Proposed Collection; Comment Request, 65553-65554 [E9-29393]

Download as PDF Federal Register / Vol. 74, No. 236 / Thursday, December 10, 2009 / Notices all public comments and/or presentations will be treated as public documents and will be made available for public inspection, including being posted on the PCAST Web site. SECURITIES AND EXCHANGE COMMISSION FOR FURTHER INFORMATION CONTACT: For Further Information: Information regarding the meeting agenda, time, location, and how to register for the meeting is available on the PCAST Web site at: https://www.ostp.gov/pcast. A live video webcast and an archive of the webcast after the event will be available at https://www.ostp.gov//pcast. The archived video will be available within one week of the meeting. Questions about the meeting should be directed to Dr. Deborah D. Stine, PCAST Executive Director, at dstine@ostp.eop.gov, (202) 456–6006. Please note that public seating for this meeting is limited and is available on a first-come, first-served basis. Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549–0213. The President’s Council of Advisors on Science and Technology was established by Executive Order 13226 on September 30, 2001. The PCAST is an advisory group of the nation’s leading scientists and engineers who directly advise the President and the Executive Office of the President. PCAST makes policy recommendations in the many areas where understanding of science, technology, and innovation is key to strengthening our economy and forming policy that works for the American people. PCAST is administered by the Office of Science and Technology Policy (OSTP). PCAST is co-chaired by Dr. John P. Holdren, Assistant to the President for Science and Technology, and Director, Office of Science and Technology Policy, Executive Office of the President, The White House; Dr. Harold E. Varmus, President, Memorial Sloan-Kettering Cancer Center; and Dr. Eric S. Lander, President and Director, Broad Institute of MIT and Harvard. Meeting Accomodations: Individuals requiring special accommodation to access this public meeting should contact Dr. Stine at least ten business days prior to the meeting so that appropriate arrangements can be made. mstockstill on DSKH9S0YB1PROD with NOTICES SUPPLEMENTARY INFORMATION: M. David Hodge, Operations Manager. [FR Doc. E9–29488 Filed 12–9–09; 8:45 am] BILLING CODE 3170–W9–P VerDate Nov<24>2008 17:19 Dec 09, 2009 Jkt 220001 Proposed Collection; Comment Request Extension: Rule 3a–4; SEC File No. 270–401; OMB Control No. 3235–0459. 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. Rule 3a–4 (17 CFR 270.3a–4) under the Investment Company Act of 1940 (15 U.S.C. 80a) (‘‘Investment Company Act’’ or ‘‘Act’’) provides a nonexclusive safe harbor from the definition of investment company under the Act for certain investment advisory programs. These programs, which include ‘‘wrap fee’’ and ‘‘mutual fund wrap’’ programs, generally are designed to provide professional portfolio management services to clients who are investing less than the minimum usually required by portfolio managers but more than the minimum account size of most mutual funds. Under wrap fee and similar programs, a client’s account is typically managed on a discretionary basis according to pre-selected investment objectives. Clients with similar investment objectives often receive the same investment advice and may hold the same or substantially similar securities in their accounts. Some of these investment advisory programs may meet the definition of investment company under the Act because of the similarity of account management. In 1997, the Commission adopted rule 3a–4, which clarifies that programs organized and operated in a manner consistent with the conditions of rule 3a–4 are not required to register under the Investment Company Act or comply with the Act’s requirements.1 These programs differ from investment 1 Status of Investment Advisory Programs Under the Investment Company Act of 1940, Investment Company Act Release No. 22579 (Mar. 24, 1997) (62 FR 15098 (Mar. 31,1997)) (‘‘Adopting Release’’). In addition, there are no registration requirements under section 5 of the Securities Act of 1933 for these programs. See 17 CFR 270.3a–4, introductory note. PO 00000 Frm 00046 Fmt 4703 Sfmt 4703 65553 companies because, among other things, they provide individualized investment advice to the client. The rule’s provisions have the effect of ensuring that clients in a program relying on the rule receive advice tailored to the client’s needs. Rule 3a–4 provides that each client’s account must be managed on the basis of the client’s financial situation and investment objectives and consistent with any reasonable restrictions the client imposes on managing the account. When an account is opened, the sponsor 2 (or its designee) must obtain information from each client regarding the client’s financial situation and investment objectives, and must allow the client an opportunity to impose reasonable restrictions on managing the account.3 In addition, the sponsor (or its designee) must contact the client annually to determine whether the client’s financial situation or investment objectives have changed and whether the client wishes to impose any reasonable restrictions on the management of the account or reasonably modify existing restrictions. The sponsor (or its designee) must also notify the client quarterly, in writing, to contact the sponsor (or its designee) regarding changes to the client’s financial situation, investment objectives, or restrictions on the account’s management.4 The program must provide each client with a quarterly statement describing all activity in the client’s account during the previous quarter. The sponsor and personnel of the client’s account manager who know about the client’s account and its management must be reasonably available to consult with the client. Each client also must retain certain indicia of ownership of all securities and funds in the account. The requirement that the sponsor (or its designee) obtain information about each new client’s financial situation and investment objectives when their account is opened is designed to ensure that the investment adviser has sufficient information regarding the client’s unique needs and goals to 2 For purposes of rule 3a–4, the term ‘‘sponsor’’ refers to any person who receives compensation for sponsoring, organizing or administering the program, or for selecting, or providing advice to clients regarding the selection of, persons responsible for managing the client’s account in the program. 3 Clients specifically must be allowed to designate securities that should not be purchased for the account or that should be sold if held in the account. The rule does not require that a client be able to require particular securities be purchased for the account. 4 The sponsor also must provide a means by which clients can contact the sponsor (or its designee). E:\FR\FM\10DEN1.SGM 10DEN1 mstockstill on DSKH9S0YB1PROD with NOTICES 65554 Federal Register / Vol. 74, No. 236 / Thursday, December 10, 2009 / Notices enable the portfolio manager to provide individualized investment advice. The sponsor is required to contact clients annually and provide them with quarterly notices to ensure that the sponsor has current information about the client’s financial status, investment objectives, and restrictions on management of the account. Maintaining current information enables the portfolio manager to evaluate each client’s portfolio in light of the client’s changing needs and circumstances. The requirement that clients be provided with quarterly statements of account activity is designed to ensure each client receives an individualized report, which the Commission believes is a key element of individualized advisory services. The Commission staff estimates that 3,109,671 clients participate each year in investment advisory programs relying on rule 3a–4. Of that number, the staff estimates that 220,805 are new clients and 2,888,866 are continuing clients. The staff estimates that each year investment advisory program sponsors staff engage in 1.5 hours per new client and 0.75 hours per continuing client to prepare, conduct and/or review interviews regarding the client’s financial situation and investment objectives as required by the rule. Furthermore, the staff estimates that each year investment advisory program staff spends 1 hour per client to prepare and mail quarterly client account statements, including notices to update information. Based on the estimates above, the Commission estimates that the total annual burden of the rule’s paperwork requirements is 5,607,528 hours. The total annual hour burden of 5,607,528 hours represents an increase of 1,158,112.5 hours from the prior estimate of 4,449,415.5 hours. This increase principally results from an increase in the number of continuing clients, but also reflects an increase in the estimated burden hours associated with several of the collections of information required under the rule. The increase in estimated burden hours per collection of information results from an increase in burden hours reported by representatives of investment advisers that rely on rule 3a–4 that Commission staff surveyed. The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules and forms. An agency may not conduct or sponsor, and a person is not rquired to respond to a collection of information VerDate Nov<24>2008 17:19 Dec 09, 2009 Jkt 220001 unless it displays a currenly valid control number. Written comments are invited on: (a) Whether the collections of information are necessary for the proper performance of the functions of the Commission, including whether the information has practical utility; (b) the accuracy of the Commission’s estimate of the burdens of the collections of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to 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. December 4, 2009. Florence E. Harmon, Deputy Secretary. [FR Doc. E9–29393 Filed 12–9–09; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61119; File No. S7–05–09] Order Extending and Modifying Temporary Exemptions Under the Securities Exchange Act of 1934 in Connection With Request From ICE Trust U.S. LLC Related to Central Clearing of Credit Default Swaps, and Request for Comments December 4, 2009. I. Introduction Over the past year, the Securities and Exchange Commission (‘‘Commission’’) has taken multiple actions to protect investors and ensure the integrity of the nation’s securities markets, including actions 1 designed to address concerns 1 See generally Securities Exchange Act Release No. 60372 (Jul. 23, 2009), 74 FR 37748 (Jul. 29, 2009) (temporary exemptions in connection with CDS clearing by ICE Clear Europe Limited), Securities Exchange Act Release No. 60373 (Jul. 23, 2009), 74 FR 37740 (Jul. 29, 2009) (temporary exemptions in connection with CDS clearing by Eurex Clearing AG), Securities Exchange Act Release No. 59578 (Mar. 13, 2009), 74 FR 11781 (Mar. 19, 2009) (temporary exemptions in connection with CDS clearing by Chicago Mercantile Exchange Inc.), Securities Exchange Act Release No. 59527 (Mar. 6, 2009), 74 FR 10791 (Mar. 12, 2009) (temporary exemptions in PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 related to the market in credit default swaps (‘‘CDS’’).2 The over-the-counter (‘‘OTC’’) market for CDS has been a source of particular concern to us and other financial regulators, and we have recognized that facilitating the establishment of central counterparties (‘‘CCPs’’) for CDS can play an important role in reducing the counterparty risks inherent in the CDS market, and thus can help mitigate potential systemic impacts. We have therefore found that taking action to help foster the prompt development of CCPs, including granting temporary conditional exemptions from certain provisions of the federal securities laws, is in the public interest.3 The Commission’s authority over the OTC market for CDS is limited. Specifically, Section 3A of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) limits the Commission’s authority over swap agreements, as defined in Section 206A connection with CDS clearing by ICE US Trust LLC (now ‘‘ICE Trust U.S. LLC’’)) (hereinafter, the ‘‘March ICE Trust Order’’), Securities Exchange Act Release No. 59164 (Dec. 24, 2008), 74 FR 139 (Jan. 2, 2009) (temporary exemptions in connection with CDS clearing by LIFFE A&M and LCH.Clearnet Ltd.) and other Commission actions discussed therein. In addition, we have issued interim final temporary rules that provide exemptions under the Securities Act of 1933 and the Securities Exchange Act of 1934 for CDS to facilitate the operation of one or more central counterparties for the CDS market. See Securities Act Release No. 8999 (Jan. 14, 2009), 74 FR 3967 (Jan. 22, 2009) (initial approval); Securities Act Release No. 9063 (Sep. 14, 2009), 74 FR 47719 (Sep. 17, 2009) (extension until Nov. 30, 2010). Further, the Commission has provided temporary exemptions in connection with Sections 5 and 6 of the Securities Exchange Act of 1934 for transactions in CDS. See Securities Exchange Act Release No. 59165 (Dec. 24, 2008), 74 FR 133 (Jan. 2, 2009) (initial exemption); Securities Exchange Act Release No. 60718 (Sep. 25, 2009), 74 FR 50862 (Oct. 1, 2009) (extension until Mar. 24, 2010). 2 A CDS is a bilateral contract between two parties, known as counterparties. The value of this financial contract is based on underlying obligations of a single entity (‘‘reference entity’’) or on a particular security or other debt obligation, or an index of several such entities, securities, or obligations. The obligation of a seller to make payments under a CDS contract is triggered by a default or other credit event as to such entity or entities or such security or securities. Investors may use CDS for a variety of reasons, including to offset or insure against risk in their fixed-income portfolios, to take positions in bonds or in segments of the debt market as represented by an index, or to take positions on the volatility in credit spreads during times of economic uncertainty. Growth in the CDS market has coincided with a significant rise in the types and number of entities participating in the CDS market. CDS were initially created to meet the demand of banking institutions looking to hedge and diversify the credit risk attendant to their lending activities. However, financial institutions such as insurance companies, pension funds, securities firms, and hedge funds have entered the CDS market. 3 See generally actions referenced in note 1, supra. E:\FR\FM\10DEN1.SGM 10DEN1

Agencies

[Federal Register Volume 74, Number 236 (Thursday, December 10, 2009)]
[Notices]
[Pages 65553-65554]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-29393]


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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 3a-4; SEC File No. 270-401; OMB Control No. 3235-0459.

    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.
    Rule 3a-4 (17 CFR 270.3a-4) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (``Investment Company Act'' or ``Act'') provides a 
nonexclusive safe harbor from the definition of investment company 
under the Act for certain investment advisory programs. These programs, 
which include ``wrap fee'' and ``mutual fund wrap'' programs, generally 
are designed to provide professional portfolio management services to 
clients who are investing less than the minimum usually required by 
portfolio managers but more than the minimum account size of most 
mutual funds. Under wrap fee and similar programs, a client's account 
is typically managed on a discretionary basis according to pre-selected 
investment objectives. Clients with similar investment objectives often 
receive the same investment advice and may hold the same or 
substantially similar securities in their accounts. Some of these 
investment advisory programs may meet the definition of investment 
company under the Act because of the similarity of account management.
    In 1997, the Commission adopted rule 3a-4, which clarifies that 
programs organized and operated in a manner consistent with the 
conditions of rule 3a-4 are not required to register under the 
Investment Company Act or comply with the Act's requirements.\1\ These 
programs differ from investment companies because, among other things, 
they provide individualized investment advice to the client. The rule's 
provisions have the effect of ensuring that clients in a program 
relying on the rule receive advice tailored to the client's needs.
---------------------------------------------------------------------------

    \1\ Status of Investment Advisory Programs Under the Investment 
Company Act of 1940, Investment Company Act Release No. 22579 (Mar. 
24, 1997) (62 FR 15098 (Mar. 31,1997)) (``Adopting Release''). In 
addition, there are no registration requirements under section 5 of 
the Securities Act of 1933 for these programs. See 17 CFR 270.3a-4, 
introductory note.
---------------------------------------------------------------------------

    Rule 3a-4 provides that each client's account must be managed on 
the basis of the client's financial situation and investment objectives 
and consistent with any reasonable restrictions the client imposes on 
managing the account. When an account is opened, the sponsor \2\ (or 
its designee) must obtain information from each client regarding the 
client's financial situation and investment objectives, and must allow 
the client an opportunity to impose reasonable restrictions on managing 
the account.\3\ In addition, the sponsor (or its designee) must contact 
the client annually to determine whether the client's financial 
situation or investment objectives have changed and whether the client 
wishes to impose any reasonable restrictions on the management of the 
account or reasonably modify existing restrictions. The sponsor (or its 
designee) must also notify the client quarterly, in writing, to contact 
the sponsor (or its designee) regarding changes to the client's 
financial situation, investment objectives, or restrictions on the 
account's management.\4\
---------------------------------------------------------------------------

    \2\ For purposes of rule 3a-4, the term ``sponsor'' refers to 
any person who receives compensation for sponsoring, organizing or 
administering the program, or for selecting, or providing advice to 
clients regarding the selection of, persons responsible for managing 
the client's account in the program.
    \3\ Clients specifically must be allowed to designate securities 
that should not be purchased for the account or that should be sold 
if held in the account. The rule does not require that a client be 
able to require particular securities be purchased for the account.
    \4\ The sponsor also must provide a means by which clients can 
contact the sponsor (or its designee).
---------------------------------------------------------------------------

    The program must provide each client with a quarterly statement 
describing all activity in the client's account during the previous 
quarter. The sponsor and personnel of the client's account manager who 
know about the client's account and its management must be reasonably 
available to consult with the client. Each client also must retain 
certain indicia of ownership of all securities and funds in the 
account.
    The requirement that the sponsor (or its designee) obtain 
information about each new client's financial situation and investment 
objectives when their account is opened is designed to ensure that the 
investment adviser has sufficient information regarding the client's 
unique needs and goals to

[[Page 65554]]

enable the portfolio manager to provide individualized investment 
advice. The sponsor is required to contact clients annually and provide 
them with quarterly notices to ensure that the sponsor has current 
information about the client's financial status, investment objectives, 
and restrictions on management of the account. Maintaining current 
information enables the portfolio manager to evaluate each client's 
portfolio in light of the client's changing needs and circumstances. 
The requirement that clients be provided with quarterly statements of 
account activity is designed to ensure each client receives an 
individualized report, which the Commission believes is a key element 
of individualized advisory services.
    The Commission staff estimates that 3,109,671 clients participate 
each year in investment advisory programs relying on rule 3a-4. Of that 
number, the staff estimates that 220,805 are new clients and 2,888,866 
are continuing clients. The staff estimates that each year investment 
advisory program sponsors staff engage in 1.5 hours per new client and 
0.75 hours per continuing client to prepare, conduct and/or review 
interviews regarding the client's financial situation and investment 
objectives as required by the rule. Furthermore, the staff estimates 
that each year investment advisory program staff spends 1 hour per 
client to prepare and mail quarterly client account statements, 
including notices to update information. Based on the estimates above, 
the Commission estimates that the total annual burden of the rule's 
paperwork requirements is 5,607,528 hours.
    The total annual hour burden of 5,607,528 hours represents an 
increase of 1,158,112.5 hours from the prior estimate of 4,449,415.5 
hours. This increase principally results from an increase in the number 
of continuing clients, but also reflects an increase in the estimated 
burden hours associated with several of the collections of information 
required under the rule. The increase in estimated burden hours per 
collection of information results from an increase in burden hours 
reported by representatives of investment advisers that rely on rule 
3a-4 that Commission staff surveyed.
    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act. The estimate is not derived 
from a comprehensive or even a representative survey or study of the 
costs of Commission rules and forms. An agency may not conduct or 
sponsor, and a person is not rquired to respond to a collection of 
information unless it displays a currenly valid control number.
    Written comments are invited on: (a) Whether the collections of 
information are necessary for the proper performance of the functions 
of the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimate of the burdens 
of the collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
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.

    December 4, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-29393 Filed 12-9-09; 8:45 am]
BILLING CODE 8011-01-P
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