed that ‘‘the
Commission staff’s willingness to
consider exemptive applications in draft
form and to grant requests for
confidential treatment, when
appropriate, is critical to encouraging
innovation in the fund industry.’’ 22 The
other commenter was concerned that
the new filing requirement might result
in an increase of the use of draft
applications to the detriment of the
public interest.23
The staff’s policy, as first stated in a
Commission release in 1985, is that the
staff will not, except in the most
extraordinary situations, review draft
applications.24 Consistent with this
policy, the staff will continue to accept
draft applications only in situations
where the applicant clearly
demonstrates the extraordinary
circumstances that necessitate the
submission of a draft application.25 We
believe that this approach continues to
strike an appropriate balance between
encouraging innovation in the fund
industry, making effective use of staff
resources, and serving the interests of
the public. While it is possible that
applicants will seek permission to
submit more applications as draft
applications, as discussed above the
staff’s policy of reviewing draft
applications only in the most
extraordinary situations will not change,
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22 See
ICI Comment Letter. In support of its
position, the commenter stated:
The development of new investment products
and more efficient and effective business practices
can be a costly and time-consuming endeavor for
fund sponsors and other applicants. In return for
their investment of intellectual and financial
capital, applicants should be rewarded for their
innovation and creativity by being the ‘‘first to
market’’ with their new product or practice.
23 Noting this concern, the commenter stated that:
Permitting applicants to file draft applications is
contrary to fundamental principles of
administrative law and the public interest. It also
is unfair to other applicants for Commission staff
to spend time on draft applications while
applications that have been properly filed are left
on hold. In its adopting release, the Commission
should clarify that the staff will not accept or
review draft applications, and that concerns
regarding the confidentiality of proprietary
information should be addressed by appropriate
redactions in a filed request.
See Fund Democracy Comment Letter.
24 See Commission Policy and Guidelines for
Filing of Applications for Exemption, Investment
Company Act Release No. 14492 (Apr. 30, 1985).
25 See IM Exemptive Application Processing, SEC
Office of the Inspector General, Audit Report No.
408, Recommendation C (Sept. 29, 2006).
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and as a result, we do not believe that
the number of draft applications will
increase. The new filing requirement
will only change the format (from paper
to electronic) of documents that were
and will be publicly available.
As we noted in the Proposing Release,
from time to time, an applicant may
wish to submit an application for
exemption under both the Investment
Company Act and the Investment
Advisers Act.26 We did not propose to
require that applications under the
Investment Advisers Act be made on
EDGAR. We noted that any document
that is intended as an application for an
order under both the Investment
Company Act and the Investment
Advisers Act should be submitted
separately under each Act.
One commenter expressed the view
that we should consider alternative
approaches that would allow a single
EDGAR filing for an application
requesting relief under both Acts.27 We
note that, to date, the EDGAR system
has not been a vehicle for the
submission of Investment Advisers Act
filings. Further, based on staff review of
the contents of all Advisers Act
applications submitted to us, we are not
aware of any within the past ten years
that also requested relief from
Investment Company Act provisions.
Therefore, we believe it is not costeffective for us to make the
programming changes at this time so
that EDGAR would accept applications
under both Acts, given that recently no
applications requested relief from both
statutes. EDGAR will accept
applications under the Investment
Company Act as proposed.
As with other entities that make
submissions on EDGAR, applicants will
be subject to the provisions of
Regulation S–T 28 and the EDGAR Filer
Manual. Regulation S–T includes
detailed rules concerning mandatory
and permissive electronic EDGAR
submissions; it also makes clear that
requests for confidential treatment must
be made in paper format.29
Regulation S–T requires the electronic
filing of any amendments and related
correspondence and supplemental
information pertaining to a document
that is the subject of mandated EDGAR
26 See
footnote 18 of the Proposing Release.
ICI Comment Letter.
28 For a comprehensive discussion of Regulation
S–T and electronic filing, see ‘‘Electronic Filing and
the EDGAR System: A Regulatory Overview,’’
available on the Information for EDGAR Filers page
of the Commission’s Web site, https://www.sec.gov/
info/edgar.shtml.
29 See Rule 101 of Regulation S–T [17 CFR
232.101].
27 See
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submission.30 These requirements also
apply to companies and persons who
submit applications.31 The requirement
to file amendments electronically
applies to applications filed
electronically on EDGAR as well as to
pending applications initially filed in
paper.32
The Regulation also covers such
matters as providing for the override of
formatting requirements applicable to
paper submissions.33 The EDGAR Filer
Manual contains detailed technical
specifications concerning EDGAR
submissions. The Manual also provides
technical guidance concerning how to
commence submissions on EDGAR by
submitting Form ID to obtain a CIK 34
and confidential access codes and how
to maintain and update company data,
e.g., how to change company names and
contact information.35
One technical specification that the
EDGAR Filer Manual includes is the
electronic ‘‘submission type’’ for each
submission made on EDGAR. The
EDGAR electronic submission types for
applications are designed to facilitate
and expedite the review of these
applications.
Consistent with our amendments, the
EDGAR Filer Manual and the
EDGARLink software provide for three
EDGAR electronic submission types for
applications: 40–APP, 40–OIP, and 40–
6B. Applicants whose applications are
typically processed by the Division of
Investment Management’s Office of
Investment Company Regulation will
use EDGAR submission type 40–APP;
these applicants will submit
amendments using EDGAR submission
30 Regulation S–T Rule 101(a)(2) [17 CFR
232.101(a)(2)].
31 See amendments to paragraphs (a)(2) and (3) of
Rule 101 of Regulation S–T. Related
correspondence and supplemental information are
not automatically disseminated publicly through
the EDGAR system but are immediately available to
the Commission staff.
32 This provision dates back to 1993. See text at
footnote 83 of Rulemaking for EDGAR System,
Release No. 33–6977 (Feb. 23, 1993) [58 FR 14628
(Mar. 18, 1993)] (‘‘Once a filer becomes subject to
the mandated electronic filing rules, any
documents, including amendments and
supplements to documents previously filed in
paper, will be required to be filed in electronic
format, absent a hardship exemption.’’).
33 The paper formatting requirements continue to
be applicable to paper submissions made pursuant
to temporary and continuing hardship exemptions
under Rules 201 and 202 of Regulation S–T [17 CFR
232.201 and 232.202].
34 A filer’s CIK (or ‘‘central index key’’) is a tendigit number uniquely identifying that filer.
35 We remind filers that, in the case of name
changes, the changes must be made via the EDGAR
filing Web site in advance of the change being
reflected on an EDGAR submission. The name on
past submissions will not change. The CIK and file
number(s) of the company will provide a link to
filings under the old name.
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type 40–APP/A. Applicants whose
applications are typically processed by
the Division’s Office of Insurance
Products will use the new EDGAR
submission type 40–OIP; these
applicants will submit amendments
using EDGAR submission type 40–OIP/
A. Employees’ securities company
applications (also processed by the
Office of Investment Company
Regulation) will use EDGAR submission
type 40–6B and submission type 40–6B/
A for amendments. Applicants that have
currently pending applications that
were submitted in paper and recorded
as submission type 40–6C will submit
amendments to their applications using
either EDGAR submission type 40–APP/
A or 40–OIP/A, as appropriate.
The EDGAR Filer Manual provides
guidance for applicants in choosing the
correct submission type. Most
applicants will submit their
applications under EDGAR submission
type 40–APP, the submission type
designated for the Office of Investment
Company Regulation. Applicants
submitting the following categories of
applications will use EDGAR
submission type 40–OIP, the submission
type for the Office of Insurance
Products:
(1) Applications with regard to mixed
and shared funding filed under section
6(c) of the Investment Company Act, for
exemptions from the provisions of
sections 9(a), 13(a), 15(a) and 15(b) of
the Investment Company Act,36 and
Rules 6e–2(b)(15) and 6e–3(T)(b)(15); 37
(2) Applications relating to the
recapture of bonus credits filed under
section 6(c) of the Investment Company
Act for exemptions from the provisions
of sections 2(a)(32) and 27(i)(2)(A) of the
Investment Company Act 38 and Rule
22c–1; 39
(3) Applications relating to the
substitution of securities held by a
variable insurance separate account
filed under section 26(c) of the
Investment Company Act; 40 and
(4) Applications for approval of the
terms of an exchange offer involving
variable insurance contracts filed under
section 11(a) of the Investment
Company Act.41
These three submission types are
designed to facilitate and expedite staff
review of the submissions. Our internal
system will quickly route the
application to the appropriate Office. If
36 15 U.S.C. 80a–9(a), 80a–13(a), 80a–15(a), 80a–
15(b).
37 17 CFR 270.6e–2(b)(15), 270.6e–3(T)(b)(15).
38 15 U.S.C. 80a–2(a)(32), 80a–27(i)(2)(A).
39 17 CFR 270.22c–1.
40 15 U.S.C. 80a–26(c).
41 15 U.S.C. 80a–11(a).
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applicants have any questions as to the
appropriate EDGAR submission type,
we encourage them to verify in advance
the correct submission type so that the
application can be routed automatically
to the appropriate Office.42 As
proposed, for applications with multiple
co-applicants, the applicants will
submit the application with all coapplicants included in one submission.
The applicants will choose one
applicant to list first as the ‘‘primary’’
co-applicant. Then, they will include in
the EDGAR template the information for
all other co-applicants, i.e., the CIK of
each co-applicant and, for amendments,
the file number assigned to each coapplicant when the original application
was filed. Applicants can be dropped
from or added to an application with
each amendment submission.43
Our internal EDGAR system has been
enhanced to allow for the upload and
public dissemination via the EDGAR
system of notices and orders in
connection with applications. These
documents will, of course, still be
available in the Federal Register. The
staff will commence the upload and
dissemination of notice and orders on
the EDGAR system as of the effective
date of the amendments. The staff will
upload and disseminate any notice or
order issued on or after the effective
date, regardless of whether the
application, or any amendment to it,
was submitted in paper or on EDGAR.
We asked commenters to address the
issue of what the transition period
should be for investment companies and
other applicants to prepare for the
mandatory electronic submission of
these applications. We received no
comments in response to this request
other than the comments regarding draft
applications. We believe applicants are
prepared to submit their applications
electronically on EDGAR as soon as our
amendments become effective.
42 In case of doubt, applicants may call the IM
EDGAR Inquiry Line (202–551–6989) in the
Division of Investment Management for assistance.
43 As is the case currently with paper
applications, for each application, an applicant will
receive a unique file number which will begin with
the prefix ‘‘812,’’ or ‘‘813’’ in the case of
applications made by employees’’ securities
companies. As also is currently the case with paper
filings, each co-applicant’s file number will be
composed of the primary applicant’s file number
with an appended numerical suffix unique to that
co-applicant. Each applicant or co-applicant will
include this file number, in addition to its CIK, in
the EDGAR template of all amendments to the
application, which will also be required electronic
submissions.
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65519
III. Amendments to Rule 0–2 and to
Temporary Hardship Exemption of
Regulation S–T
Rule 0–2 requires that every
application for an order for which a
form is not specifically prescribed and
which is executed by a corporation,
partnership or other company and filed
with the Commission contain a
statement of the applicable provisions of
the articles of incorporation, bylaws or
similar documents, relating to the right
of the person signing and filing such
application to take such action on behalf
of the applicant, and a statement that all
such requirements have been complied
with and that the person signing and
filing the application is fully authorized
to do so. If such authorization is
dependent on resolutions of
stockholders, directors, or other bodies,
such resolutions must be attached as an
exhibit to or quoted in the application.
Any amendment to the application must
contain a similar statement as to the
applicability of the original statement of
authorization. When any application or
amendment is signed by an agent or
attorney, Rule 0–2 requires that the
power of attorney evidencing his
authority to sign shall state the basis for
the agent’s authority and shall be filed
with the Commission. Every application
subject to Rule 0–2 must be verified by
the person executing the application by
providing a notarized signature in
substantially the form specified in the
rule. Each application subject to Rule 0–
2 must state the reasons why the
applicant is deemed to be entitled to the
action requested, the name and address
of each applicant, and the name and
address of any person to whom any
questions regarding the application
should be directed. Rule 0–2 requires
that a proposed notice of the proceeding
initiated by the filing of the application
accompany each application as an
exhibit and, if necessary, be modified to
reflect any amendment to the
application.
We proposed three amendments to
Rule 0–2 governing the form of
applications under the Investment
Company Act and requested comment
on these proposed amendments. The
commenters supported the proposed
amendments to Rule 0–2, and we are
adopting these amendments as
proposed. First, we are eliminating the
requirement to have verifications of
applications and statements of facts
made in connection with applications
notarized.44 We believe that this
requirement is unnecessary in the
44 See
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context of an electronic filing.45 Second,
we are eliminating the requirement that
applicants include draft notices as
exhibits to applications.46 The staff has
found these exhibits to be of limited
value because the staff prefers to draft
its own notices of applications. Finally,
we are amending Rule 0–2 to remove
the last sentence of paragraph (b),47
which was added in the initial EDGAR
rulemaking and is inconsistent with
mandatory electronic submission of
applications on EDGAR.48
One commenter suggested that we
further amend Rule 0–2 by eliminating
from paragraph (c)(1) the requirement
that a copy of any board resolution
authorizing the actions of the person
signing and filing the application be
included as an exhibit to the application
(or, alternatively, that the pertinent
provisions of such resolution be quoted
in the application).49
Because this suggestion goes beyond
the scope of our proposal, we are not
adopting the recommendation at this
time. We may consider this
recommendation in the future.
We proposed and are adopting an
amendment to Rule 201 of Regulation
S–T. Rules 201 and 202 50 of Regulation
S–T address hardship exemptions from
EDGAR filing requirements, and Rule
45 Regulation S–T requires that each signatory to
an electronic filing manually sign a signature page
or other document authenticating, acknowledging
or otherwise adopting his or her signature that
appears in typed form in the electronic filing. This
document must be executed before or at the time
the electronic filing is made, must be retained by
the filer for a period of five years, and must be made
available to the Commission upon request. See Rule
302(b) of Regulation S–T [17 CFR 232.302(b)]. We
believe that this requirement provides sufficient
assurance of the legitimacy of signatures contained
in the electronic filings so that notarization is
unnecessary.
46 See Rule 0–2(g).
47 The last sentence of Rule 0–2(b) read as
follows: ‘‘Every application for an order under any
provision of the Act and every amendment to such
application shall be submitted to the Commission
in paper only, whether or not the applicant is
otherwise required to file in electronic format,
unless instructions for electronic filing are included
on the form, if any, prescribed for such
application.’’
48 See Rulemaking for EDGAR System—
Investment Companies and Institutional Investment
Managers, Release No. 33–6978 (Feb. 23, 1993) [58
FR 14848 (Mar. 18, 1993)].
49 See ICI Comment Letter. The commenter also
noted:
In our view, this requirement is unnecessary
because the person signing the application is
required to attest to such resolutions in the
verification required by paragraph (d) of the rule.
We further note that board resolutions do not have
to be submitted with other types of filings with the
Commission, such as fund registration statements
and proxy statements, nor are we aware of any
history of abuse that would suggest this
requirement must be maintained.
50 17 CFR 232.202.
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13(b) of Regulation S–T 51 addresses the
related issue of filing date adjustments.
A filer may obtain a temporary
hardship exemption under Rule 201 if it
experiences unanticipated technical
difficulties that prevent the timely
preparation and submission of an
electronic filing by filing a properly
legended paper copy 52 of the filing
under cover of Form TH.53 This process
is self-executing. A filer who files in
paper under the temporary hardship
exemption must submit an electronic
format copy of the filed paper document
within six business days of the filing of
the paper format document.54
A filer may apply for a continuing
hardship exemption under Rule 202 if it
cannot file all or part of a filing without
undue burden or expense.55 In contrast
to the self-executing temporary hardship
exemption process, a filer can obtain a
continuing hardship exemption only by
submitting a written application, upon
which the Commission, or Commission
staff pursuant to delegated authority,
may then act.
We proposed making the temporary
hardship exemption unavailable for
submission of applications under the
Investment Company Act, since there is
generally no submission exigency or
submission deadline associated with
these submissions. We asked for
comments on this proposed
amendment. We received one comment
questioning whether, if this provision
were adopted, the staff would work with
applicants that need additional time to
file amendments, to prevent
applications from being placed in an
inactive status.56 As has been the
practice in the past, the staff will
continue to work with applicants
experiencing unanticipated technical or
other difficulties to establish
appropriate timeframes for the
submission of amendments and ensure
the timely processing of all applications.
We are amending Rule 201(a) of
Regulation S–T as proposed to make the
temporary hardship exemption
unavailable for submission of
applications under the Investment
Company Act.57 We restate our belief
51 17
CFR 232.13(b).
17 CFR 232.201(a).
53 17 CFR 239.65, 249.447, 269.10, and 274.404.
54 See 17 CFR 232.201(b).
55 See 17 CFR 232.202(a).
56 See ICI Comment Letter. The staff typically
places applications in an inactive status if the
applicant does not respond to staff comments
within sixty days of receiving the comments, such
as by filing an amendment.
57 See amendment to Rule 201(a) of Regulation S–
T. As we noted in the Proposing Release, we have
previously made unavailable the ability for filers to
use the temporary hardship exemption for EDGAR
submissions of beneficial ownership reports filed
52 See
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that there is generally no submission
exigency or submission deadline
associated with these submissions. An
applicant will continue to have the
ability to apply for a continuing
hardship exemption under Rule 202 if it
cannot submit all or part of an
application without undue burden or
expense. Also, while we expect the
circumstances to be rare, the staff could
use its delegated authority to grant a
filing date adjustment pursuant to Rule
13(b) of Regulation S–T [17 CFR
232.13(b)]. While we do not expect an
applicant to need a filing date
adjustment in the context of an
application, it will be available in the
unlikely event it is needed. And, as
stated above, the staff will continue to
work with applicants experiencing
unanticipated difficulties.
IV. Amendments To Mandate That
Certain Filings of Small Business
Investment Companies and Business
Development Companies Be Made
Electronically
Regulation E 58 provides for the
exemption from registration of securities
issued by small business investment
companies registered under the
Investment Company Act and business
development companies regulated
under the Investment Company Act,
subject to the terms and conditions of
the regulation. Rule 604 59 of Regulation
E requires the filing of notification on
Form 1–E 60 of sales of securities under
Regulation E. Rule 607 61 of Regulation
E requires the filing of sales material
used in connection with the offering.
Rule 609 62 of Regulation E requires the
filing of reports of sales on Form 2–E.63
We proposed that Regulation E filings
be mandatory electronic filings on the
EDGAR system. Regulation E filers make
most of their filings electronically on
the EDGAR system. Since these filers
are already EDGAR filers and most will
have available electronic copies of their
Form 1–E (and any related sales
material) 64 and Form 2–E, we believe
that making these filings electronically
by officers, directors and principal security holders
under Section 16(a) of the Exchange Act [15 U.S.C.
78p(a)]. See Mandated EDGAR Filing and Web Site
Posting for Forms 3, 4 and 5, Release No. 33–8230
(May 7, 2003) [68 FR 25788].
58 17 CFR 230.601 to 230.610a.
59 17 CFR 230.604.
60 17 CFR 239.200.
61 17 CFR 230.607.
62 17 CFR 230.609.
63 17 CFR 239.201.
64 Requiring electronic filing on EDGAR of Rule
607 sales literature is consistent with the
requirement to file electronically on EDGAR
omitting prospectuses under Rule 482 of the
Securities Act of 1933 (the ‘‘Securities Act’’)
(referred to as ‘‘482 ads’’) and sales literature under
Section 24(b) of the Investment Company Act.
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on EDGAR will impose very little
burden or cost on these companies. We
requested but received no comment on
this proposal. We are adopting the
amendments as proposed, making these
filings mandatory electronic
submissions.65
V. Effective Date
Beginning on January 1, 2009,
applications for orders under the
Investment Company Act and
Regulation E filings will become
mandatory electronic submissions on
the EDGAR system. This effective date
will provide time for filers to prepare for
the mandatory requirements. Also, since
the effective date will be the start of a
calendar year, the public will have a
clear reference point for determining
whether any particular application or
Regulation E filing has been submitted
either in paper or electronically.
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VI. Cost-Benefit Analysis
We are sensitive to the costs and
burdens of our rules. The rules we are
adopting today reflect the addition of
applications under the Investment
Company Act as mandatory electronic
submissions on EDGAR. In addition,
they amend Rule 0–2 and make
unavailable to applicants Regulation S–
T’s provision for temporary hardship
exemptions. They also add Regulation E
filings to the list of those that must be
filed electronically through EDGAR.
A. Expected Benefits
We expect that the addition of
applications under the Investment
Company Act as mandatory electronic
submissions on EDGAR will result in
considerable benefits to the securities
markets, investors, and other members
of the public, by expanding the
accessibility of information, and
increasing the types of information,
filed and made available for public
review through the EDGAR system. The
primary goal of the EDGAR system since
its inception has been to facilitate the
rapid dissemination of financial and
business information in connection with
filings, including filings by investment
companies. The amendments will
benefit investors, financial analysts and
others by increasing the efficiency of
retrieving and disseminating these
applications. The mandated electronic
transmission of these documents will
enable the public to access them more
quickly and search them more easily.
Instead of having to come in person or
through an agent to the Commission’s
public reference room to conduct a
65 See amendments to paragraphs (a)(1)(v) and
(c)(6) of Rule 101 of Regulation S–T.
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search for a particular submission that
is in paper or microfiche, the public will
be able to find and review the
application on any computer with an
Internet connection by accessing the
EDGAR system through the
Commission’s Web site or through a
third party Web site that links to
EDGAR. We received one comment
stating the belief that it is unlikely that
investors would choose to access and
review exemptive applications available
via EDGAR.66 We believe that these
documents should be publicly available
via EDGAR for any investors who do
choose to access and review them.
The amendments will benefit the
public by making the EDGAR page of
our Web site a more comprehensive
resource for most information on file
with us related to the operation of
investment companies. A further benefit
will be to ensure that all applications
are available to the public free of charge
on our Web site without the cost of
paying a third party for a copy.
Persons who may consider requesting
a hearing on an application on the basis
of a notice will be able to more easily
obtain the actual application so that
they can better evaluate the issues
raised by the application. We believe
this will be a significant improvement
in the applications process.
We also expect that applicants will
benefit from the increased efficiencies
in the filing process for these
submissions resulting from the
amendments. By electronically
transmitting these documents directly to
the Commission, applicants will avoid
the uncertainties and delays that can
occur with the manual delivery of paper
documents; we believe that it will be a
simpler and more efficient means to
submit applications. Applicants also
will benefit from no longer having to
submit multiple copies of paper
documents to the Commission.
Because the Commission’s staff will
be able to retrieve and analyze
information contained in these
submissions more readily than under
our current paper system, mandated
electronic submission of these
documents should facilitate the staff’s
retrieval and review of a particular
document. Applicants and investors
should benefit from increased
efficiencies in the Commission’s storage,
retrieval, and analysis of these
submissions which should result from
the amendments.
We believe the amendments to Rule
0–2 will benefit applicants. Removing
the notarization requirement will
remove a requirement from filers that is
66 See
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Frm 00027
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65521
unnecessary for electronic filings, and
removing the requirement to include a
draft notice as an exhibit will result in
a cost-savings to applicants. And, we
believe that making unavailable to
applicants Regulation S–T’s Rule 201
provision for temporary hardship
exemptions will benefit applicants
because applicants will not bear the cost
of both submitting an application in
paper and in electronic form as a
confirming copy within six business
days as required by the temporary
hardship exemption rule. This is true in
light of the fact that there is no deadline
for the submission of an application.
We also expect that the addition of
Regulation E filings as mandatory
electronic submissions on EDGAR will
result in benefits to the securities
markets, investors, and other members
of the public, by expanding the
accessibility of information, and
increasing the types of information,
filed and made available for public
review through the EDGAR system.
Requiring these Regulation E filings to
be submitted on EDGAR will benefit
members of the investing public and the
financial community by making
information contained in these
Commission filings more easily
searchable and readily available to
them. The amendments will result in
the benefit to the public of the EDGAR
page of our Web site being a
comprehensive source from which to
find filings of small business investment
companies and business development
companies.
We also expect that Regulation E filers
will benefit from the amendments by
increased efficiencies in the filing
process for these submissions. By
electronically transmitting these
documents directly to the Commission,
these filers will avoid the uncertainties
and delays that can occur with the
manual delivery of paper documents;
we believe that it will be a simpler and
more efficient means to submit these
Regulation E filings. Regulation E filers
also will benefit from no longer having
to submit multiple copies of paper
documents to the Commission.
The amendments will benefit
investors, financial analysts and others
by increasing the efficiency of retrieving
and disseminating these filings. The
mandated electronic transmission of
these documents will enable the public
to access them more quickly. Instead of
having to come in person or through an
agent to the Commission’s public
reference room to conduct a search for
a particular submission that is in paper
or microfiche, the public will be able to
find and review the filing on any
computer with an Internet connection
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by accessing the EDGAR system through
the Commission’s Web site or through a
third party Web site that links to
EDGAR. The amendments will also
enable financial analysts and others to
retrieve, analyze and disseminate more
rapidly this information.
An investor will be able to more
efficiently gather information of interest
about Regulation E filers. Also,
Regulation E filers and investors should
benefit from the amendments by
increased efficiencies in the
Commission’s storage, retrieval, and
analysis of these submissions. Mandated
EDGAR submission of these documents
will result in their addition to the
Commission’s central electronic
repository of filings that is free to
anyone who has access to a computer
linked to the Internet. Because the
Commission’s staff will be able to
retrieve and analyze information
contained in these Regulation E
submissions more readily than under
our current paper system, mandated
electronic submission of these
documents should facilitate the staff’s
retrieval and review of a particular
document.
In the Paperwork Reduction Act
section we estimate that, the
amendments to Rule 0–2 will reduce the
total burden by approximately $52,550
annually.
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B. Expected Costs
We expect that the amendments will
result in some initial and ongoing costs
to applicants. We also expect, however,
that many applicants will not bear the
full range of costs that will result from
the amendments for the reasons
described below. Initial costs are those
associated with filing a Form ID in order
to obtain the access codes needed to
submit an application electronically and
otherwise preparing to make an
application submission.67 In order to
file a Form ID, an applicant will need
to learn the related electronic filing
requirements, obtain access to a
computer and the Internet, use the
computer to access the Commission’s
EDGAR Filer Management Web site,
respond to Form ID’s information
requirements and fax to the Commission
a notarized authenticating document.
Ongoing costs are those associated
with maintaining the framework
developed through the initial costs (for
example, updating information required
by Form ID) and additional costs arising
67 Applicants that already have EDGAR access
codes will not need to file a Form ID. As further
discussed in Part IX, however, we assume that a
small number of applicants per year will not
already have the codes.
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15:01 Nov 03, 2008
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from each subsequent submission of an
application.
We expect that the vast majority of
applicants will need to incur few, if any,
additional costs related to obtaining
computer and Internet access. We
believe that the vast majority of
applicants already will have access to a
computer and the Internet.68
We expect no additional costs to
applicants from amendments to Rule 0–
2. We requested but received no
comment on whether our amendments
to Rule 0–2 to remove the current
requirements for notarization and
provision of a draft notice as an exhibit
will result in any additional costs,
although the two commenters supported
these proposals. We expect no
additional costs to applicants from our
amendment to make unavailable to
applicants Regulation S–T’s Rule 201
provision for temporary hardship
exemption. An applicant will still be
able to request a continuing hardship
exemption under Regulation S–T Rule
202 under appropriate circumstances.
We believe that mandatory EDGAR
submission of Regulation E filings will
result in minimal cost to these filers. For
the following reasons, we also expect
that Regulation E filers will not bear the
full range of costs frequently associated
with new electronic filing requirements.
Initial costs are those associated with
the purchase of compatible computer
equipment and software, including
EDGAR software if obtained from a
third-party vendor and not from the
Commission’s Web site. Initial costs also
include those resulting from the training
of existing employees to be EDGAR
proficient or the hiring of additional
employees or agents that are already
skilled in EDGAR processing. Initial
costs further include those associated
with the formatting and transmission of
an applicant’s first document submitted
on EDGAR. These transmission costs
may include those related to subscribing
to an Internet service provider.
Regulation E filers already file on
EDGAR and will have minimal or no
initial costs.
Ongoing costs are those associated
with the electronic formatting and
transmission of subsequent EDGAR
filings. Regulation E filers may also
incur future costs resulting from the
training or hiring of employees
regarding updated EDGAR filing
requirements. The magnitude of these
costs will depend on the filers’ levels of
technological proficiency and their
68 An applicant that did not already own a
computer with Internet access could, for example,
go to a public library to use its computer and obtain
Internet access.
PO 00000
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previous familiarity with EDGAR filing
requirements. Regulation E filers will
incur the ongoing costs associated with
formatting and transmitting their
subsequent EDGAR filings.
Consequently, the mandated EDGAR
requirements should result only in costs
related primarily to the electronic
formatting of these documents in a
format compatible with EDGAR, and
transmission of the EDGAR formatted
documents to the Commission. In any
event, we believe that any costs for
transmission, formatting, and education
will be comparable to savings from not
having to incur similar costs related to
paper submissions.
VII. Burden on Competition; Promotion
of Efficiency, Competition, and Capital
Formation
Section 23(a)(2) of the Exchange Act
requires us, in adopting rules under the
Exchange Act, to consider the anticompetitive effects of any rules that we
adopt thereunder. Furthermore, section
2(b) of the Securities Act,69 section 3(f)
of the Exchange Act,70 and section
2(c) 71 of the Investment Company Act
require us, when engaging in
rulemaking, and considering or
determining whether an action is
necessary or appropriate in the public
interest, to consider whether the action
will promote efficiency, competition,
and capital formation. We requested
comment on whether the amendments,
if adopted, will burden competition and
whether they will promote efficiency,
competition, and capital formation. We
encouraged commenters to provide
empirical data or other facts to support
their views. We received no comments
in response.
The amendments regarding mandated
electronic filing of applications and the
related amendments to Rule 0–2 and
Regulation S–T’s Rule 201 are intended
to simplify the requirements for
submitting applications and facilitate
more efficient transmission, analysis,
storage and retrieval of information. We
believe this will improve the
accessibility and usefulness of
information available to all applicants
and the public, including those wishing
to request a hearing on an application.
It may make the investment products
offered by applicants more competitive,
since all applicants will have ready
access to the applications of others. We
believe the amendments will also
improve the accessibility of information
available to the public and investors
about the operation of investment
69 15
U.S.C. 77b(b).
U.S.C. 78c(f).
71 15 U.S.C. 80a–2(c).
70 15
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companies. We believe the amendments
will not impose a burden on
competition and will not have an
adverse impact on capital formation.
The amendments regarding mandated
electronic filings under Regulation E by
small business investment companies
and business development companies
are intended to facilitate more efficient
transmission, analysis, storage and
retrieval of information. We believe this
will improve the accessibility and
usefulness of information available for
use by filers, investors, and the public.
It may make the investment products
offered by filers more competitive, since
all filers will have immediate on-line
access to Regulation E filings of their
competitors. We believe that the
amendments will also improve the
accessibility of information available to
the public about the operation of small
business investment companies and
business development companies and
thereby improve investors’ ability to
make informed investment decisions.
We believe the amendments will not
impose a burden on competition and
will not have an adverse impact on
capital formation.
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VIII. Final Regulatory Flexibility Act
Analysis
This Final Regulatory Flexibility Act
Analysis has been prepared in
accordance with 5 U.S.C. 603. It relates
to our amendments adding applications
for orders under the Investment
Company Act to the list of submissions
that must be made electronically,
amendments to amend Rule 0–2 and
make unavailable to applicants the
provision for temporary hardship
exemptions in Rule 201 of Regulation
S–T, and amendments adding
Regulation E filings to the list of those
that must be filed electronically through
EDGAR.
A. Need for the Rule Amendments
The amendments will require
applications for orders under any
section of the Investment Company Act
to be submitted electronically on
EDGAR. The amendments to Rule 0–2
remove the requirements for
notarization and provision of a draft
notice, and the amendments to Rule 201
of Regulation S–T make applications
ineligible for temporary hardship
exemptions. We make these
amendments because the absence of an
electronic system for submitting
applications for orders in the past
limited the usefulness of the
information collected and to reduce the
burdens of submitting applications.
The amendments add Regulation E
filings made by small business
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15:01 Nov 03, 2008
Jkt 217001
investment companies and business
development companies to the list of
those that must be filed electronically
through EDGAR. We also make these
amendments because the absence of an
electronic system for submitting
Regulation E filings in the past limited
the usefulness of the information
collected.
B. Significant Issues Raised by Public
Comment
In the Initial Regulatory Flexibility
Act Analysis (‘‘IRFA’’) for the proposed
amendments, we encouraged the
submission of written comments with
respect to any aspect of the IRFA. We
requested specifically comment on the
number of small entities that will be
affected by the amendments and the
likely impact on small entities. We
asked commenters to describe the
nature of any impact and provide
empirical data supporting the extent of
the impact. We received no comments
with respect to this section of the
proposal.
C. Small Entities Subject to the Rule
For purposes of the Regulatory
Flexibility Act, an investment company
is a small entity if it, together with other
investment companies in the same
group of related investment companies,
has net assets of $50 million or less as
of the end of its most recent fiscal
year.72 Approximately 159 registered
investment companies meet this
definition.73 Approximately 38 business
development companies may be
considered small entities.74 We estimate
that few, if any, separate accounts
registered on Form N–3, N–4, or N–6 are
small entities.75
D. Projected Reporting, Recordkeeping,
and Other Compliance Requirements
The amendments require applicants
to submit requests for orders and small
business investment companies and
business development companies to
72 Rule 0–10(a) under the Investment Company
Act [17 CFR 240.0–10(a)].
73 The estimated number of reporting investment
companies that may be considered small entities is
based on December 2007 data from the
Commission’s EDGAR database and a third-party
data provider.
74 This estimate is based on analysis by the
Division of Investment Management staff of
information from databases compiled by third-party
information providers.
75 This estimate is based on figures compiled by
the Division of Investment Management staff
regarding separate accounts registered on Forms N–
3, N–4, and N–6. In determining whether an
insurance company separate account is a small
entity for purposes of the Regulatory Flexibility Act,
the assets of insurance company separate accounts
are aggregated with the assets of their sponsoring
insurance companies. Rule 0–10(b) under the
Investment Company Act [17 CFR 270.0–10(b)].
PO 00000
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Fmt 4700
Sfmt 4700
65523
submit Regulation E filings
electronically on the EDGAR system.
The Commission estimates some onetime formatting and ongoing burdens
that will be imposed on all applicants
and Regulation E filers, including those
that are small entities. We note,
however, that all Regulations E filers
and most applicants currently make
other filings on EDGAR. Furthermore,
we believe that non-investment
company applicants will have no greater
burden than that of those filers of
Section 16 reports or Schedules 13D and
13G 76 who will not otherwise make
EDGAR filings and that the electronic
submission should create only a de
minimis burden.
There will be no change in reporting
or recordkeeping requirements. The
amendments to Rule 0–2 reduce
compliance requirements to the extent
that they will remove the requirements
for notarization of the application and
provision of a draft notice with the
application.
We solicited comment on the effect
the amendments would have on small
entities. We received no comments in
response.
E. Agency Action To Minimize Effect on
Small Entities
The Regulatory Flexibility Act directs
us to consider significant alternatives
that will accomplish our stated
objectives, while minimizing any
significant adverse impact on small
entities. In connection with the
amendments, the Commission
considered the following alternatives: (i)
The establishment of differing
compliance or reporting requirements or
timetables that take into account the
resources available to small entities; (ii)
the clarification, consolidation, or
simplification of compliance and
reporting requirements under the
amendments for small entities; (iii) the
use of performance rather than design
standards; and (iv) an exemption from
coverage of the amendments, or any part
thereof, for small entities.
The Commission believes at the
present time that special compliance or
reporting requirements for small
entities, or an exemption from coverage
for small entities, is not appropriate or
consistent with investor protection.
Different requirements for applicants or
Regulation E filers that are small entities
could make it more difficult for the
public to locate Commission filings and
disclosure documents for these
applicants. We believe it is important
that the benefits resulting from the
amendments be provided to the public
76 17
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for all applications and Regulation E
filings, not just for applications and
Regulation E filings for entities that are
not considered small entities.
We have endeavored throughout the
amendments to minimize the regulatory
burden on all applicants and Regulation
E filers, including small entities, while
meeting our regulatory objectives. Small
entities should benefit from the
Commission’s reasoned approach to the
amendments to the same degree as
others. The Commission believes that
further clarification, consolidation, or
simplification of the amendments for
those that are small entities would be
inconsistent with the Commission’s
concern for investor protection. Further
clarification, consolidation, or
simplification of the amendments for
those that are small entities would
result in less information available
about them. Similarly, we conclude that
using performance rather than design
standards would not be consistent with
our statutory mandate of investor
protection. We believe that the standard
provided in the amendments (EDGAR
filing) is already sufficiently clear and
appropriately simple. A major goal of
making these mandatory EDGAR
submissions is a more complete and
searchable EDGAR database of filings;
we do not believe that there is a
comparable performance standard that
will achieve this goal.
dwashington3 on PRODPC61 with RULES
IX. Paperwork Reduction Act
The rule amendments contain
‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act of 1995
(‘‘PRA’’).77 We submitted the collections
of information to the Office of
Management and Budget (‘‘OMB’’) for
review in accordance with 44 U.S.C.
3507(d) and 5 CFR 1320.11. 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.
A. Rule 0–2
The title for the collection of
information is ‘‘General Requirements of
Papers and Applications.’’ OMB
approved this collection of information
under control number 3235–0636
(expiring on February 28, 2011).
Provision of information under the rule
is necessary to obtain a benefit. The
information is not kept confidential.
Respondents to the collection are
applying for orders of the Commission
under the Investment Company Act.
The Commission uses the information
required by Rule 0–2 to decide whether
the applicant should be deemed to be
entitled to the action requested by the
application. The amendments to Rule 0–
2 eliminate the requirement to have
verifications of applications and
statements of facts made in connection
with applications notarized 78 and
eliminate the requirement that
applicants include draft notices as
exhibits to applications.79
Burden Estimate for Rule 0–2
Applicants file applications as they
deem necessary. The Commission
receives approximately 125 applications
per year under the Investment Company
Act. Although each application
typically is submitted on behalf of
multiple entities, the entities in the vast
majority of cases are related companies
and are treated as a single applicant for
purposes of this analysis.
Much of the work of preparing an
application is performed by outside
counsel. The cost outside counsel
charges applicants depends on the
complexity of the issues covered by the
application and the time required for
preparation. Based on conversations
with applicants and attorneys, the cost
ranges from approximately $7,000 for
preparing a well-precedented, routine
application to approximately $80,000 to
prepare a complex and/or novel
application. We estimate that the
Commission receives 20 of the most
time-consuming applications annually,
80 applications of medium difficulty,
and 25 of the least difficult applications.
This distribution gives a total estimated
annual cost burden to applicants of
filing all applications of $5,255,000 [(20
× $80,000) + (80 × $43,500) + (25 ×
$7,000)].
In addition, based on conversations
with applicants, we estimate that inhouse counsel spend from ten to fifty
hours helping to draft and review an
application. We estimate a total annual
hour burden to all respondents of 3,650
hours (50 hours × 20 applications) + (30
hours × 80 applications) + (10 hours ×
25 applications).
We have decreased the burden
associated with the existing collection
of information for Rule 0–2 to reflect the
amendments. The amendments to Rule
0–2 eliminate the requirement to have
verifications of applications and
statements of facts made in connection
with applications notarized. The notary
service was provided by a secretary or
similar administrative employee of the
applicant or the outside counsel
preparing the application and
78 See
77 44
U.S.C. 3501 et seq.
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Rule 0–2(g).
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represented a negligible cost or hour
burden to the applicant, so elimination
of the notarization requirement will not
be likely to decrease the burden
measurably.
The amendments also eliminate the
requirement that applicants include
proposed notices as exhibits to
applications. A proposed notice is
merely a summary of the statements in
the application. We estimate that
preparation of the proposed notice by
outside counsel represents
approximately 1% of the cost of
preparing an application. Elimination of
this requirement will reduce the
estimated cost burden by approximately
$52,550 (1% of $5,255,000). The
amendments will not change the hour
burden.
We estimate the total reduction in the
burden will be approximately $52,550.
B. Regulation S–T
The title for the collection of
information is ‘‘General Rules and
Regulations for Electronic Filing.’’
(OMB Control No. 3235–0424, expiring
on September 30, 2008). The purpose of
Regulation S–T is to implement the
Commission’s EDGAR system. The
EDGAR system enables the Commission
to receive, store, process and
disseminate information filed with the
Commission under the provisions of the
federal securities laws. The
Commission’s forms and rules require
filings that make information available
to the investing public and that permit
the Commission to verify compliance
with the federal securities laws.
Electronic filing improves the
availability to the public and to the
Commission of information filed with
the Commission. Regulation S–T
specifies the requirements that govern
the electronic submission of documents
to the Commission. Provision of the
information required by the Regulation
is mandatory. Responses are not kept
confidential.
Burden Estimate for Regulation S–T
The amendments to Regulation S–T
revise Rule 101 under Regulation S–T to
require electronic filing of applications
for orders of the Commission under the
Investment Company Act and of forms
required by Regulation E under the
Securities Act of 1933. The burden
associated with the filing of applications
under Rule 0–2 is reflected in the
collection of information entitled
‘‘General Requirements of Papers and
Applications.’’ We are not amending
Regulation E. The burden associated
with the filing of documents required by
Regulation E is reflected in the
collections of information required by
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Federal Register / Vol. 73, No. 214 / Tuesday, November 4, 2008 / Rules and Regulations
Regulation E, and will not change as a
result of the amendments to Regulation
S–T. We are also amending Rule 201
under Regulation S–T, which governs
temporary hardship exemptions from
electronic filing. Rule 201 is part of
Regulation S–T and does not impose
any burden on respondents separate
from Regulation S–T. The amendments
to Rule 201 will not change the burden
of Regulation S–T. The Paperwork
Reduction Act requires that we obtain
OMB approval for a collection of
information, whether the collection has
a burden or not. Regulation S–T is a
collection of information with no
burden to respondents. OMB requires us
to assign a burden of one hour to
Regulation S–T and to indicate that the
Regulation has one respondent so the
automated OMB system will be able to
handle approval of the Regulation. OMB
has already approved a burden of one
hour for one respondent to the
Regulation.
The Commission estimates that each
year a small number of applicants for
orders under the Investment Company
Act will need to file a Form ID (OMB
Control Number 3235–0328, expiring
April 30, 2009) with the Commission in
order to gain access to EDGAR. Form ID
is used to request the assignment of
access codes to file on EDGAR. Most
applicants will not need to file a Form
ID because any applicant that has made
at least one filing with the Commission
since 2002 has been entered into the
EDGAR system by the Commission and
will not need to file Form ID to file
electronically on EDGAR. However,
applicants that have never made a filing
with the Commission will need to file
Form ID.
The Commission estimates that it will
receive approximately 10 Forms ID a
year under the amendments. Because
the actual number of Forms ID the
Commission receives each year is less
than the current estimate, we are not
revising the estimated number of
respondents that file a Form ID.
We received no comments on the PRA
section of the proposal.
X. Statutory Basis
dwashington3 on PRODPC61 with RULES
17 CFR Part 232
Reporting and recordkeeping
requirements, Securities.
17 CFR Part 270
Investment companies, Reporting and
recordkeeping requirements, Securities.
Text of the Rule Amendments
In accordance with the foregoing, the
Commission amends Title 17, Chapter II
of the Code of Federal Regulations as
follows.
■
PART 232—REGULATION S–T—
GENERAL RULES AND REGULATIONS
FOR ELECTRONIC FILINGS
1. The authority citation for part 232
continues to read, in part, as follows:
■
Authority: 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a), 77sss(a), 78c(b), 78l, 78m, 78n, 78o(d),
78w(a), 78ll (d), 80a–8, 80a–29, 80a–30, 80a–
37, and 7201 et seq.; and 18 U.S.C. 1350.
*
C. Form ID
We adopt the rule amendments
outlined above under sections 6, 7, 8, 10
and 19(a) of the Securities Act [15
U.S.C. 77f, 77g, 77h, 77j, and 77s(a)],
sections 3, 12, 13, 14, 15(d), 23(a) and
35A of the Exchange Act [15 U.S.C. 78c,
78l, 78m, 78n, 78o(d), 78w(a), and 78ll],
and sections 8, 30, 31 and 38 of the
Investment Company Act [15 U.S.C.
80a–8, 80a–29, 80a–30, and 80a–37].
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15:01 Nov 03, 2008
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*
*
*
*
2. Section 232.101 is amended by:
a. Revising paragraphs (a)(1)(iv) and
(v), the introductory text of paragraph
(a)(2), paragraph (a)(2)(i), the first
sentence of paragraph (a)(3);
■ b. Removing ‘‘and Regulation E
(§§ 230.601–230.610a of this chapter)’’
from paragraph (c)(6); and
■ c. Removing and reserving paragraph
(c)(11).
The revisions read as follows:
■
■
§ 232.101 Mandated electronic
submissions and exceptions.
(a) * * *
(1) * * *
(iv) Documents filed with the
Commission pursuant to sections 8, 17,
20, 23(c), 24(b), 24(e), 24(f), and 30 of
the Investment Company Act (15 U.S.C.
80a–8, 80a–17, 80a–20, 80a–23(c), 80a–
24(b), 80a–24(e), 80a–24(f), and 80a–29)
and any application for an order under
any section of the Investment Company
Act (15 U.S. C. 80a–1 et seq.);
(v) Documents relating to offerings
exempt from registration under the
Securities Act filed with the
Commission pursuant to Regulation E
(§§ 230.601–230.610a of this chapter);
*
*
*
*
*
(2) The following amendments to
filings and applications, including any
related correspondence and
supplemental information except as
otherwise provided, shall be submitted
as follows:
(i) Any amendment to a filing or
application submitted by or relating to
a registrant or an applicant that is
required to file electronically, including
any amendment to a paper filing or
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Fmt 4700
Sfmt 4700
65525
application, shall be submitted in
electronic format;
*
*
*
*
*
(3) Supplemental information,
including documents related to
applications under any section of the
Investment Company Act, shall be
submitted in electronic format except as
provided in paragraph (c)(2) of this
section. * * *
*
*
*
*
*
■ 3. Amend § 232.201 by revising
paragraph (a) introductory text to read
as follows:
§ 232.201
Temporary hardship exemption.
(a) If an electronic filer experiences
unanticipated technical difficulties
preventing the timely preparation and
submission of an electronic filing other
than a Form 3 (§ 249.103 of this
chapter), a Form 4 (§ 249.104 of this
chapter), a Form 5 (§ 249.105 of this
chapter), a Form ID (§§ 239.63, 249.446,
269.7 and 274.402 of this chapter), a
Form TA–1 (§ 249.100 of this chapter),
a Form TA–2 (§ 249.102 of this chapter),
a Form TA–W (§ 249.101 of this
chapter), a Form D (§ 239.500 of this
chapter), or an application for an order
under any section of the Investment
Company Act (15 U.S.C. 80a–1 et seq.),
the electronic filer may file the subject
filing, under cover of Form TH
(§§ 239.65, 249.447, 269.10 and 274.404
of this chapter), in paper format no later
than one business day after the date on
which the filing was to be made.
*
*
*
*
*
PART 270—RULES AND
REGULATIONS, INVESTMENT
COMPANY ACT OF 1940
4. The authority citation for Part 270
continues to read in part as follows:
■
Authority: 15 U.S.C. 80a–1 et seq., 80a–
34(d), 80a–37, and 80a–39, unless otherwise
noted.
*
*
*
*
*
5. Amend § 270.0–2 by:
a. Removing the last sentence in
paragraph (b):
■ b. Revising paragraph (d);
■ c. Removing paragraph (g);
■ d. Redesignating paragraph (h) as
paragraph (g); and
■ e. Removing the authority citation
following the section.
The revision reads as follows:
■
■
§ 270.0–2 General requirements of papers
and applications.
*
*
*
*
*
(d) Verification of applications and
statements of fact. Every application for
an order under any provision of the Act,
for which a form with instructions is not
E:\FR\FM\04NOR1.SGM
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Federal Register / Vol. 73, No. 214 / Tuesday, November 4, 2008 / Rules and Regulations
specifically prescribed and every
amendment to such application, and
every statement of fact formally filed in
support of, or in opposition to, any
application or declaration shall be
verified by the person executing the
same. An instrument executed on behalf
of a corporation shall be verified in
substantially the following form, but
suitable changes may be made in such
form for other kinds of companies and
for individuals:
The undersigned states that he or she
has duly executed the attached ______
dated ______, 20 ___ for and on behalf
of (name of company); that he or she is
(title of officer) of such company; and
that all action by stockholders,
directors, and other bodies necessary to
authorize the undersigned to execute
and file such instrument has been taken.
The undersigned further states that he
or she is familiar with such instrument,
and the contents thereof, and that the
facts therein set forth are true to the best
of his or her knowledge, information
and belief.
llllllllllllllllll
l
(Signature)
*
*
*
*
*
Dated: October 29, 2008.
By the Commission.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–26183 Filed 11–3–08; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF ENERGY
information less burdensome and more
accessible.
DATES: Effective Date: This order will
become effective upon publication in
the Federal Register. The definitions
adopted in this order shall be used in
filing the Q1, 2009 EQR due on April
30, 2009 and in subsequent filings of the
EQR.
FOR FURTHER INFORMATION CONTACT:
Mark Blazejowski (Technical
Information), Office of Enforcement,
Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502–
6055.
Gary D. Cohen (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC
20426, (202) 502–8321.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T.
Kelliher, Chairman; Suedeen G. Kelly,
Marc Spitzer, Philip D. Moeller, and
Jon Wellinghoff.
1. In this order, after consideration of
the comments filed in response to our
notices seeking comment,1 we are
revising the Electric Quarterly Report
(EQR) Data Dictionary. Specifically, we
are revising the EQR Data Dictionary to
define and rename Field 22 of the EQR
to ‘‘Commencement Date of Contract
Terms,’’ as this field is intended to be
used to identify when the current terms
of the reported contract became
effective. This order also clarifies the
information to be reported in the EQR
concerning ancillary services.
Federal Energy Regulatory
Commission
I. Background
18 CFR Part 35
2. On April 25, 2002, the Commission
issued Order No. 2001, a final rule
establishing revised public utility filing
requirements. This rule requires public
utilities to file EQRs summarizing
specified pertinent data about their
currently effective contracts (contract
data) and data about wholesale power
sales they made during the reporting
period (transaction data).2 The
requirement to file EQRs replaced the
requirement to file quarterly transaction
reports summarizing a utility’s market-
A. EQRs and EQR Data Dictionary
[Docket Nos. RM01–8–009 and RM01–8–
010]
Revised Public Utility Filing
Requirements for Electric Quarterly
Reports
Issued October 28, 2008.
Federal Energy Regulatory
Commission, DOE.
ACTION: Order No. 2001–I; Order
Revising Electric Quarterly Report
(EQR) Data Dictionary.
AGENCY:
In this order, the Federal
Energy Regulatory Commission
(Commission) revises the EQR Data
Dictionary to define and rename Field
22 of the EQR to ‘‘Commencement Date
of Contract Terms’’ and to clarify the
information to be reported in the EQR
concerning ancillary services. These
revisions will make reporting this
dwashington3 on PRODPC61 with RULES
SUMMARY:
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15:01 Nov 03, 2008
Jkt 217001
1 Revised Public Utility Filing Requirements for
Electric Quarterly Reports, 73 FR 12983 (Mar. 11,
2008), FERC Stats. & Regs. ¶ 35,557 (2008) (EQR
Ancillary Services Notice); Revised Public Utility
Filing Requirements for Electric Quarterly Reports,
73 FR 30543 (May 28, 2008), FERC Stats. & Regs.
¶ 35,558 (2008) (Commencement Date Notice).
2 Revised Public Utility Filing Requirements,
Order No. 2001, 67 FR 31043, FERC Stats. & Regs.
¶ 31,127 (2002), reh’g denied, Order No. 2001–A,
100 FERC ¶ 61,074 (2002), reh’g denied, Order No.
2001–B, 100 FERC ¶ 61,342 (2002).
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Frm 00032
Fmt 4700
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based rate transactions and sales
agreements that conformed to the
utility’s tariff.
3. In Order No. 2001, the Commission
also adopted a new section in its
regulations, 18 CFR 35.10b, which
requires that the EQRs are to be
prepared in conformance with the
Commission’s software and guidance
posted and available from the
Commission’s Web site. This provision
obviates the need to revise the
Commission’s regulations to implement
revisions to the EQR software and
guidance. Since the issuance of Order
No. 2001, as need has arisen, the
Commission has issued orders to resolve
questions raised by EQR users and has
directed Staff to issue additional
guidance on how to report certain
transactions.3
4. On September 24, 2007, the
Commission issued Order No. 2001–G,
adopting an EQR Data Dictionary that
collected in one document the
definitions of certain terms and values
used in filing EQR data and providing
formal definitions for fields that were
previously undefined.
B. Commencement Date
5. On December 20, 2007, the
Commission issued Order No. 2001–H,
which addressed a pending request for
rehearing and clarified the information
to be reported in several EQR data
fields. In Order No. 2001–H, the
Commission defined Field 22 in the
Contract Data section of the EQR, named
‘‘Contract Commencement Date,’’ as:
The date the terms of the contract reported
in the EQR were effective. If the terms
reported in the Contract Data section of the
EQR became effective or if service under
those terms began on multiple dates (i.e., due
to an amendment), the date to be reported as
the Commencement Date is the date when
service began pursuant to the most recent
amendment to the terms reported in the
Contract Data section of the EQR.4
6. On February 26, 2008, the
Commission held a technical conference
to ‘‘review the EQR Data Dictionary and
address questions from EQR users.’’ 5
3 See, e.g., Notice Providing Guidance on the
Filing of Information on Transmission Capacity
Reassignments in Electric Quarterly Reports, 124
FERC ¶ 61,244 (2008), which provided guidance on
complying with the Commission’s Order No. 890–
B reporting requirements; Revised Public Utility
Filing Requirements, Order No. 2001–E, 105 FERC
¶ 61,352 (2003), where the Commission
standardized the terminology for control areas; and
Revised Public Utility Filing Requirements, 67 FR
65973 (Oct. 29, 2002), FERC Stats. & Regs. ¶ 35,045
(Oct. 21, 2002), which provided general guidance
for using the EQR software.
4 Revised Public Utility Filing Requirements for
Electric Quarterly Reports, Order No. 2001–H, 121
FERC ¶ 61,289 (2007), Data Dictionary at Field 22.
5 See Notice of Electric Quarterly Reports
Technical Conference, 73 FR 2477 (Jan. 15, 2008).
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]]>Agencies
[Federal Register Volume 73, Number 214 (Tuesday, November 4, 2008)]
[Rules and Regulations]
[Pages 65516-65526]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-26183]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 232 and 270
[Release Nos. 33-8981; 34-58874; IC-28476 File No. S7-25-07]
RIN 3235-AJ81
Mandatory Electronic Submission of Applications for Orders Under
the Investment Company Act and Filings Made Pursuant to Regulation E
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: We are adopting several amendments to rules regarding our
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
Specifically, we are amending our rules to make mandatory the
electronic submission on EDGAR of applications for orders under any
section of the Investment Company Act of 1940 (``Investment Company
Act'') as well as Regulation E filings of small business investment
companies and business development companies. We also are amending the
electronic filing rules to make the temporary hardship exemption
unavailable for submission of applications under the Investment Company
Act. Finally, we are amending Rule 0-2 under the Investment Company
Act, eliminating the requirement that certain documents accompanying an
application be notarized and the requirement that applicants submit a
draft notice as an exhibit to an application.
DATES: Effective Date: January 1, 2009.
FOR FURTHER INFORMATION CONTACT: If you have questions about the rules,
please contact one of the following members of our staff in the
Division of Investment Management, at the Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549-0506: in the Office
of Legal and Disclosure, Ruth Armfield Sanders, Senior Special Counsel
(EDGAR), at (202) 551-6989; in the Office of Investment Company
Regulation, Michael W. Mundt, Assistant Director, at (202) 551-6821;
or, in the Office of Insurance Products, Keith Carpenter, Senior
Special Counsel, at (202) 551-6766; for technical questions relating to
the EDGAR system, in the Office of Information Technology, Richard D.
Heroux, EDGAR Program Manager, at (202) 551-8168.
SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission
(``Commission'') is adopting amendments to Rules 101 and 201 of
Regulation S-T \1\ relating to electronic filing on the EDGAR system
and to Rule 0-2 \2\ under the Investment Company Act.\3\
---------------------------------------------------------------------------
\1\ 17 CFR 232.101 and 232.201.
\2\ 17 CFR 270.0-2.
\3\ We proposed these amendments in November 2007. See
Rulemaking for EDGAR System; Mandatory Electronic Submission of
Applications for Orders under the Investment Company Act and Filings
Made Pursuant to Regulation E, Release No. 33-8859 (Nov. 1, 2007)
[72 FR 63513 (Nov. 9, 2007)] (``Proposing Release'').
---------------------------------------------------------------------------
I. Background
In the last several years, we initiated a series of amendments to
keep EDGAR current technologically and to make it more useful to the
investing public and Commission staff.\4\ In April 2000, we adopted
rule and form amendments in connection with the modernization of
EDGAR.\5\ In the Modernization Proposing Release, we noted that, as the
use of electronic databases grows, it becomes increasingly important
for members of the public to have electronic access to our filings. We
also stated that we were contemplating future rulemaking to require
more of our filings to be filed on EDGAR. In May 2002, we adopted rules
requiring foreign private issuers and foreign governments to file most
of their documents electronically.\6\ In May 2003, we adopted rules
requiring electronic filing of beneficial ownership reports filed by
officers, directors and principal security holders under section 16(a)
\7\ of the Securities Exchange Act of 1934 (``Exchange Act'').\8\ In
July 2005, we adopted rules requiring certain open-end management
investment companies and insurance companies separate accounts to
identify in their EDGAR submissions information relating to their
series and classes (or contracts, in the case of separate accounts) and
mandating that fidelity bonds filed under section 17(g) \9\ and sales
literature filed with us under section 24(b) \10\ be
[[Page 65517]]
made by electronic submission on the EDGAR system.\11\ In December
2006, we adopted amendments to the rules and forms under section 17A of
the Exchange Act requiring that the forms filed with respect to
transfer agent registration, annual reporting, and withdrawal from
registration be filed with the Commission electronically on EDGAR.\12\
On February 6, 2008, we adopted amendments to make mandatory the
electronic submission of Form D on the EDGAR system.\13\
---------------------------------------------------------------------------
\4\ We recently announced the successor to the EDGAR Database.
The new system is called IDEA, short for Interactive Data Electronic
Applications, and will at first supplement and then eventually
replace the EDGAR system. See ``SEC Announces Successor to EDGAR
Database; ``IDEA'' Will Make Company and Fund Information
Interactive,'' Press Release No. 2008-179, Aug. 19, 2008.
\5\ See Rulemaking for EDGAR System, Release No. 33-7855 (Apr.
27, 2000) [65 FR 24788] (the ``Modernization Adopting Release'').
See also Release No. 33-7803 (Mar. 3, 2000) [65 FR 11507]
(``Modernization Proposing Release'').
\6\ See Mandated EDGAR Filing for Foreign Issuers, Release No.
33-8099 (May 14, 2002) [67 FR 36678].
\7\ 15 U.S.C. 78p(a).
\8\ See Mandated EDGAR Filing and Web Site Posting for Forms 3,
4 and 5, Release No. 33-8230 (May 7, 2003) [68 FR 25788] (the
``EDGAR Section 16 Release'').
\9\ 15 U.S.C. 80a-17(g).
\10\ 15 U.S.C. 80a-24(b).
\11\ See Rulemaking for EDGAR System, Release No. 33-8590 (July
18, 2005) [70 FR 43558 (July 27, 2005)].
\12\ See Electronic Filing of Transfer Agent Forms, Release No.
34-54864 (Dec. 4, 2006) [71 FR 74698 (Dec. 12, 2006)].
\13\ See Electronic Filing and Revisions of Form D, Release No.
33-8891 (Feb. 6, 2008) [73 FR 10592 (Feb. 27, 2008)].
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Today, we are amending our rules to require that applicants submit
electronically on the EDGAR system their applications for orders under
any section of the Investment Company Act (``applications''). In
addition, we are adding Regulation E filings to the list of those that
must be filed electronically through EDGAR. These amendments are
designed to facilitate the efficient submission of applications and
Regulation E filings, to enable the public to access them more quickly
and search them more easily, and to improve the Commission's ability to
track and process such applications and Regulation E filings. We are
also making related amendments to Regulation S-T, our electronic filing
rules, and revising Rule 0-2.
II. Mandatory Electronic Submission of Investment Company Applications
The rules under Regulation S-T previously provided that
applications for exemptive relief under any section of the Investment
Company Act shall not be made in electronic format.\14\ The only
applications under the Investment Company Act that were mandatory EDGAR
submissions were applications for deregistration filed by investment
companies.\15\ Applicants for orders under the Investment Company Act
can include registered investment companies, affiliated persons of
registered investment companies, and issuers seeking to avoid
investment company status, among other entities.\16\ These applications
were submitted in paper and available only from the Commission's public
reference room or electronically from private services. Private
services usually charge fees for electronic copies of applications;
also, there is a delay of about thirty days between the submission of
applications to the Commission and their electronic availability from
the private sources.
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\14\ Rule 101(a)(1)(iv) and (c)(11) of Regulation S-T [17 CFR
232.101(a)(1)(iv) and (c)(11)].
\15\ These include applications and amendments submitted on Form
N-8F [17 CFR 274.218] (EDGAR submission types N-8F and N-8F/A) and
those submitted pursuant to Investment Company Act Rule 0-2 [17 CFR
270.0-2] (EDGAR submission types 40-8F-2 and 40-8F-2/A). See Release
No. IC-23786 (Apr. 15, 1999) [76 19469 (Apr. 21, 1999)].
\16\ There are several sections of the Investment Company Act
pursuant to which entities may make applications for relief. For
example, Section 6(c) [15 U.S.C. 80a-6(c)] provides the Commission
with authority to exempt persons, securities or transactions from
any provision of the Investment Company Act, or the regulations
thereunder, if and to the extent that such exemption is in the
public interest and consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the
Investment Company Act.
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We are amending certain provisions of Regulation S-T and Investment
Company Act Rule 0-2 \17\ to require electronic submission on EDGAR of
applications pursuant to Rule 0-2 under the Investment Company Act. We
are amending Rule 101(a)(1)(iv) of Regulation S-T to include within its
mandatory electronic filing provisions any application for an order
under any section of the Investment Company Act.\18\
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\17\ Rule 0-2 is the Investment Company Act rule under which
applications are submitted.
\18\ See amendment to Rule 101(a)(1)(iv) under Regulation S-T.
Paragraph (11) of Rule 101(c) provided that filings under Section
6(c) of the Investment Company Act, i.e., applications for orders,
be submitted in paper format only. As proposed, we are removing and
reserving this paragraph.
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In the Proposing Release, we requested comment on the impact of our
making the submission of requests for orders under the Investment
Company Act mandatory electronic submissions and whether we should
implement this rule. We requested comment on whether it would be
burdensome for us to require applicants to submit applications
electronically. We also sought comments as to which applications the
rule should apply. We asked commenters to address the issue of what the
transition period should be for investment companies and other
applicants to prepare for the mandatory electronic submission of these
applications.
We requested comment not only on the specific issues that we
discussed in the Proposing Release, but on any other approaches or
issues that we should consider in connection with the submission of
applications for orders and Regulation E filings on the EDGAR system.
We sought comment from any interested person, including those required
to file information with us on the EDGAR system, as well as investors,
disseminators of EDGAR data, EDGAR filing agents, and other members of
the public who have access to and use information from the EDGAR
system.
We asked commenters to provide detailed information on any
difficulties and considerations unique to these proposed requirements.
In the event commenters believed that any aspect of the proposed
requirements would be burdensome, we asked for specific details and
alternative approaches.
We received two comment letters in response to our requests for
comment. Both commenters expressed support for the rulemaking proposal
to require that all applications be submitted electronically through
the EDGAR system.\19\ Both commenters expressed views about
applications that are sent to the staff in draft that have not been
officially filed. One commenter inquired about applications made under
both the Investment Company Act and the Investment Advisers Act of 1940
(``Investment Advisers Act'') \20\ and had certain concerns about
amendments to Rule 0-2.\21\ We received no comments in connection with
the portion of our proposal related to Regulation E filings.
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\19\ In support of the proposal, one commenter stated:
Like the Commission, the Institute believes that the proposal
will help to facilitate both the efficient submission of
applications and the retrieval of those applications by interested
parties. We also applaud this effort by the Commission to improve
its ability to track and process exemptive applications, which are
of vital importance to the fund industry and, ultimately, to fund
investors.
See Comment Letter dated Dec. 14, 2007, of Karrie McMillan,
General Counsel, Investment Company Institute (the ``ICI Comment
Letter''). See also Comment Letter dated Dec. 14, 2007, of Mercer
Bullard, Founder and President, Fund Democracy (the ``Fund Democracy
Comment Letter'').
\20\ 15 U.S.C. 80b-1 et seq.
\21\ See ICI Comment Letter.
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We are adopting these amendments, in light of the primary goals of
the EDGAR system, to facilitate the rapid dissemination of financial
and business information in connection with filings, including filings
by investment companies. Requiring applications to be submitted
electronically will benefit members of the investing public and the
financial community by making information contained in these filings
readily available and more easily searchable. In this age of
information, we believe that filings and applications made with the
Commission are more valuable to the public if they are available in
electronic form and that adding applications to the EDGAR database will
provide a more complete picture for the investing public. We believe
that the amendments will benefit the public by making the EDGAR
[[Page 65518]]
page of our Web site a more comprehensive resource for most information
on file with us related to the operation of investment companies.
Both of the commenters on the Proposing Release raised the issue of
applications submitted to the Commission's staff in draft form. One
commenter strongly believed that ``the Commission staff's willingness
to consider exemptive applications in draft form and to grant requests
for confidential treatment, when appropriate, is critical to
encouraging innovation in the fund industry.'' \22\ The other commenter
was concerned that the new filing requirement might result in an
increase of the use of draft applications to the detriment of the
public interest.\23\
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\22\ See ICI Comment Letter. In support of its position, the
commenter stated:
The development of new investment products and more efficient
and effective business practices can be a costly and time-consuming
endeavor for fund sponsors and other applicants. In return for their
investment of intellectual and financial capital, applicants should
be rewarded for their innovation and creativity by being the ``first
to market'' with their new product or practice.
\23\ Noting this concern, the commenter stated that:
Permitting applicants to file draft applications is contrary to
fundamental principles of administrative law and the public
interest. It also is unfair to other applicants for Commission staff
to spend time on draft applications while applications that have
been properly filed are left on hold. In its adopting release, the
Commission should clarify that the staff will not accept or review
draft applications, and that concerns regarding the confidentiality
of proprietary information should be addressed by appropriate
redactions in a filed request.
See Fund Democracy Comment Letter.
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The staff's policy, as first stated in a Commission release in
1985, is that the staff will not, except in the most extraordinary
situations, review draft applications.\24\ Consistent with this policy,
the staff will continue to accept draft applications only in situations
where the applicant clearly demonstrates the extraordinary
circumstances that necessitate the submission of a draft
application.\25\ We believe that this approach continues to strike an
appropriate balance between encouraging innovation in the fund
industry, making effective use of staff resources, and serving the
interests of the public. While it is possible that applicants will seek
permission to submit more applications as draft applications, as
discussed above the staff's policy of reviewing draft applications only
in the most extraordinary situations will not change, and as a result,
we do not believe that the number of draft applications will increase.
The new filing requirement will only change the format (from paper to
electronic) of documents that were and will be publicly available.
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\24\ See Commission Policy and Guidelines for Filing of
Applications for Exemption, Investment Company Act Release No. 14492
(Apr. 30, 1985).
\25\ See IM Exemptive Application Processing, SEC Office of the
Inspector General, Audit Report No. 408, Recommendation C (Sept. 29,
2006).
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As we noted in the Proposing Release, from time to time, an
applicant may wish to submit an application for exemption under both
the Investment Company Act and the Investment Advisers Act.\26\ We did
not propose to require that applications under the Investment Advisers
Act be made on EDGAR. We noted that any document that is intended as an
application for an order under both the Investment Company Act and the
Investment Advisers Act should be submitted separately under each Act.
---------------------------------------------------------------------------
\26\ See footnote 18 of the Proposing Release.
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One commenter expressed the view that we should consider
alternative approaches that would allow a single EDGAR filing for an
application requesting relief under both Acts.\27\ We note that, to
date, the EDGAR system has not been a vehicle for the submission of
Investment Advisers Act filings. Further, based on staff review of the
contents of all Advisers Act applications submitted to us, we are not
aware of any within the past ten years that also requested relief from
Investment Company Act provisions. Therefore, we believe it is not
cost-effective for us to make the programming changes at this time so
that EDGAR would accept applications under both Acts, given that
recently no applications requested relief from both statutes. EDGAR
will accept applications under the Investment Company Act as proposed.
---------------------------------------------------------------------------
\27\ See ICI Comment Letter.
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As with other entities that make submissions on EDGAR, applicants
will be subject to the provisions of Regulation S-T \28\ and the EDGAR
Filer Manual. Regulation S-T includes detailed rules concerning
mandatory and permissive electronic EDGAR submissions; it also makes
clear that requests for confidential treatment must be made in paper
format.\29\
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\28\ For a comprehensive discussion of Regulation S-T and
electronic filing, see ``Electronic Filing and the EDGAR System: A
Regulatory Overview,'' available on the Information for EDGAR Filers
page of the Commission's Web site, https://www.sec.gov/info/
edgar.shtml.
\29\ See Rule 101 of Regulation S-T [17 CFR 232.101].
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Regulation S-T requires the electronic filing of any amendments and
related correspondence and supplemental information pertaining to a
document that is the subject of mandated EDGAR submission.\30\ These
requirements also apply to companies and persons who submit
applications.\31\ The requirement to file amendments electronically
applies to applications filed electronically on EDGAR as well as to
pending applications initially filed in paper.\32\
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\30\ Regulation S-T Rule 101(a)(2) [17 CFR 232.101(a)(2)].
\31\ See amendments to paragraphs (a)(2) and (3) of Rule 101 of
Regulation S-T. Related correspondence and supplemental information
are not automatically disseminated publicly through the EDGAR system
but are immediately available to the Commission staff.
\32\ This provision dates back to 1993. See text at footnote 83
of Rulemaking for EDGAR System, Release No. 33-6977 (Feb. 23, 1993)
[58 FR 14628 (Mar. 18, 1993)] (``Once a filer becomes subject to the
mandated electronic filing rules, any documents, including
amendments and supplements to documents previously filed in paper,
will be required to be filed in electronic format, absent a hardship
exemption.'').
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The Regulation also covers such matters as providing for the
override of formatting requirements applicable to paper
submissions.\33\ The EDGAR Filer Manual contains detailed technical
specifications concerning EDGAR submissions. The Manual also provides
technical guidance concerning how to commence submissions on EDGAR by
submitting Form ID to obtain a CIK \34\ and confidential access codes
and how to maintain and update company data, e.g., how to change
company names and contact information.\35\
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\33\ The paper formatting requirements continue to be applicable
to paper submissions made pursuant to temporary and continuing
hardship exemptions under Rules 201 and 202 of Regulation S-T [17
CFR 232.201 and 232.202].
\34\ A filer's CIK (or ``central index key'') is a ten-digit
number uniquely identifying that filer.
\35\ We remind filers that, in the case of name changes, the
changes must be made via the EDGAR filing Web site in advance of the
change being reflected on an EDGAR submission. The name on past
submissions will not change. The CIK and file number(s) of the
company will provide a link to filings under the old name.
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One technical specification that the EDGAR Filer Manual includes is
the electronic ``submission type'' for each submission made on EDGAR.
The EDGAR electronic submission types for applications are designed to
facilitate and expedite the review of these applications.
Consistent with our amendments, the EDGAR Filer Manual and the
EDGARLink software provide for three EDGAR electronic submission types
for applications: 40-APP, 40-OIP, and 40-6B. Applicants whose
applications are typically processed by the Division of Investment
Management's Office of Investment Company Regulation will use EDGAR
submission type 40-APP; these applicants will submit amendments using
EDGAR submission
[[Page 65519]]
type 40-APP/A. Applicants whose applications are typically processed by
the Division's Office of Insurance Products will use the new EDGAR
submission type 40-OIP; these applicants will submit amendments using
EDGAR submission type 40-OIP/A. Employees' securities company
applications (also processed by the Office of Investment Company
Regulation) will use EDGAR submission type 40-6B and submission type
40-6B/A for amendments. Applicants that have currently pending
applications that were submitted in paper and recorded as submission
type 40-6C will submit amendments to their applications using either
EDGAR submission type 40-APP/A or 40-OIP/A, as appropriate.
The EDGAR Filer Manual provides guidance for applicants in choosing
the correct submission type. Most applicants will submit their
applications under EDGAR submission type 40-APP, the submission type
designated for the Office of Investment Company Regulation. Applicants
submitting the following categories of applications will use EDGAR
submission type 40-OIP, the submission type for the Office of Insurance
Products:
(1) Applications with regard to mixed and shared funding filed
under section 6(c) of the Investment Company Act, for exemptions from
the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the
Investment Company Act,\36\ and Rules 6e-2(b)(15) and 6e-3(T)(b)(15);
\37\
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\36\ 15 U.S.C. 80a-9(a), 80a-13(a), 80a-15(a), 80a-15(b).
\37\ 17 CFR 270.6e-2(b)(15), 270.6e-3(T)(b)(15).
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(2) Applications relating to the recapture of bonus credits filed
under section 6(c) of the Investment Company Act for exemptions from
the provisions of sections 2(a)(32) and 27(i)(2)(A) of the Investment
Company Act \38\ and Rule 22c-1; \39\
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\38\ 15 U.S.C. 80a-2(a)(32), 80a-27(i)(2)(A).
\39\ 17 CFR 270.22c-1.
---------------------------------------------------------------------------
(3) Applications relating to the substitution of securities held by
a variable insurance separate account filed under section 26(c) of the
Investment Company Act; \40\ and
---------------------------------------------------------------------------
\40\ 15 U.S.C. 80a-26(c).
---------------------------------------------------------------------------
(4) Applications for approval of the terms of an exchange offer
involving variable insurance contracts filed under section 11(a) of the
Investment Company Act.\41\
---------------------------------------------------------------------------
\41\ 15 U.S.C. 80a-11(a).
---------------------------------------------------------------------------
These three submission types are designed to facilitate and
expedite staff review of the submissions. Our internal system will
quickly route the application to the appropriate Office. If applicants
have any questions as to the appropriate EDGAR submission type, we
encourage them to verify in advance the correct submission type so that
the application can be routed automatically to the appropriate
Office.\42\ As proposed, for applications with multiple co-applicants,
the applicants will submit the application with all co-applicants
included in one submission. The applicants will choose one applicant to
list first as the ``primary'' co-applicant. Then, they will include in
the EDGAR template the information for all other co-applicants, i.e.,
the CIK of each co-applicant and, for amendments, the file number
assigned to each co-applicant when the original application was filed.
Applicants can be dropped from or added to an application with each
amendment submission.\43\
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\42\ In case of doubt, applicants may call the IM EDGAR Inquiry
Line (202-551-6989) in the Division of Investment Management for
assistance.
\43\ As is the case currently with paper applications, for each
application, an applicant will receive a unique file number which
will begin with the prefix ``812,'' or ``813'' in the case of
applications made by employees'' securities companies. As also is
currently the case with paper filings, each co-applicant's file
number will be composed of the primary applicant's file number with
an appended numerical suffix unique to that co-applicant. Each
applicant or co-applicant will include this file number, in addition
to its CIK, in the EDGAR template of all amendments to the
application, which will also be required electronic submissions.
---------------------------------------------------------------------------
Our internal EDGAR system has been enhanced to allow for the upload
and public dissemination via the EDGAR system of notices and orders in
connection with applications. These documents will, of course, still be
available in the Federal Register. The staff will commence the upload
and dissemination of notice and orders on the EDGAR system as of the
effective date of the amendments. The staff will upload and disseminate
any notice or order issued on or after the effective date, regardless
of whether the application, or any amendment to it, was submitted in
paper or on EDGAR.
We asked commenters to address the issue of what the transition
period should be for investment companies and other applicants to
prepare for the mandatory electronic submission of these applications.
We received no comments in response to this request other than the
comments regarding draft applications. We believe applicants are
prepared to submit their applications electronically on EDGAR as soon
as our amendments become effective.
III. Amendments to Rule 0-2 and to Temporary Hardship Exemption of
Regulation S-T
Rule 0-2 requires that every application for an order for which a
form is not specifically prescribed and which is executed by a
corporation, partnership or other company and filed with the Commission
contain a statement of the applicable provisions of the articles of
incorporation, bylaws or similar documents, relating to the right of
the person signing and filing such application to take such action on
behalf of the applicant, and a statement that all such requirements
have been complied with and that the person signing and filing the
application is fully authorized to do so. If such authorization is
dependent on resolutions of stockholders, directors, or other bodies,
such resolutions must be attached as an exhibit to or quoted in the
application. Any amendment to the application must contain a similar
statement as to the applicability of the original statement of
authorization. When any application or amendment is signed by an agent
or attorney, Rule 0-2 requires that the power of attorney evidencing
his authority to sign shall state the basis for the agent's authority
and shall be filed with the Commission. Every application subject to
Rule 0-2 must be verified by the person executing the application by
providing a notarized signature in substantially the form specified in
the rule. Each application subject to Rule 0-2 must state the reasons
why the applicant is deemed to be entitled to the action requested, the
name and address of each applicant, and the name and address of any
person to whom any questions regarding the application should be
directed. Rule 0-2 requires that a proposed notice of the proceeding
initiated by the filing of the application accompany each application
as an exhibit and, if necessary, be modified to reflect any amendment
to the application.
We proposed three amendments to Rule 0-2 governing the form of
applications under the Investment Company Act and requested comment on
these proposed amendments. The commenters supported the proposed
amendments to Rule 0-2, and we are adopting these amendments as
proposed. First, we are eliminating the requirement to have
verifications of applications and statements of facts made in
connection with applications notarized.\44\ We believe that this
requirement is unnecessary in the
[[Page 65520]]
context of an electronic filing.\45\ Second, we are eliminating the
requirement that applicants include draft notices as exhibits to
applications.\46\ The staff has found these exhibits to be of limited
value because the staff prefers to draft its own notices of
applications. Finally, we are amending Rule 0-2 to remove the last
sentence of paragraph (b),\47\ which was added in the initial EDGAR
rulemaking and is inconsistent with mandatory electronic submission of
applications on EDGAR.\48\
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\44\ See Rule 0-2(d).
\45\ Regulation S-T requires that each signatory to an
electronic filing manually sign a signature page or other document
authenticating, acknowledging or otherwise adopting his or her
signature that appears in typed form in the electronic filing. This
document must be executed before or at the time the electronic
filing is made, must be retained by the filer for a period of five
years, and must be made available to the Commission upon request.
See Rule 302(b) of Regulation S-T [17 CFR 232.302(b)]. We believe
that this requirement provides sufficient assurance of the
legitimacy of signatures contained in the electronic filings so that
notarization is unnecessary.
\46\ See Rule 0-2(g).
\47\ The last sentence of Rule 0-2(b) read as follows: ``Every
application for an order under any provision of the Act and every
amendment to such application shall be submitted to the Commission
in paper only, whether or not the applicant is otherwise required to
file in electronic format, unless instructions for electronic filing
are included on the form, if any, prescribed for such application.''
\48\ See Rulemaking for EDGAR System--Investment Companies and
Institutional Investment Managers, Release No. 33-6978 (Feb. 23,
1993) [58 FR 14848 (Mar. 18, 1993)].
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One commenter suggested that we further amend Rule 0-2 by
eliminating from paragraph (c)(1) the requirement that a copy of any
board resolution authorizing the actions of the person signing and
filing the application be included as an exhibit to the application
(or, alternatively, that the pertinent provisions of such resolution be
quoted in the application).\49\
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\49\ See ICI Comment Letter. The commenter also noted:
In our view, this requirement is unnecessary because the person
signing the application is required to attest to such resolutions in
the verification required by paragraph (d) of the rule. We further
note that board resolutions do not have to be submitted with other
types of filings with the Commission, such as fund registration
statements and proxy statements, nor are we aware of any history of
abuse that would suggest this requirement must be maintained.
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Because this suggestion goes beyond the scope of our proposal, we
are not adopting the recommendation at this time. We may consider this
recommendation in the future.
We proposed and are adopting an amendment to Rule 201 of Regulation
S-T. Rules 201 and 202 \50\ of Regulation S-T address hardship
exemptions from EDGAR filing requirements, and Rule 13(b) of Regulation
S-T \51\ addresses the related issue of filing date adjustments.
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\50\ 17 CFR 232.202.
\51\ 17 CFR 232.13(b).
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A filer may obtain a temporary hardship exemption under Rule 201 if
it experiences unanticipated technical difficulties that prevent the
timely preparation and submission of an electronic filing by filing a
properly legended paper copy \52\ of the filing under cover of Form
TH.\53\ This process is self-executing. A filer who files in paper
under the temporary hardship exemption must submit an electronic format
copy of the filed paper document within six business days of the filing
of the paper format document.\54\
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\52\ See 17 CFR 232.201(a).
\53\ 17 CFR 239.65, 249.447, 269.10, and 274.404.
\54\ See 17 CFR 232.201(b).
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A filer may apply for a continuing hardship exemption under Rule
202 if it cannot file all or part of a filing without undue burden or
expense.\55\ In contrast to the self-executing temporary hardship
exemption process, a filer can obtain a continuing hardship exemption
only by submitting a written application, upon which the Commission, or
Commission staff pursuant to delegated authority, may then act.
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\55\ See 17 CFR 232.202(a).
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We proposed making the temporary hardship exemption unavailable for
submission of applications under the Investment Company Act, since
there is generally no submission exigency or submission deadline
associated with these submissions. We asked for comments on this
proposed amendment. We received one comment questioning whether, if
this provision were adopted, the staff would work with applicants that
need additional time to file amendments, to prevent applications from
being placed in an inactive status.\56\ As has been the practice in the
past, the staff will continue to work with applicants experiencing
unanticipated technical or other difficulties to establish appropriate
timeframes for the submission of amendments and ensure the timely
processing of all applications.
---------------------------------------------------------------------------
\56\ See ICI Comment Letter. The staff typically places
applications in an inactive status if the applicant does not respond
to staff comments within sixty days of receiving the comments, such
as by filing an amendment.
---------------------------------------------------------------------------
We are amending Rule 201(a) of Regulation S-T as proposed to make
the temporary hardship exemption unavailable for submission of
applications under the Investment Company Act.\57\ We restate our
belief that there is generally no submission exigency or submission
deadline associated with these submissions. An applicant will continue
to have the ability to apply for a continuing hardship exemption under
Rule 202 if it cannot submit all or part of an application without
undue burden or expense. Also, while we expect the circumstances to be
rare, the staff could use its delegated authority to grant a filing
date adjustment pursuant to Rule 13(b) of Regulation S-T [17 CFR
232.13(b)]. While we do not expect an applicant to need a filing date
adjustment in the context of an application, it will be available in
the unlikely event it is needed. And, as stated above, the staff will
continue to work with applicants experiencing unanticipated
difficulties.
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\57\ See amendment to Rule 201(a) of Regulation S-T. As we noted
in the Proposing Release, we have previously made unavailable the
ability for filers to use the temporary hardship exemption for EDGAR
submissions of beneficial ownership reports filed by officers,
directors and principal security holders under Section 16(a) of the
Exchange Act [15 U.S.C. 78p(a)]. See Mandated EDGAR Filing and Web
Site Posting for Forms 3, 4 and 5, Release No. 33-8230 (May 7, 2003)
[68 FR 25788].
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IV. Amendments To Mandate That Certain Filings of Small Business
Investment Companies and Business Development Companies Be Made
Electronically
Regulation E \58\ provides for the exemption from registration of
securities issued by small business investment companies registered
under the Investment Company Act and business development companies
regulated under the Investment Company Act, subject to the terms and
conditions of the regulation. Rule 604 \59\ of Regulation E requires
the filing of notification on Form 1-E \60\ of sales of securities
under Regulation E. Rule 607 \61\ of Regulation E requires the filing
of sales material used in connection with the offering. Rule 609 \62\
of Regulation E requires the filing of reports of sales on Form 2-
E.\63\
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\58\ 17 CFR 230.601 to 230.610a.
\59\ 17 CFR 230.604.
\60\ 17 CFR 239.200.
\61\ 17 CFR 230.607.
\62\ 17 CFR 230.609.
\63\ 17 CFR 239.201.
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We proposed that Regulation E filings be mandatory electronic
filings on the EDGAR system. Regulation E filers make most of their
filings electronically on the EDGAR system. Since these filers are
already EDGAR filers and most will have available electronic copies of
their Form 1-E (and any related sales material) \64\ and Form 2-E, we
believe that making these filings electronically
[[Page 65521]]
on EDGAR will impose very little burden or cost on these companies. We
requested but received no comment on this proposal. We are adopting the
amendments as proposed, making these filings mandatory electronic
submissions.\65\
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\64\ Requiring electronic filing on EDGAR of Rule 607 sales
literature is consistent with the requirement to file electronically
on EDGAR omitting prospectuses under Rule 482 of the Securities Act
of 1933 (the ``Securities Act'') (referred to as ``482 ads'') and
sales literature under Section 24(b) of the Investment Company Act.
\65\ See amendments to paragraphs (a)(1)(v) and (c)(6) of Rule
101 of Regulation S-T.
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V. Effective Date
Beginning on January 1, 2009, applications for orders under the
Investment Company Act and Regulation E filings will become mandatory
electronic submissions on the EDGAR system. This effective date will
provide time for filers to prepare for the mandatory requirements.
Also, since the effective date will be the start of a calendar year,
the public will have a clear reference point for determining whether
any particular application or Regulation E filing has been submitted
either in paper or electronically.
VI. Cost-Benefit Analysis
We are sensitive to the costs and burdens of our rules. The rules
we are adopting today reflect the addition of applications under the
Investment Company Act as mandatory electronic submissions on EDGAR. In
addition, they amend Rule 0-2 and make unavailable to applicants
Regulation S-T's provision for temporary hardship exemptions. They also
add Regulation E filings to the list of those that must be filed
electronically through EDGAR.
A. Expected Benefits
We expect that the addition of applications under the Investment
Company Act as mandatory electronic submissions on EDGAR will result in
considerable benefits to the securities markets, investors, and other
members of the public, by expanding the accessibility of information,
and increasing the types of information, filed and made available for
public review through the EDGAR system. The primary goal of the EDGAR
system since its inception has been to facilitate the rapid
dissemination of financial and business information in connection with
filings, including filings by investment companies. The amendments will
benefit investors, financial analysts and others by increasing the
efficiency of retrieving and disseminating these applications. The
mandated electronic transmission of these documents will enable the
public to access them more quickly and search them more easily. Instead
of having to come in person or through an agent to the Commission's
public reference room to conduct a search for a particular submission
that is in paper or microfiche, the public will be able to find and
review the application on any computer with an Internet connection by
accessing the EDGAR system through the Commission's Web site or through
a third party Web site that links to EDGAR. We received one comment
stating the belief that it is unlikely that investors would choose to
access and review exemptive applications available via EDGAR.\66\ We
believe that these documents should be publicly available via EDGAR for
any investors who do choose to access and review them.
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\66\ See ICI Comment Letter at footnote 7.
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The amendments will benefit the public by making the EDGAR page of
our Web site a more comprehensive resource for most information on file
with us related to the operation of investment companies. A further
benefit will be to ensure that all applications are available to the
public free of charge on our Web site without the cost of paying a
third party for a copy.
Persons who may consider requesting a hearing on an application on
the basis of a notice will be able to more easily obtain the actual
application so that they can better evaluate the issues raised by the
application. We believe this will be a significant improvement in the
applications process.
We also expect that applicants will benefit from the increased
efficiencies in the filing process for these submissions resulting from
the amendments. By electronically transmitting these documents directly
to the Commission, applicants will avoid the uncertainties and delays
that can occur with the manual delivery of paper documents; we believe
that it will be a simpler and more efficient means to submit
applications. Applicants also will benefit from no longer having to
submit multiple copies of paper documents to the Commission.
Because the Commission's staff will be able to retrieve and analyze
information contained in these submissions more readily than under our
current paper system, mandated electronic submission of these documents
should facilitate the staff's retrieval and review of a particular
document. Applicants and investors should benefit from increased
efficiencies in the Commission's storage, retrieval, and analysis of
these submissions which should result from the amendments.
We believe the amendments to Rule 0-2 will benefit applicants.
Removing the notarization requirement will remove a requirement from
filers that is unnecessary for electronic filings, and removing the
requirement to include a draft notice as an exhibit will result in a
cost-savings to applicants. And, we believe that making unavailable to
applicants Regulation S-T's Rule 201 provision for temporary hardship
exemptions will benefit applicants because applicants will not bear the
cost of both submitting an application in paper and in electronic form
as a confirming copy within six business days as required by the
temporary hardship exemption rule. This is true in light of the fact
that there is no deadline for the submission of an application.
We also expect that the addition of Regulation E filings as
mandatory electronic submissions on EDGAR will result in benefits to
the securities markets, investors, and other members of the public, by
expanding the accessibility of information, and increasing the types of
information, filed and made available for public review through the
EDGAR system. Requiring these Regulation E filings to be submitted on
EDGAR will benefit members of the investing public and the financial
community by making information contained in these Commission filings
more easily searchable and readily available to them. The amendments
will result in the benefit to the public of the EDGAR page of our Web
site being a comprehensive source from which to find filings of small
business investment companies and business development companies.
We also expect that Regulation E filers will benefit from the
amendments by increased efficiencies in the filing process for these
submissions. By electronically transmitting these documents directly to
the Commission, these filers will avoid the uncertainties and delays
that can occur with the manual delivery of paper documents; we believe
that it will be a simpler and more efficient means to submit these
Regulation E filings. Regulation E filers also will benefit from no
longer having to submit multiple copies of paper documents to the
Commission.
The amendments will benefit investors, financial analysts and
others by increasing the efficiency of retrieving and disseminating
these filings. The mandated electronic transmission of these documents
will enable the public to access them more quickly. Instead of having
to come in person or through an agent to the Commission's public
reference room to conduct a search for a particular submission that is
in paper or microfiche, the public will be able to find and review the
filing on any computer with an Internet connection
[[Page 65522]]
by accessing the EDGAR system through the Commission's Web site or
through a third party Web site that links to EDGAR. The amendments will
also enable financial analysts and others to retrieve, analyze and
disseminate more rapidly this information.
An investor will be able to more efficiently gather information of
interest about Regulation E filers. Also, Regulation E filers and
investors should benefit from the amendments by increased efficiencies
in the Commission's storage, retrieval, and analysis of these
submissions. Mandated EDGAR submission of these documents will result
in their addition to the Commission's central electronic repository of
filings that is free to anyone who has access to a computer linked to
the Internet. Because the Commission's staff will be able to retrieve
and analyze information contained in these Regulation E submissions
more readily than under our current paper system, mandated electronic
submission of these documents should facilitate the staff's retrieval
and review of a particular document.
In the Paperwork Reduction Act section we estimate that, the
amendments to Rule 0-2 will reduce the total burden by approximately
$52,550 annually.
B. Expected Costs
We expect that the amendments will result in some initial and
ongoing costs to applicants. We also expect, however, that many
applicants will not bear the full range of costs that will result from
the amendments for the reasons described below. Initial costs are those
associated with filing a Form ID in order to obtain the access codes
needed to submit an application electronically and otherwise preparing
to make an application submission.\67\ In order to file a Form ID, an
applicant will need to learn the related electronic filing
requirements, obtain access to a computer and the Internet, use the
computer to access the Commission's EDGAR Filer Management Web site,
respond to Form ID's information requirements and fax to the Commission
a notarized authenticating document.
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\67\ Applicants that already have EDGAR access codes will not
need to file a Form ID. As further discussed in Part IX, however, we
assume that a small number of applicants per year will not already
have the codes.
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Ongoing costs are those associated with maintaining the framework
developed through the initial costs (for example, updating information
required by Form ID) and additional costs arising from each subsequent
submission of an application.
We expect that the vast majority of applicants will need to incur
few, if any, additional costs related to obtaining computer and
Internet access. We believe that the vast majority of applicants
already will have access to a computer and the Internet.\68\
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\68\ An applicant that did not already own a computer with
Internet access could, for example, go to a public library to use
its computer and obtain Internet access.
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We expect no additional costs to applicants from amendments to Rule
0-2. We requested but received no comment on whether our amendments to
Rule 0-2 to remove the current requirements for notarization and
provision of a draft notice as an exhibit will result in any additional
costs, although the two commenters supported these proposals. We expect
no additional costs to applicants from our amendment to make
unavailable to applicants Regulation S-T's Rule 201 provision for
temporary hardship exemption. An applicant will still be able to
request a continuing hardship exemption under Regulation S-T Rule 202
under appropriate circumstances.
We believe that mandatory EDGAR submission of Regulation E filings
will result in minimal cost to these filers. For the following reasons,
we also expect that Regulation E filers will not bear the full range of
costs frequently associated with new electronic filing requirements.
Initial costs are those associated with the purchase of compatible
computer equipment and software, including EDGAR software if obtained
from a third-party vendor and not from the Commission's Web site.
Initial costs also include those resulting from the training of
existing employees to be EDGAR proficient or the hiring of additional
employees or agents that are already skilled in EDGAR processing.
Initial costs further include those associated with the formatting and
transmission of an applicant's first document submitted on EDGAR. These
transmission costs may include those related to subscribing to an
Internet service provider. Regulation E filers already file on EDGAR
and will have minimal or no initial costs.
Ongoing costs are those associated with the electronic formatting
and transmission of subsequent EDGAR filings. Regulation E filers may
also incur future costs resulting from the training or hiring of
employees regarding updated EDGAR filing requirements. The magnitude of
these costs will depend on the filers' levels of technological
proficiency and their previous familiarity with EDGAR filing
requirements. Regulation E filers will incur the ongoing costs
associated with formatting and transmitting their subsequent EDGAR
filings. Consequently, the mandated EDGAR requirements should result
only in costs related primarily to the electronic formatting of these
documents in a format compatible with EDGAR, and transmission of the
EDGAR formatted documents to the Commission. In any event, we believe
that any costs for transmission, formatting, and education will be
comparable to savings from not having to incur similar costs related to
paper submissions.
VII. Burden on Competition; Promotion of Efficiency, Competition, and
Capital Formation
Section 23(a)(2) of the Exchange Act requires us, in adopting rules
under the Exchange Act, to consider the anti-competitive effects of any
rules that we adopt thereunder. Furthermore, section 2(b) of the
Securities Act,\69\ section 3(f) of the Exchange Act,\70\ and section
2(c) \71\ of the Investment Company Act require us, when engaging in
rulemaking, and considering or determining whether an action is
necessary or appropriate in the public interest, to consider whether
the action will promote efficiency, competition, and capital formation.
We requested comment on whether the amendments, if adopted, will burden
competition and whether they will promote efficiency, competition, and
capital formation. We encouraged commenters to provide empirical data
or other facts to support their views. We received no comments in
response.
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\69\ 15 U.S.C. 77b(b).
\70\ 15 U.S.C. 78c(f).
\71\ 15 U.S.C. 80a-2(c).
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The amendments regarding mandated electronic filing of applications
and the related amendments to Rule 0-2 and Regulation S-T's Rule 201
are intended to simplify the requirements for submitting applications
and facilitate more efficient transmission, analysis, storage and
retrieval of information. We believe this will improve the
accessibility and usefulness of information available to all applicants
and the public, including those wishing to request a hearing on an
application. It may make the investment products offered by applicants
more competitive, since all applicants will have ready access to the
applications of others. We believe the amendments will also improve the
accessibility of information available to the public and investors
about the operation of investment
[[Page 65523]]
companies. We believe the amendments will not impose a burden on
competition and will not have an adverse impact on capital formation.
The amendments regarding mandated electronic filings under
Regulation E by small business investment companies and business
development companies are intended to facilitate more efficient
transmission, analysis, storage and retrieval of information. We
believe this will improve the accessibility and usefulness of
information available for use by filers, investors, and the public. It
may make the investment products offered by filers more competitive,
since all filers will have immediate on-line access to Regulation E
filings of their competitors. We believe that the amendments will also
improve the accessibility of information available to the public about
the operation of small business investment companies and business
development companies and thereby improve investors' ability to make
informed investment decisions. We believe the amendments will not
impose a burden on competition and will not have an adverse impact on
capital formation.
VIII. Final Regulatory Flexibility Act Analysis
This Final Regulatory Flexibility Act Analysis has been prepared in
accordance with 5 U.S.C. 603. It relates to our amendments adding
applications for orders under the Investment Company Act to the list of
submissions that must be made electronically, amendments to amend Rule
0-2 and make unavailable to applicants the provision for temporary
hardship exemptions in Rule 201 of Regulation S-T, and amendments
adding Regulation E filings to the list of those that must be filed
electronically through EDGAR.
A. Need for the Rule Amendments
The amendments will require applications for orders under any
section of the Investment Company Act to be submitted electronically on
EDGAR. The amendments to Rule 0-2 remove the requirements for
notarization and provision of a draft notice, and the amendments to
Rule 201 of Regulation S-T make applications ineligible for temporary
hardship exemptions. We make these amendments because the absence of an
electronic system for submitting applications for orders in the past
limited the usefulness of the information collected and to reduce the
burdens of submitting applications.
The amendments add Regulation E filings made by small business
investment companies and business development companies to the list of
those that must be filed electronically through EDGAR. We also make
these amendments because the absence of an electronic system for
submitting Regulation E filings in the past limited the usefulness of
the information collected.
B. Significant Issues Raised by Public Comment
In the Initial Regulatory Flexibility Act Analysis (``IRFA'') for
the proposed amendments, we encouraged the submission of written
comments with respect to any aspect of the IRFA. We requested
specifically comment on the number of small entities that will be
affected by the amendments and the likely impact on small entities. We
asked commenters to describe the nature of any impact and provide
empirical data supporting the extent of the impact. We received no
comments with respect to this section of the proposal.
C. Small Entities Subject to the Rule
For purposes of the Regulatory Flexibility Act, an investment
company is a small entity if it, together with other investment
companies in the same group of related investment companies, has net
assets of $50 million or less as of the end of its most recent fiscal
year.\72\ Approximately 159 registered investment companies meet this
definition.\73\ Approximately 38 business development companies may be
considered small entities.\74\ We estimate that few, if any, separate
accounts registered on Form N-3, N-4, or N-6 are small entities.\75\
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\72\ Rule 0-10(a) under the Investment Company Act [17 CFR
240.0-10(a)].
\73\ The estimated number of reporting investment companies that
may be considered small entities is based on December 2007 data from
the Commission's EDGAR database and a third-party data provider.
\74\ This estimate is based on analysis by the Division of
Investment Management staff of information from databases compiled
by third-party information providers.
\75\ This estimate is based on figures compiled by the Division
of Investment Management staff regarding separate accounts
registered on Forms N-3, N-4, and N-6. In determining whether an
insurance company separate account is a small entity for purposes of
the Regulatory Flexibility Act, the assets of insurance company
separate accounts are aggregated with the assets of their sponsoring
insurance companies. Rule 0-10(b) under the Investment Company Act
[17 CFR 270.0-10(b)].
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D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
The amendments require applicants to submit requests for orders and
small business investment companies and business development companies
to submit Regulation E filings electronically on the EDGAR system. The
Commission estimates some one-time formatting and ongoing burdens that
will be imposed on all applicants and Regulation E filers, including
those that are small entities. We note, however, that all Regulations E
filers and most applicants currently make other filings on EDGAR.
Furthermore, we believe that non-investment company applicants will
have no greater burden than that of those filers of Section 16 reports
or Schedules 13D and 13G \76\ who will not otherwise make EDGAR filings
and that the electronic submission should create only a de minimis
burden.
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\76\ 17 CFR 240.13d-101 and 240.13d-102.
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There will be no change in reporting or recordkeeping requirements.
The amendments to Rule 0-2 reduce compliance requirements to the extent
that they will remove the requirements for notarization of the
application and provision of a draft notice with the application.
We solicited comment on the effect the amendments would have on
small entities. We received no comments in response.
E. Agency Action To Minimize Effect on Small Entities
The Regulatory Flexibility Act directs us to consider significant
alternatives that will accomplish our stated objectives, while
minimizing any significant adverse impact on small entities. In
connection with the amendments, the Commission considered the following
alternatives: (i) The establishment of differing compliance or
reporting requirements or timetables that take into account the
resources available to small entities; (ii) the clarification,
consolidation, or simplification of compliance and reporting
requirements under the amendments for small entities; (iii) the use of
performance rather than design standards; and (iv) an exemption from
coverage of the amendments, or any part thereof, for small entities.
The Commission believes at the present time that special compliance
or reporting requirements for small entities, or an exemption from
coverage for small entities, is not appropriate or consistent with
investor protection. Different requirements for applicants or
Regulation E filers that are small entities could make it more
difficult for the public to locate Commission filings and disclosure
documents for these applicants. We believe it is important that the
benefits resulting from the amendments be
