Proposed Collection; Comment Request, 54862-54864 [E9-25487]
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54862
Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Notices
October 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–25483 Filed 10–22–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: U.S. Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 17i–4, SEC File No. 270–530, OMB
Control No. 3235–0594.
CPrice-Sewell on DSKGBLS3C1PROD with NOTICES
Notice is hereby given that pursuant
to the Paperwork Reduction Act of
1995 1 the Securities and Exchange
Commission (‘‘Commission’’) has
submitted to the Office of Management
and Budget requests for extension of the
previously approved collections of
information discussed below. The Code
of Federal Regulations citation to this
collection of information is the
following: 17 CFR 240.17i–4.
Section 231 of the Gramm-LeachBliley Act of 1999 2 (the ‘‘GLBA’’)
amended Section 17 of the Securities
Exchange Act of 1934 to create a
regulatory framework under which a
holding company of a broker-dealer
(‘‘investment bank holding company’’ or
‘‘IBHC’’) may voluntarily be supervised
by the Commission as a supervised
investment bank holding company (or
‘‘SIBHC’’).3 In 2004, the Commission
promulgated rules, including Rule 17i–
4, to create a framework for the
Commission to supervise SIBHCs.4 This
framework includes qualification
criteria for SIBHCs, as well as
recordkeeping and reporting
requirements. Among other things, this
regulatory framework for SIBHCs is
intended to provide a basis for non-U.S.
financial regulators to treat the
Commission as the principal U.S.
consolidated, home-country supervisor
for SIBHCs and their affiliated brokerdealers.5
Rule 17i–4 requires an SIBHC to
comply with present Exchange Act Rule
15c3–4 6 as though it were a broker1 44
U.S.C. 3501 et seq.
Law No. 106–102, 113 Stat. 1338 (1999).
3 See 15 U.S.C. 78q(i).
4 See Exchange Act Release No. 49831 (Jun. 8,
2004), 69 FR 34472 (Jun. 21, 2004).
5 See H.R. Conf. Rep. No. 106–434, 165 (1999).
See also Exchange Act Release No. 49831, at 6 (Jun.
8, 2004), 69 FR 34472, at 34473 (Jun. 21, 2004).
6 17 CFR 240.15c3–4.
dealer, which requires that the firm
establish, document and maintain a
system of internal risk management
controls to assist it in managing the
risks associated with its business
activities (including market, credit,
operational, funding, and legal risks). In
addition, Rule 17i–4 requires that an
SIBHC establish, document, and
maintain procedures for the detection
and prevention of money laundering
and terrorist financing as part of its
internal risk management control
system. Finally, Rule 17i–4 requires that
an SIBHC periodically review its
internal risk management control
system for integrity of the risk
measurement, monitoring, and
management process, and
accountability, at the appropriate
organizational level, for defining the
permitted scope of activity and level of
risk. The records required to be created
pursuant to Rule 17i–4 must be
preserved for a period of not less than
three years.7
The collection of information required
pursuant to Rule 17i–4 is needed so that
the Commission can adequately
supervise the activities of these SIBHCs,
and to allow the Commission to
effectively determine whether
supervision of an IBHC as an SIBHC is
necessary or appropriate in furtherance
of the purposes of Section 17 of the Act.
Without this information, the
Commission would be unable to
adequately supervise the SIBHC as
provided for under the Exchange Act.
We estimate that three IBHCs will file
Notices of Intention with the
Commission to be supervised by the
Commission as SIBHCs. An SIBHC will
require, on average, about 3,600 hours to
assess its present structure, businesses,
and controls, and establish and
document its risk management control
system. In addition, an SIBHC will
require, on average, approximately 250
hours each year to maintain its risk
management control system.
Consequently, the total initial burden
for all SIBHCs is approximately 10,800
hours 8 and the continuing annual
burden is about 750 hours.9 Thus, the
total burden relating to Rule 17i–4 for
all SIBHCs is approximately 11,550
hours 10 in the first year, and
approximately 750 hours each year
thereafter.11
We believe that an IBHC likely would
upgrade its information technology
2 Public
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Jkt 220001
7 17
CFR 240.17i–5(b)(5).
hours × 3 SIBHCs) = 10,800 hours.
hours per year × 3 SIBHCs) = 750 hours per
8 (3,600
9 (250
year.
10 (3,600 hours × 3 SIBHCs) + (250 hours per year
× 3 SIBHCs.)
11 (250 hours per year × 3 SIBHCs).
PO 00000
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(‘‘IT’’) systems in order to more
efficiently comply with certain of the
SIBHC framework rules (including
Rules 17i–4, 17i–5, 17i–6 and 17i–7),
and that this would be a one-time cost.
Depending on the state of development
of the IBHC’s IT systems, it would cost
an IBHC between $1 million and $10
million to upgrade its IT systems to
comply with the SIBHC framework of
rules. Thus, on average, it would cost
each of the three SIBHCs about $5.5
million to upgrade their IT systems, or
approximately $16.5 million in total. It
is impossible to determine what
percentage of the IT systems costs
would be attributable to each Rule, so
we allocated the total estimated upgrade
costs equally (at 25% for each of the
above-mentioned Rules), with
$4,125,000 attributable to Rule 17i–5.
Written comments are invited on: (a)
Whether the collection of information is
necessary for the proper performance of
the functions of the agency, including
whether the information will have
practical utility; (b) the accuracy of the
agency’s estimate of the burden of the
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
Comments should be directed to
Charles Boucher, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria, Virginia 22312 or send an
e-mail to: PRA_Mailbox@sec.gov.
October 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–25485 Filed 10–22–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 31a–2; SEC File No. 270–174; OMB
Control No. 3235–0179.
E:\FR\FM\23OCN1.SGM
23OCN1
Federal Register / Vol. 74, No. 204 / Friday, October 23, 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’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Section 31(a)(1) of the Investment
Company Act of 1940 (the ‘‘Act’’) 1
requires registered investment
companies (‘‘funds’’) and certain
principal underwriters, broker-dealers,
investment advisers and depositors of
funds to maintain and preserve records
as prescribed by Commission rules. Rule
31a–1 2 specifies the books and records
that each of these entities must
maintain. Rule 31a–2,3 which was
adopted on April 17, 1944, specifies the
time periods that entities must retain
books and records required to be
maintained under rule 31a–1.
Rule 31a–2 requires the following:
1. Every fund must preserve
permanently, and in an easily accessible
place for the first two years, all books
and records required under rule 31a–
1(b)(1)–(4).4
2. Every fund must preserve for at
least six years, and in an easily
accessible place for the first two years:
a. All books and records required
under rule 31a–1(b)(5)–(12); 5
b. All vouchers, memoranda,
correspondence, checkbooks, bank
statements, canceled checks, cash
reconciliations, canceled stock
certificates and all schedules that
support each computation of net asset
value of fund shares;
c. Any advertisement, pamphlet,
circular, form letter or other sales
CPrice-Sewell on DSKGBLS3C1PROD with NOTICES
1 15
U.S.C. 80a–30(a)(1).
2 17 CFR 270.31a–1.
3 17 CFR 270.31a–2.
4 17 CFR 270.31a–1(b)(1)–(4). These include,
among other records, journals detailing daily
purchases and sales of securities or contracts to
purchase and sell securities, general and auxiliary
ledgers reflecting all asset, liability, reserve, capital,
income and expense accounts, separate ledgers
reflecting, separately for each portfolio security as
of the trade date all ‘‘long’’ and ‘‘short’’ positions
carried by the fund for its own account, and
corporate charters, certificates of incorporation and
by-laws.
5 17 CFR 270.31a–1(b)(5)–(12). These include,
among other records, records of each brokerage
order given in connection with purchases and sales
of securities by the fund, all other portfolio
purchases, records of all puts, calls, spreads,
straddles or other options in which the fund has an
interest, has granted, or has guaranteed, records of
proof of money balances in all ledger accounts, files
of all advisory material received from the
investment adviser, and memoranda identifying
persons, committees or groups authorizing the
purchase or sale of securities for the fund.
VerDate Nov<24>2008
15:24 Oct 22, 2009
Jkt 220001
literature addressed or intended for
distribution to prospective investors;
d. Any record of the initial
determination that a director is not an
interested person of the fund, and each
subsequent determination that the
director is not an interested person of
the fund, including any questionnaire
and any other document used to
determine that a director is not an
interested person of the company;
e. Any materials used by the
disinterested directors of a fund to
determine that a person who is acting as
legal counsel to those directors is an
independent legal counsel; and
f. Any documents or other written
information considered by the directors
of the fund pursuant to section 15(c) of
the Act in approving the terms or
renewal of a contract or agreement
between the company and an
investment advisor.
3. Every underwriter, broker or dealer
that is a majority-owned subsidiary of a
fund must preserve records required to
be preserved by brokers and dealers
under rules adopted under section 17 of
the Securities Exchange Act of 1934 6
(‘‘section 17’’) for the periods
established in those rules.
4. Every depositor of any fund, and
every principal underwriter of any fund
other than a closed-end fund, must
preserve for at least six years records
required to be preserved by brokers and
dealers under rules adopted under
section 17 to the extent the records are
necessary or appropriate to record the
entity’s transactions with the fund.
5. Every investment adviser that is a
majority-owned subsidiary of a fund
must preserve the records required to be
maintained by investment advisers
under rules adopted under section 204
of the Investment Advisers Act of 1940 7
(‘‘section 204’’) for the periods specified
in those rules.
6. Every investment adviser that is not
a majority-owned subsidiary of a fund
must preserve for at least six years
records required to be maintained by
registered investment advisers under
rules adopted under section 204 to the
extent the records are necessary or
appropriate to reflect the adviser’s
transactions with the fund.
The records required to be maintained
and preserved under this part may be
maintained and preserved for the
required time by, or on behalf of, a fund
on (i) micrographic media, including
microfilm, microfiche, or any similar
medium, or (ii) electronic storage media,
including any digital storage medium or
system that meets the terms of this
6 15
7 15
PO 00000
U.S.C. 78q.
U.S.C. 80b–4.
Frm 00088
Fmt 4703
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54863
section. The fund, or person that
maintains and preserves records on its
behalf, must arrange and index the
records in a way that permits easy
location, access, and retrieval of any
particular record.8
The Commission periodically inspects
the operations of all funds to ensure
their compliance with the provisions of
the Act and the rules under the Act. The
Commission staff spends a significant
portion of their time in these
inspections reviewing the information
contained in the books and records
required to be kept by rule 31a–1 and
to be preserved by rule 31a–2.
There are approximately 4,522
registered investment companies
(‘‘funds’’) as of September 30, 2009, all
of which are required to comply with
rule 31a–2. Based on conversations with
representatives of the fund industry and
past estimates, our staff estimates that
each fund currently spends 220 hours
per year complying with rule 31a–2.
Based on these estimates, our staff
estimates that the total annual burden
for a fund to comply with rule 31a–2,
is 220 hours, with a total annual burden
for all funds of 994,840 hours.9
The hour burden estimates for
retaining records under rule 31a–2 are
based on our experience with registrants
and our experience with similar
requirements under the Act and the
rules under the Act. The number of
burden hours may vary depending on,
among other things, the complexity of
the fund, the issues faced by the fund,
and the number of series and classes of
the fund. The estimated average burden
hours are made solely for purposes of
the Paperwork Reduction Act and are
not derived from quantitative,
comprehensive, or even representative
8 In addition, the fund, or whoever maintains the
documents for the fund must provide promptly any
of the following that the Commission (by its
examiners or other representatives) or the directors
of the fund may request: (A) A legible, true, and
complete copy of the record in the medium and
format in which it is stored; (B) a legible, true, and
complete printout of the record; and (C) means to
access, view, and print the records; and separately
store, for the time required for preservation of the
original record, a duplicate copy of the record on
any medium allowed by this section. In the case of
records retained on electronic storage media, the
fund, or person that maintains and preserves
records on its behalf, must establish and maintain
procedures: (i) To maintain and preserve the
records, so as to reasonably safeguard them from
loss, alteration, or destruction; (ii) to limit access to
the records to properly authorized personnel, the
directors of the fund, and the Commission
(including its examiners and other representatives);
and (iii) to reasonably ensure that any reproduction
of a non-electronic original record on electronic
storage media is complete, true, and legible when
retrieved.
9 This estimate is based on the following
calculation: 4,522 registered investment companies
× 220 hours = 994,840 total hours.
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54864
Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Notices
survey or study of the burdens
associated with our rules and forms.
The Commission staff estimates the
average cost of preserving books and
records required by rule 31a–2, to be
approximately $70,000 annually per
fund. As discussed previously, there are
approximately 4,522 funds currently
operating, for a total cost of preserving
records as required by rule 31a–2 of
$316,540,000 per year.10 Our staff
understands, however, based on
conversations with representatives of
the fund industry, that funds would
already spend approximately half of this
amount ($158,270,000) to preserve these
same books and records, as they are also
necessary to prepare financial
statements, meet various state reporting
requirements, and prepare their annual
federal and state income tax returns.
Therefore, we estimate that the total
annual cost burden for funds as a result
of compliance with rule 31a–2 is
$158,270,000 per year.
These estimates of average costs are
made solely for the purposes of the
Paperwork Reduction Act. The estimate
is not derived from a comprehensive or
even a representative survey or study of
the costs of Commission rules. 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 OMB control
number.
Written comments are invited on: (a)
Whether the collections of information
are necessary for the proper
performance of the functions of the
Commission, including whether the
information has practical utility; (b) the
accuracy of the Commission’s estimate
of the burdens of the collections of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burdens of the collections
of information on respondents,
including through the use of automated
collection techniques or other forms of
information technology. Consideration
will be given to comments and
suggestions submitted in writing within
60 days of this publication.
Please direct your written comments
to 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.
10 This estimate is based on the following
calculation: 4,522 funds × $70,000 = $316,540,000.
VerDate Nov<24>2008
15:24 Oct 22, 2009
Jkt 220001
Dated: October 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–25487 Filed 10–22–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: U.S. Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 17i–6; SEC File No. 270–532; OMB
Control No. 3235–0588.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of
1995 1 the Securities and Exchange
Commission (‘‘Commission’’) has
submitted to the Office of Management
and Budget requests for extension of the
previously approved collections of
information discussed below. The Code
of Federal Regulations citation to this
collection of information is the
following: 17 CFR 240.17i–6.
Section 231 of the Gramm-LeachBliley Act of 1999 2 (the ‘‘GLBA’’)
amended Section 17 of the Securities
Exchange Act of 1934 to create a
regulatory framework under which a
holding company of a broker-dealer
(‘‘investment bank holding company’’ or
‘‘IBHC’’) may voluntarily be supervised
by the Commission as a supervised
investment bank holding company (or
‘‘SIBHC’’).3 In 2004, the Commission
promulgated rules, including Rule 17i–
6, to create a framework for the
Commission to supervise SIBHCs.4 This
framework includes qualification
criteria for SIBHCs, as well as
recordkeeping and reporting
requirements. Among other things, this
regulatory framework for SIBHCs is
intended to provide a basis for non-U.S.
financial regulators to treat the
Commission as the principal U.S.
consolidated home-country supervisor
for SIBHCs and their affiliated brokerdealers.5
Pursuant to Section 17(i)(3)(A) of the
Exchange Act, an SIBHC must make and
keep records, furnish copies thereof,
and make such reports as the
1 44
U.S.C. 3501 et seq.
L. No. 106–102, 113 Stat. 1338 (1999).
3 See 15 U.S.C. 78q(i).
4 See Exchange Act Release No. 49831 (Jun. 8,
2004), 69 FR 34472 (Jun. 21, 2004).
5 See H.R. Conf. Rep. No. 106–434, 165 (1999).
See also Exchange Act Release No. 49831, at 6 (Jun.
8, 2004), 69 FR 34472, at 34473 (Jun. 21, 2004).
2 Pub.
PO 00000
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Commission may require by rule.6 Rule
17i–6 requires that an SIBHC file with
the Commission certain monthly and
quarterly reports and an annual audit
report. The reports and notices required
to be filed pursuant to Rule 17i–6 must
be preserved for a period of not less
than three years.7
The collections of information
required by Rule 17i–6 are necessary to
allow the Commission adequately to
supervise the activities of these SIBHCs
and to effectively determine whether
supervision of an IBHC as an SIBHC is
necessary or appropriate in furtherance
of the purposes of Section 17 of the Act.
Rule 17i–6 also enhances the
Commission’s supervision of an
SIBHC’s subsidiary broker-dealers
through collection of additional
information and inspections of affiliates
of those broker-dealers. Without these
reports, the Commission would be
unable to adequately supervise an
SIBHC, nor would it be able to
determine whether continued
supervision of an IBHC as an SIBHC
were necessary and appropriate in
furtherance of the purposes of Section
17 of the Act.
We estimate that three IBHCs will file
Notices of Intention with the
Commission to be supervised by the
Commission as SIBHCs. An SIBHC will
require about 8 hours to prepare and file
each monthly report required by this
rule (or approximately 96 hours per
year).8 On average, it will take an SIBHC
about 16 hours each quarter (or 64 hours
each year) 9 to prepare and file the
quarterly reports required by this rule.
An SIBHC will require about 200 hours
to prepare and file the annual audit
reports required by this rule.
Consequently, the total annual burden
of Rule 17i–6 on all SIBHCs is
approximately 984 hours.10
Rule 17i–6 requires that an SIBHC file
certain monthly and quarterly reports
with the Commission, as well as an
annual audit report. The average cost for
an SIBHC to prepare and file the
monthly reports is about $1,424 per
month, and thus approximately $11,392
6 15
U.S.C. 78q(i)(3)(A).
CFR 240.17i–5(b)(3).
8 The SIBHC must file with the Commission a
monthly report within 30 calendar days after the
end of each month that does not coincide with a
fiscal quarter end. Consequently, the SIBHC must
file a monthly report 8 times each year. (8 hours ×
8 months) = 64 hours/year.
9 (16 hours × 4 quarters in a year) = 64 hours/year.
10 (64 hours per year to prepare and file monthly
reports + 64 hours each year to prepare and file
quarterly reports + 200 hours each year to prepare
and file annual audit reports) × 3 SIBHCs = 984
hours.
7 17
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]]>Agencies
[Federal Register Volume 74, Number 204 (Friday, October 23, 2009)]
[Notices]
[Pages 54862-54864]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25487]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 31a-2; SEC File No. 270-174; OMB Control No. 3235-0179.
[[Page 54863]]
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'') is soliciting comments on the
collection of information summarized below. The Commission plans to
submit this existing collection of information to the Office of
Management and Budget for extension and approval.
Section 31(a)(1) of the Investment Company Act of 1940 (the
``Act'') \1\ requires registered investment companies (``funds'') and
certain principal underwriters, broker-dealers, investment advisers and
depositors of funds to maintain and preserve records as prescribed by
Commission rules. Rule 31a-1 \2\ specifies the books and records that
each of these entities must maintain. Rule 31a-2,\3\ which was adopted
on April 17, 1944, specifies the time periods that entities must retain
books and records required to be maintained under rule 31a-1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 80a-30(a)(1).
\2\ 17 CFR 270.31a-1.
\3\ 17 CFR 270.31a-2.
---------------------------------------------------------------------------
Rule 31a-2 requires the following:
1. Every fund must preserve permanently, and in an easily
accessible place for the first two years, all books and records
required under rule 31a-1(b)(1)-(4).\4\
---------------------------------------------------------------------------
\4\ 17 CFR 270.31a-1(b)(1)-(4). These include, among other
records, journals detailing daily purchases and sales of securities
or contracts to purchase and sell securities, general and auxiliary
ledgers reflecting all asset, liability, reserve, capital, income
and expense accounts, separate ledgers reflecting, separately for
each portfolio security as of the trade date all ``long'' and
``short'' positions carried by the fund for its own account, and
corporate charters, certificates of incorporation and by-laws.
---------------------------------------------------------------------------
2. Every fund must preserve for at least six years, and in an
easily accessible place for the first two years:
a. All books and records required under rule 31a-1(b)(5)-(12); \5\
---------------------------------------------------------------------------
\5\ 17 CFR 270.31a-1(b)(5)-(12). These include, among other
records, records of each brokerage order given in connection with
purchases and sales of securities by the fund, all other portfolio
purchases, records of all puts, calls, spreads, straddles or other
options in which the fund has an interest, has granted, or has
guaranteed, records of proof of money balances in all ledger
accounts, files of all advisory material received from the
investment adviser, and memoranda identifying persons, committees or
groups authorizing the purchase or sale of securities for the fund.
---------------------------------------------------------------------------
b. All vouchers, memoranda, correspondence, checkbooks, bank
statements, canceled checks, cash reconciliations, canceled stock
certificates and all schedules that support each computation of net
asset value of fund shares;
c. Any advertisement, pamphlet, circular, form letter or other
sales literature addressed or intended for distribution to prospective
investors;
d. Any record of the initial determination that a director is not
an interested person of the fund, and each subsequent determination
that the director is not an interested person of the fund, including
any questionnaire and any other document used to determine that a
director is not an interested person of the company;
e. Any materials used by the disinterested directors of a fund to
determine that a person who is acting as legal counsel to those
directors is an independent legal counsel; and
f. Any documents or other written information considered by the
directors of the fund pursuant to section 15(c) of the Act in approving
the terms or renewal of a contract or agreement between the company and
an investment advisor.
3. Every underwriter, broker or dealer that is a majority-owned
subsidiary of a fund must preserve records required to be preserved by
brokers and dealers under rules adopted under section 17 of the
Securities Exchange Act of 1934 \6\ (``section 17'') for the periods
established in those rules.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q.
---------------------------------------------------------------------------
4. Every depositor of any fund, and every principal underwriter of
any fund other than a closed-end fund, must preserve for at least six
years records required to be preserved by brokers and dealers under
rules adopted under section 17 to the extent the records are necessary
or appropriate to record the entity's transactions with the fund.
5. Every investment adviser that is a majority-owned subsidiary of
a fund must preserve the records required to be maintained by
investment advisers under rules adopted under section 204 of the
Investment Advisers Act of 1940 \7\ (``section 204'') for the periods
specified in those rules.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 80b-4.
---------------------------------------------------------------------------
6. Every investment adviser that is not a majority-owned subsidiary
of a fund must preserve for at least six years records required to be
maintained by registered investment advisers under rules adopted under
section 204 to the extent the records are necessary or appropriate to
reflect the adviser's transactions with the fund.
The records required to be maintained and preserved under this part
may be maintained and preserved for the required time by, or on behalf
of, a fund on (i) micrographic media, including microfilm, microfiche,
or any similar medium, or (ii) electronic storage media, including any
digital storage medium or system that meets the terms of this section.
The fund, or person that maintains and preserves records on its behalf,
must arrange and index the records in a way that permits easy location,
access, and retrieval of any particular record.\8\
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\8\ In addition, the fund, or whoever maintains the documents
for the fund must provide promptly any of the following that the
Commission (by its examiners or other representatives) or the
directors of the fund may request: (A) A legible, true, and complete
copy of the record in the medium and format in which it is stored;
(B) a legible, true, and complete printout of the record; and (C)
means to access, view, and print the records; and separately store,
for the time required for preservation of the original record, a
duplicate copy of the record on any medium allowed by this section.
In the case of records retained on electronic storage media, the
fund, or person that maintains and preserves records on its behalf,
must establish and maintain procedures: (i) To maintain and preserve
the records, so as to reasonably safeguard them from loss,
alteration, or destruction; (ii) to limit access to the records to
properly authorized personnel, the directors of the fund, and the
Commission (including its examiners and other representatives); and
(iii) to reasonably ensure that any reproduction of a non-electronic
original record on electronic storage media is complete, true, and
legible when retrieved.
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The Commission periodically inspects the operations of all funds to
ensure their compliance with the provisions of the Act and the rules
under the Act. The Commission staff spends a significant portion of
their time in these inspections reviewing the information contained in
the books and records required to be kept by rule 31a-1 and to be
preserved by rule 31a-2.
There are approximately 4,522 registered investment companies
(``funds'') as of September 30, 2009, all of which are required to
comply with rule 31a-2. Based on conversations with representatives of
the fund industry and past estimates, our staff estimates that each
fund currently spends 220 hours per year complying with rule 31a-2.
Based on these estimates, our staff estimates that the total annual
burden for a fund to comply with rule 31a-2, is 220 hours, with a total
annual burden for all funds of 994,840 hours.\9\
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\9\ This estimate is based on the following calculation: 4,522
registered investment companies x 220 hours = 994,840 total hours.
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The hour burden estimates for retaining records under rule 31a-2
are based on our experience with registrants and our experience with
similar requirements under the Act and the rules under the Act. The
number of burden hours may vary depending on, among other things, the
complexity of the fund, the issues faced by the fund, and the number of
series and classes of the fund. The estimated average burden hours are
made solely for purposes of the Paperwork Reduction Act and are not
derived from quantitative, comprehensive, or even representative
[[Page 54864]]
survey or study of the burdens associated with our rules and forms.
The Commission staff estimates the average cost of preserving books
and records required by rule 31a-2, to be approximately $70,000
annually per fund. As discussed previously, there are approximately
4,522 funds currently operating, for a total cost of preserving records
as required by rule 31a-2 of $316,540,000 per year.\10\ Our staff
understands, however, based on conversations with representatives of
the fund industry, that funds would already spend approximately half of
this amount ($158,270,000) to preserve these same books and records, as
they are also necessary to prepare financial statements, meet various
state reporting requirements, and prepare their annual federal and
state income tax returns. Therefore, we estimate that the total annual
cost burden for funds as a result of compliance with rule 31a-2 is
$158,270,000 per year.
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\10\ This estimate is based on the following calculation: 4,522
funds x $70,000 = $316,540,000.
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These estimates of average costs are made solely for the purposes
of the Paperwork Reduction Act. The estimate is not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules. 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 OMB control number.
Written comments are invited on: (a) Whether the collections of
information are necessary for the proper performance of the functions
of the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burdens
of the collections of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burdens of the collections of information on respondents,
including through the use of automated collection techniques or other
forms of information technology. Consideration will be given to
comments and suggestions submitted in writing within 60 days of this
publication.
Please direct your written comments to 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.
Dated: October 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-25487 Filed 10-22-09; 8:45 am]
BILLING CODE 8011-01-P
