Submission for OMB Review; Comment Request, 27204-27206 [E9-13256]
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27204
Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Rule 17g–1 (17 CFR 270.17g–1) under
the Investment Company Act of 1940
(the ‘‘Act’’) (15 U.S.C. 80a–17(g))
governs the fidelity bonding of officers
and employees of registered
management investment companies
(‘‘funds’’) and their advisers. Rule 17g–
1 requires, in part, the following:
Independent Directors’ Approval
The form and amount of the fidelity
bond must be approved by a majority of
the fund’s independent directors at least
once annually, and the amount of any
premium paid by the fund for any ‘‘joint
insured bond,’’ covering multiple funds
or certain affiliates, must be approved
by a majority of the fund’s independent
directors.
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Terms and Provisions of the Bond
The amount of the bond may not be
less than the minimum amounts of
coverage set forth in a schedule based
on the fund’s gross assets; the bond
must provide that it shall not be
cancelled, terminated, or modified
except upon 60-day written notice to the
affected party and to the Commission; in
the case of a joint insured bond, 60-day
written notice must also be given to
each fund covered by the bond; a joint
insured bond must provide that the
fidelity insurance company will provide
all funds covered by the bond with a
copy of the agreement, a copy of any
claim on the bond, and notification of
the terms of the settlement of any claim
prior to execution of that settlement;
and a fund that is insured by a joint
bond must enter into an agreement with
all other parties insured by the joint
bond regarding recovery under the
bond.
Filings With the Commission
Upon the execution of a fidelity bond
or any amendment thereto, a fund must
file with the Commission within 10
days a copy of the executed bond or any
amendment to the bond, the
independent directors’ resolution
approving the bond, and a statement as
to the period for which premiums have
been paid on the bond. In the case of a
joint insured bond, a fund must also file
(i) a statement showing the amount the
fund would have been required to
maintain under the rule if it were
insured under a single insured bond and
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(ii) the agreement between the fund and
all other insured parties regarding
recovery under the bond. A fund must
also notify the Commission in writing
within five days of any claim or
settlement on a claim under the fidelity
bond.
Notices to Directors
A fund must notify by registered mail
each member of its board of directors of
(i) any cancellation, termination, or
modification of the fidelity bond at least
45 days prior to the effective date, and
(ii) the filing or settlement of any claim
under the fidelity bond when
notification is filed with the
Commission.
Rule 17g–1’s independent directors’
annual review requirements, fidelity
bond content requirements, joint bond
agreement requirement and the required
notices to directors are designed to
ensure the safety of fund assets against
losses due to the conduct of persons
who may obtain access to those assets.
These requirements also facilitate
oversight of a fund’s fidelity bond. The
rule’s required filings with the
Commission are designed to assist the
Commission in monitoring funds’
compliance with the fidelity bond
requirements.
Based on conversations with
representatives in the fund industry, the
Commission staff estimates that for each
of the estimated 3,885 active funds,1 the
average annual paperwork burden
associated with rule 17g–1’s
requirements is two hours, one hour
each for a compliance attorney and the
board of directors as a whole. The time
spent by a compliance attorney includes
time spent filing reports with the
Commission for any fidelity losses (if
any) as well as paperwork associated
with any notices to directors, and
managing any updates to the bond and
the joint agreement (if one exists). The
time spent by the board of directors as
a whole includes any time spent
initially establishing the bond, as well
as time spent on annual updates and
approvals. The Commission staff
therefore estimates the total ongoing
paperwork burden hours per year for all
funds required by rule 17g–1 to be 7,770
hours (3,885 funds × 2 hours = 7,770
hours).
These estimates of average burden
hours are made solely for the purposes
of the Paperwork Reduction Act. These
estimates are not derived from a
comprehensive or even a representative
1 Based on statistics compiled by Commission
staff, we estimate that there are approximately 3,885
funds that must comply with the collections of
information under rule 17g–1.
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survey or study of Commission rules.
The collection of information required
by Rule 17g–1 is mandatory and will not
be kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid control number.
Please direct general comments
regarding the above information to the
following persons: (i) Desk Officer for
the Securities and Exchange
Commission, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503
or send an e-mail to Shagufta Ahmed at
Shagufta_Ahmed@omb.eop.gov; and (ii)
Charles Boucher, Director/CIO,
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
send an e-mail to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: June 1, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–13257 Filed 6–5–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 12d1–1; SEC File No. 270–526; OMB
Control No. 3235–0584.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Under current law, an investment
company (‘‘fund’’) is limited in the
amount of securities the fund
(‘‘acquiring fund’’) can acquire from
another fund (‘‘acquired fund’’). In
general under the Investment Company
Act of 1940 (15 U.S.C. 80a) (the
‘‘Investment Company Act’’ or ‘‘Act’’), a
registered fund (and companies it
controls) cannot: (i) Acquire more than
three percent of another fund’s
securities; (ii) invest more than five
percent of its own assets in another
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Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices
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fund; or (iii) invest more than ten
percent of its own assets in other funds
in the aggregate.1 In addition, a
registered open-end fund, its principal
underwriter, and any registered broker
or dealer cannot sell that fund’s shares
to another fund if, as a result: (i) The
acquiring fund (and any companies it
controls) owns more than three percent
of the acquired fund’s stock; or (ii) all
acquiring funds (and companies they
control) in the aggregate own more than
ten percent of the acquired fund’s
stock.2 Rule 12d1–1 under the Act (17
CFR 270.12d1–1) provides an
exemption from these limitations for
‘‘cash sweep’’ arrangements, in which a
fund invests all or a portion of its
available cash in a money market fund
rather than directly in short-term
instruments. An acquiring fund relying
on the exemption may not pay a sales
load, distribution fee, or service fee on
acquired fund shares, or if it does, the
acquiring fund’s investment adviser
must waive a sufficient amount of its
advisory fee to offset the cost of the
loads or distribution fees.3 The acquired
fund may be a fund in the same fund
complex or in a different fund complex.
In addition to providing an exemption
from section 12(d)(1) of the Act, the rule
provides exemptions from section 17(a)
and rule 17d–1, which restrict a fund’s
ability to enter into transactions and
joint arrangements with affiliated
persons.4 These provisions could
otherwise prohibit an acquiring fund
from investing in a money market fund
in the same fund complex,5 or prohibit
a fund that acquires five percent or more
of the securities of a money market fund
1 See 15 U.S.C. 80a–12(d)(1)(A). If an acquiring
fund is not registered, these limitations apply only
with respect to the acquiring fund’s acquisition of
registered funds.
2 See 15 U.S.C. 80a–12(d)(1)(B).
3 See Rule 12d1–1(b)(1).
4 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d); 17
CFR 270.17d–1.
5 An affiliated person of a fund includes any
person directly or indirectly controlling, controlled
by, or under common control with such other
person. See 15 U.S.C. 80a–2(a)(3)(C) (definition of
‘‘affiliated person’’). Most funds today are organized
by an investment adviser that advises or provides
administrative services to other funds in the same
complex. Funds in a fund complex are generally
under common control of an investment adviser or
other person exercising a controlling influence over
the management or policies of the funds. See 15
U.S.C. 80a–2(a)(9). Not all advisers control funds
they advise. The determination of whether a fund
is under the control of its adviser, officers, or
directors depends on all the relevant facts and
circumstances. See Investment Company Mergers,
Investment Company Act Release No. 25259 (Nov.
8, 2001) [66 FR 57602 (Nov. 15, 2001)], at n.11. To
the extent that an acquiring fund in a fund complex
is under common control with a money market
fund in the same complex, the funds would rely on
the rule’s exemptions from section 17(a) and rule
17d–1.
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in another fund complex from making
any additional investments in the
money market fund.6
The rule also permits a registered
fund to rely on the exemption to invest
in an unregistered money market fund
that limits its investments to those in
which a registered money market fund
may invest under rule 2a–7 under the
Act (17 CFR 270.2a–7), and undertakes
to comply with all the other provisions
of rule 2a–7. In addition the acquiring
fund must reasonably believe that the
unregistered money market fund (i)
operates in compliance with rule 2a–7,
(ii) complies with sections 17(a), (d), (e),
18, and 22(e) of the Act 7 as if it were
a registered open-end fund, (iii) has
adopted procedures designed to ensure
that it complies with these statutory
provisions, (iv) maintains the records
required by rules 31a–1(b)(2)(ii), 31a–
1(b)(2)(iv), and 31a–1(b)(9); 8 and (v)
preserves permanently, the first two
years in an easily accessible place, all
books and records required to be made
under these rules.
Rule 2a–7 contains certain collection
of information requirements. An
unregistered money market fund that
complies with rule 2a–7 would be
subject to these collection of
information requirements. In addition,
the recordkeeping requirements under
rule 31a–1 with which the acquiring
fund reasonably believes the
unregistered money market fund
complies are collections of information
for the unregistered money market fund.
By allowing funds to invest in registered
and unregistered money market funds,
rule 12d1–1 is intended to provide
funds greater options for cash
management. In order for a registered
fund to rely on the exemption to invest
in an unregistered money market fund,
the unregistered money market fund
must comply with certain collection of
information requirements for registered
money market funds. These
requirements are intended to ensure that
the unregistered money market fund has
established procedures for collecting the
information necessary to make adequate
credit reviews of securities in its
portfolio, as well as other recordkeeping
requirements that will assist the
acquiring fund in overseeing the
unregistered money market fund (and
Commission staff in its examination of
the unregistered money market fund’s
adviser).
6 See
15 U.S.C. 80a–2(a)(3)(A), (B).
15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d), 15
U.S.C. 80a–17(e), 15 U.S.C. 80a–18, 15 U.S.C. 80a–
22(e).
8 See 17 CFR 270.31a–1(b)(2)(ii), 17 CFR 270.31a–
1(b)(2)(iv), 17 CFR 270.31a–1(b)(9).
7 See
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27205
Commission staff estimates that
registered funds currently invest in 60
unregistered money market funds in
excess of the statutory limits under rule
12d1–1, and will invest in
approximately 6 new unregistered
money market funds each year.9 Staff
estimates that each of these unregistered
money market funds spends 1,220 hours
to perform the record of credit risk
analysis and other determinations
annually, and each of the 6 unregistered
money market funds in which an
acquiring fund invests in for the first
time under the rule will spend 21 hours
to implement the board procedures.
Finally, Commission staff estimates that
15 unregistered money market funds
each spend 4.5 hours to review and
amend procedures annually. The
estimated total of annual responses
under rule 12d1–1 is 10,713,10 and the
estimate of burden hours associated
with these responses is 80,714 hours.11
Commission staff estimates that
unregistered money market funds also
incur costs to preserve records, as
required under rule 2a–7. These costs
will vary significantly for individual
funds, depending on the amount of
assets under fund management and
whether the fund preserves its records
in a storage facility in hard copy or has
developed and maintains a computer
system to create and preserve
compliance records. In its rule 2a–7
Paperwork Reduction Act (‘‘PRA’’)
submission, Commission staff estimated
that the amount an individual money
market fund may spend ranged from
$100 per year to $300,000. We have no
reason to believe the range is different
for unregistered money market funds.
The Commission does not have specific
information on the amount of assets
managed by unregistered money market
funds. Accordingly, Commission staff
estimates that an unregistered money
market fund in which registered funds
invest in reliance on rule 12d1–1 have,
on average, $380 million in assets under
9 This estimate is based on the number of
applications filed with the Commission in 2005
(40), increased by investment in 6 new funds each
year since 2005 (18), and rounded to the nearest
tenth (60). This estimate may be understated
because applicants generally do not identify the
name or number of unregistered money market
funds in which registered funds intend to invest,
and each application also applies to unregistered
money market funds to be organized in the future.
10 This estimate is based on the following
calculation: (60 × 162) + (6 × 162) + (6 × 1) + (15
× 1) = 10,713.
11 This estimate is based on the following
calculation: (60 × 1,220) + (6 × 1,220) + (6 × 21)
+ (15 × 4.5) = 80,714.
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27206
Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices
management.12 Based on a cost of
$0.0000005 per dollar of assets under
management for medium-sized funds,
the staff estimates compliance with rule
2–7 costs these types of unregistered
money market funds $11,400
annually.13 Commission staff estimates
that unregistered money market funds
do not incur any capital costs to create
computer programs for maintaining and
preserving compliance records for rule
2a–7.14
The collections of information
required for unregistered money market
funds by rule 12d1–1 are necessary in
order for acquiring funds to be able to
obtain the benefits described above.
Notices to the Commission will not be
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid control number.
Please direct general comments
regarding the above information to the
following persons: (i) Desk Officer for
the Securities and Exchange
Commission, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503
or send an e-mail to Shagufta Ahmed at
Shagufta_Ahmed@omb.eop.gov; and (ii)
Charles Boucher, Director/CIO,
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
send an e-mail to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
June 1, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–13256 Filed 6–5–09; 8:45 am]
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BILLING CODE 8010–01–P
12 This estimate is based on the average of assets
under management of medium-sized registered
money market funds ($50 million to $999 million).
13 This estimate was based on the following
calculation: 60 unregistered money market funds x
$380 million in assets under management ×
$0.0000005 = $11,400. The estimate of cost per
dollar of assets is the same as that used for mediumsized funds in the rule 2a–7 PRA submission.
14 This estimate is based on information
Commission staff obtained in its survey for the rule
2a–7 PRA submission. Of the funds surveyed, no
medium-sized funds incurred this type of capital
cost. The funds either maintained record systems
using a program the fund would be likely to have
in the ordinary course of business (such as Excel)
or the records were maintained by the fund’s
custodian.
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SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 6c–7; SEC File No. 270–269; OMB
Control No. 3235–0276.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Rule 6c–7 (17 CFR 270.6c–7) under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.) (‘‘1940 Act’’)
provides exemption from certain
provisions of Sections 22(e) and 27 of
the 1940 Act for registered separate
accounts offering variable annuity
contracts to certain employees of Texas
institutions of higher education
participating in the Texas Optional
Retirement Program. There are
approximately 100 registrants governed
by Rule 6c–7. The burden of compliance
with Rule 6c–7, in connection with the
registrants obtaining from a purchaser,
prior to or at the time of purchase, a
signed document acknowledging the
restrictions on redeemability imposed
by Texas law, is estimated to be
approximately 3 minutes per response
for each of approximately 3000
purchasers annually (at an estimated
$63 per hour),1 for a total annual burden
of 150 hours (at a total annual cost of
$9,450).
Rule 6c–7 requires that the separate
account’s registration statement under
the Securities Act of 1933 (15 U.S.C. 77a
et seq.) include a representation that
Rule 6c–7 is being relied upon and is
being complied with. This requirement
enhances the Commission’s ability to
monitor utilization of and compliance
with the rule. There are no
recordkeeping requirements with
respect to Rule 6c–7.
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act, and is not
derived from a comprehensive or even
1 $63/hour figure for a Compliance Clerk is from
SIFMA’s Office Salaries in the Securities Industry
2008, modified by Commission staff to account for
an 1800-hour work-year and multiplied by 2.93 to
account for bonuses, firm size, employee benefits
and overhead.
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a representative survey or study of the
costs of Commission rules or forms. The
Commission does not include in the
estimate of average burden hours the
time preparing registration statements
and sales literature disclosure regarding
the restrictions on redeemability
imposed by Texas law. The estimate of
burden hours for completing the
relevant registration statements are
reported on the separate PRA
submissions for those statements. (See
the separate PRA submissions for Form
N–3 (17 CFR 274.11b) and Form N–4 (17
CFR 274.11c.)
Complying with the collection of
information requirements of the rules is
necessary to obtain a benefit. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid control
number.
Please direct general comments
regarding the above information to the
following persons: (i) Desk Officer for
the Securities and Exchange
Commission, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503
or send an email to Shagufta Ahmed at
Shagufta_Ahmed@omb.eop.gov; and (ii)
Charles Boucher, Director/CIO,
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
send an e-mail to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: June 1, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–13255 Filed 6–5–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Extension of Existing
Request; Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Regulation S–P, OMB Control No. 3235–
0537, SEC File No. 270–480.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in the following rule:
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]]>Agencies
[Federal Register Volume 74, Number 108 (Monday, June 8, 2009)]
[Notices]
[Pages 27204-27206]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-13256]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 12d1-1; SEC File No. 270-526; OMB Control No. 3235-0584.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (the ``Commission'') has submitted to the Office of
Management and Budget a request for extension of the previously
approved collection of information discussed below.
Under current law, an investment company (``fund'') is limited in
the amount of securities the fund (``acquiring fund'') can acquire from
another fund (``acquired fund''). In general under the Investment
Company Act of 1940 (15 U.S.C. 80a) (the ``Investment Company Act'' or
``Act''), a registered fund (and companies it controls) cannot: (i)
Acquire more than three percent of another fund's securities; (ii)
invest more than five percent of its own assets in another
[[Page 27205]]
fund; or (iii) invest more than ten percent of its own assets in other
funds in the aggregate.\1\ In addition, a registered open-end fund, its
principal underwriter, and any registered broker or dealer cannot sell
that fund's shares to another fund if, as a result: (i) The acquiring
fund (and any companies it controls) owns more than three percent of
the acquired fund's stock; or (ii) all acquiring funds (and companies
they control) in the aggregate own more than ten percent of the
acquired fund's stock.\2\ Rule 12d1-1 under the Act (17 CFR 270.12d1-1)
provides an exemption from these limitations for ``cash sweep''
arrangements, in which a fund invests all or a portion of its available
cash in a money market fund rather than directly in short-term
instruments. An acquiring fund relying on the exemption may not pay a
sales load, distribution fee, or service fee on acquired fund shares,
or if it does, the acquiring fund's investment adviser must waive a
sufficient amount of its advisory fee to offset the cost of the loads
or distribution fees.\3\ The acquired fund may be a fund in the same
fund complex or in a different fund complex. In addition to providing
an exemption from section 12(d)(1) of the Act, the rule provides
exemptions from section 17(a) and rule 17d-1, which restrict a fund's
ability to enter into transactions and joint arrangements with
affiliated persons.\4\\\ These provisions could otherwise prohibit an
acquiring fund from investing in a money market fund in the same fund
complex,\5\ or prohibit a fund that acquires five percent or more of
the securities of a money market fund in another fund complex from
making any additional investments in the money market fund.\6\
---------------------------------------------------------------------------
\1\ See 15 U.S.C. 80a-12(d)(1)(A). If an acquiring fund is not
registered, these limitations apply only with respect to the
acquiring fund's acquisition of registered funds.
\2\ See 15 U.S.C. 80a-12(d)(1)(B).
\3\ See Rule 12d1-1(b)(1).
\4\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d); 17 CFR
270.17d-1.
\5\ An affiliated person of a fund includes any person directly
or indirectly controlling, controlled by, or under common control
with such other person. See 15 U.S.C. 80a-2(a)(3)(C) (definition of
``affiliated person''). Most funds today are organized by an
investment adviser that advises or provides administrative services
to other funds in the same complex. Funds in a fund complex are
generally under common control of an investment adviser or other
person exercising a controlling influence over the management or
policies of the funds. See 15 U.S.C. 80a-2(a)(9). Not all advisers
control funds they advise. The determination of whether a fund is
under the control of its adviser, officers, or directors depends on
all the relevant facts and circumstances. See Investment Company
Mergers, Investment Company Act Release No. 25259 (Nov. 8, 2001) [66
FR 57602 (Nov. 15, 2001)], at n.11. To the extent that an acquiring
fund in a fund complex is under common control with a money market
fund in the same complex, the funds would rely on the rule's
exemptions from section 17(a) and rule 17d-1.
\6\ See 15 U.S.C. 80a-2(a)(3)(A), (B).
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The rule also permits a registered fund to rely on the exemption to
invest in an unregistered money market fund that limits its investments
to those in which a registered money market fund may invest under rule
2a-7 under the Act (17 CFR 270.2a-7), and undertakes to comply with all
the other provisions of rule 2a-7. In addition the acquiring fund must
reasonably believe that the unregistered money market fund (i) operates
in compliance with rule 2a-7, (ii) complies with sections 17(a), (d),
(e), 18, and 22(e) of the Act \7\ as if it were a registered open-end
fund, (iii) has adopted procedures designed to ensure that it complies
with these statutory provisions, (iv) maintains the records required by
rules 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9); \8\ and (v)
preserves permanently, the first two years in an easily accessible
place, all books and records required to be made under these rules.
---------------------------------------------------------------------------
\7\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d), 15 U.S.C. 80a-
17(e), 15 U.S.C. 80a-18, 15 U.S.C. 80a-22(e).
\8\ See 17 CFR 270.31a-1(b)(2)(ii), 17 CFR 270.31a-1(b)(2)(iv),
17 CFR 270.31a-1(b)(9).
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Rule 2a-7 contains certain collection of information requirements.
An unregistered money market fund that complies with rule 2a-7 would be
subject to these collection of information requirements. In addition,
the recordkeeping requirements under rule 31a-1 with which the
acquiring fund reasonably believes the unregistered money market fund
complies are collections of information for the unregistered money
market fund. By allowing funds to invest in registered and unregistered
money market funds, rule 12d1-1 is intended to provide funds greater
options for cash management. In order for a registered fund to rely on
the exemption to invest in an unregistered money market fund, the
unregistered money market fund must comply with certain collection of
information requirements for registered money market funds. These
requirements are intended to ensure that the unregistered money market
fund has established procedures for collecting the information
necessary to make adequate credit reviews of securities in its
portfolio, as well as other recordkeeping requirements that will assist
the acquiring fund in overseeing the unregistered money market fund
(and Commission staff in its examination of the unregistered money
market fund's adviser).
Commission staff estimates that registered funds currently invest
in 60 unregistered money market funds in excess of the statutory limits
under rule 12d1-1, and will invest in approximately 6 new unregistered
money market funds each year.\9\ Staff estimates that each of these
unregistered money market funds spends 1,220 hours to perform the
record of credit risk analysis and other determinations annually, and
each of the 6 unregistered money market funds in which an acquiring
fund invests in for the first time under the rule will spend 21 hours
to implement the board procedures. Finally, Commission staff estimates
that 15 unregistered money market funds each spend 4.5 hours to review
and amend procedures annually. The estimated total of annual responses
under rule 12d1-1 is 10,713,\10\ and the estimate of burden hours
associated with these responses is 80,714 hours.\11\
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\9\ This estimate is based on the number of applications filed
with the Commission in 2005 (40), increased by investment in 6 new
funds each year since 2005 (18), and rounded to the nearest tenth
(60). This estimate may be understated because applicants generally
do not identify the name or number of unregistered money market
funds in which registered funds intend to invest, and each
application also applies to unregistered money market funds to be
organized in the future.
\10\ This estimate is based on the following calculation: (60 x
162) + (6 x 162) + (6 x 1) + (15 x 1) = 10,713.
\11\ This estimate is based on the following calculation: (60 x
1,220) + (6 x 1,220) + (6 x 21) + (15 x 4.5) = 80,714.
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Commission staff estimates that unregistered money market funds
also incur costs to preserve records, as required under rule 2a-7.
These costs will vary significantly for individual funds, depending on
the amount of assets under fund management and whether the fund
preserves its records in a storage facility in hard copy or has
developed and maintains a computer system to create and preserve
compliance records. In its rule 2a-7 Paperwork Reduction Act (``PRA'')
submission, Commission staff estimated that the amount an individual
money market fund may spend ranged from $100 per year to $300,000. We
have no reason to believe the range is different for unregistered money
market funds. The Commission does not have specific information on the
amount of assets managed by unregistered money market funds.
Accordingly, Commission staff estimates that an unregistered money
market fund in which registered funds invest in reliance on rule 12d1-1
have, on average, $380 million in assets under
[[Page 27206]]
management.\12\ Based on a cost of $0.0000005 per dollar of assets
under management for medium-sized funds, the staff estimates compliance
with rule 2-7 costs these types of unregistered money market funds
$11,400 annually.\13\ Commission staff estimates that unregistered
money market funds do not incur any capital costs to create computer
programs for maintaining and preserving compliance records for rule 2a-
7.\14\
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\12\ This estimate is based on the average of assets under
management of medium-sized registered money market funds ($50
million to $999 million).
\13\ This estimate was based on the following calculation: 60
unregistered money market funds x $380 million in assets under
management x $0.0000005 = $11,400. The estimate of cost per dollar
of assets is the same as that used for medium-sized funds in the
rule 2a-7 PRA submission.
\14\ This estimate is based on information Commission staff
obtained in its survey for the rule 2a-7 PRA submission. Of the
funds surveyed, no medium-sized funds incurred this type of capital
cost. The funds either maintained record systems using a program the
fund would be likely to have in the ordinary course of business
(such as Excel) or the records were maintained by the fund's
custodian.
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The collections of information required for unregistered money
market funds by rule 12d1-1 are necessary in order for acquiring funds
to be able to obtain the benefits described above. Notices to the
Commission will not be kept confidential. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid control number.
Please direct general comments regarding the above information to
the following persons: (i) Desk Officer for the Securities and Exchange
Commission, Office of Management and Budget, Room 10102, New Executive
Office Building, Washington, DC 20503 or send an e-mail to Shagufta
Ahmed at Shagufta_Ahmed@omb.eop.gov; and (ii) Charles Boucher,
Director/CIO, Securities and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-
mail to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within
30 days of this notice.
June 1, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13256 Filed 6-5-09; 8:45 am]
BILLING CODE 8010-01-P
