Submission of OMB Review; Comment Request, 1005-1007 [2010-6]
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Federal Register / Vol. 75, No. 4 / Thursday, January 7, 2010 / Notices
‘‘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
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 collections of information
required by Rule 17i–6 are necessary to
allow the Commission to 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–6s also enhances the
Commission’s supervision of a SIBHCs’
subsidiary broker-dealers through
collection of additional information and
inspections of affiliates of those brokerdealers. 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 64 hours per
year).7 On average, it will take an SIBHC
about 16 hours each quarter (or 64 hours
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
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 15 U.S.C. 78q(i)(3)(A).
7 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.
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14:42 Jan 06, 2010
Jkt 220001
each year) 8 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.9
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
per year.10 On average, an SIBHC will
incur a quarterly cost of $2,848 to
prepare and file the required quarterly
reports, and thus will incur an annual
cost of $11,392 to file these reports.11
Finally, an SIBHC, on average, will
incur an annual cost of $40,400 to
prepare and file an annual audit.12
Thus, the total dollar cost of the ongoing
paperwork burden associated with Rule
17i–6 is approximately $189,552 13
We believe that an IBHC likely will
upgrade its information technology
(‘‘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 IBHCs about $5.5
hours × 4 quarters in a year) = 64 hours/year.
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.
10 We believe that an SIBHC would have a Senior
Accountant prepare and file these reports.
According to the Securities Industry Financial
Management Association (or ‘‘SIFMA’’), the hourly
cost of a Senior Accountant is $178, as reflected in
the SIFMA’s Report on Management and
Professional Earnings for 2008, and modified to
account for an 1,800-hour work-year and multiplied
by 5.35 to account for bonuses, firm size, employee
benefits and overhead. ($178 × 8 hours) = $1,424.
($1,424 × 8 months) = $11,392.
11 We believe that an SIBHC would have a Senior
Accountant prepare and file these reports. The
hourly cost of a Senior Accountant is $178. ($178
× 16 hours) = $2,842. ($2,848 × 4 quarters) =
$11,392.
12 We believe that an SIBHC would have a Senior
Internal Auditor work with accountants to prepare
and file these reports. According to the SIFMA, the
hourly cost of a Senior Internal Auditor is $202, as
reflected in its Report on Management and
Professional Earnings for 2008, and modified to
account for an 1,800-hour work-year and multiplied
by 5.35 to account for bonuses, firm size, employee
benefits and overhead. ($202 × 200 hours) =
$40,400.
13 (($11,392 +$11,392 + $40,400) × 3 SIBHCs) =
$189,552.
8 (16
9 (64
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1005
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–6.
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.14 The collection of
information is mandatory and the
information required to be provided to
the Commission pursuant to this Rule is
deemed confidential pursuant to
Section 17(j) of the Securities Exchange
Act of 1934 15 and Section 552(b)(3)(B)
of the Freedom of Information Act,16
notwithstanding any other provision of
law. In addition, paragraph 17i–6(h)
specifies that all reports and statements
filed by an SIBHC in accordance with
Rule 17i–6 shall be accorded
confidential treatment.
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.
Comments should be directed to: (i)
Desk Officer for the Securities and
Exchange Commission Office of
Information and Regulatory Affairs,
Office of Management and Budget,
Room 10102, New Executive Office
Building, Washington, DC, 20503 or by
sending an e-mail to:
Shagufta_Ahmed@comb.eop.gov; and
(ii) Charles Boucher, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria, Virginia 22312 or send an email to PRA_Mailbox@sec.gov.
Comments must be submitted to OMB
within 30 days of this notice.
Dated: December 30, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–5 Filed 1–6–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Submission of OMB Review; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
14 17
CFR 240.17i–5(b)(3).
U.S.C. 78q(j)
16 5 U.S.C. 552(b)(3)(B).
15 15
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Federal Register / Vol. 75, No. 4 / Thursday, January 7, 2010 / Notices
Education and Advocacy,
Washington, DC 20549–0213.
Extension: Rule 31a–2, SEC File No. 270–
174, OMB Control No. 3235–0179.
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.
Section 31(a)(1) of the Investment
Company Act of 1940 1 (the ‘‘Act’’)
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;
WReier-Aviles 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.
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14:42 Jan 06, 2010
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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.
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,
6 15
7 15
PO 00000
U.S.C. 78q.
U.S.C. 80b–4.
Frm 00039
Fmt 4703
Sfmt 4703
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
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
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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Federal Register / Vol. 75, No. 4 / Thursday, January 7, 2010 / Notices
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
not derived from quantitative,
comprehensive, or even representative
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.
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.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–29101; 812–13549]
MetLife, Inc. and MetLife Capital Trust
V; Notice of Application
December 30, 2009.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (the ‘‘Act’’) for an
exemption from all provisions of the
Act.
Dated: December 30, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–6 Filed 1–6–10; 8:45 am]
SUMMARY OF APPLICATION: MetLife
Capital Trust V (the ‘‘Trust’’) and
MetLife, Inc. (‘‘MetLife’’) request an
order that would permit the Trust to sell
debt securities or non-voting preferred
stock and use the proceeds to finance
the business operations of its parent
company or a controlled company of the
parent company.
FILING DATES: The application was filed
on July 21, 2008, and amended on
January 16, 2009, August 13, 2009,
November 16, 2009 and November 27,
2009.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on January 25, 2010, and
should be accompanied by proof of
service on applicant, in the form of an
affidavit, or for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants, 200 Park Avenue,
New York, NY 10166–0188.
FOR FURTHER INFORMATION CONTACT:
Laura L. Solomon, Senior Counsel, at
(202) 551–6915, or Julia Kim Gilmer,
Branch Chief, at (202) 551–6871
(Division of Investment Management,
Office of Investment Company
Regulation).
BILLING CODE 8011–01–P
SUPPLEMENTARY INFORMATION:
10 This estimate is based on the following
calculation: 4,522 funds × $70,000 = $316,540,000.
VerDate Nov<24>2008
14:42 Jan 06, 2010
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The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
PO 00000
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1007
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. The Trust is a statutory trust
formed under Delaware law and
pursuant to a Declaration of Trust that
MetLife signed as sponsor. As sponsor,
MetLife is currently the sole beneficial
owner of the Trust.1 MetLife, a Delaware
corporation, is an insurance holding
company that, through its subsidiaries
and affiliates, offers life insurance,
annuities, automobile and homeowners
insurance, retail banking and other
financial services to individuals, as well
as group insurance and retirement and
savings products and services to
corporations and other institutions.2
2. The Trust was formed for the
purpose of funding the operations of
MetLife or its Controlled Companies
through the issuance of debt securities
or non-voting preferred stock (the
‘‘Finance Subsidiary Securities’’). The
Trust has not yet begun operations.
3. MetLife currently contemplates that
a MetLife Finance Subsidiary will offer
Finance Subsidiary Securities in private
placement transactions in reliance on an
exemption from the registration
requirements of the Securities Act of
1933, as amended (the ‘‘Securities
Act’’), or through public offerings that
are registered under the Securities Act.
1 If the Trust issues common securities, MetLife
or a Controlled Company (defined below) will own
all of the common securities issued by the Trust.
MetLife, as sponsor, will at all times control the
Trust in all material respects, including having the
sole right to select, remove or replace the Trust
administrators. A Controlled Company may be a
wholly-owned or majority-owned subsidiary of
MetLife through which MetLife conducts its
insurance, banking and broker-dealer business, or
an entity that is or would be, after giving effect to
the requested order, ‘‘controlled by’’ MetLife within
the meaning of paragraph (b)(3) of rule 3a–5 under
the Act.
2 Applicants request that the order also apply to
any existing or future company controlled by
MetLife that is an insurance company or a bank (as
defined in section 2(a) of the Act) or a holding
company primarily engaged in the business of an
insurance company or a bank, that relies on section
3(c)(3) and/or section 3(c)(6) of the Act, and that,
except for its reliance on section 3(c)(3) and/or
section 3(c)(6), acts as a ‘‘parent company’’ within
the meaning of rule 3a–5 under the Act (such
companies, together with MetLife, ‘‘Parent
Companies’’ and each, individually, a ‘‘Parent
Company’’) and to certain finance subsidiaries
wholly owned by a Parent Company or a controlled
company of such Parent Company (‘‘Controlled
Company of the Parent Company’’) that currently
exist or that may be established or acquired in the
future (such finance subsidiaries, together with the
Trust, ‘‘MetLife Finance Subsidiaries’’). The Trust
is the only MetLife Finance Subsidiary that
presently intends to rely on the requested order.
Any MetLife entity that relies on the requested
order in the future will comply with the terms and
conditions of the application.
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]]>Agencies
[Federal Register Volume 75, Number 4 (Thursday, January 7, 2010)]
[Notices]
[Pages 1005-1007]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-6]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Submission of OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor
[[Page 1006]]
Education and Advocacy, Washington, DC 20549-0213.
Extension: Rule 31a-2, SEC File No. 270-174, OMB Control No. 3235-
0179.
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.
Section 31(a)(1) of the Investment Company Act of 1940 \1\ (the
``Act'') 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.
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\6\ 15 U.S.C. 78q.
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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.
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\7\ 15 U.S.C. 80b-4.
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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
[[Page 1007]]
not derived from quantitative, comprehensive, or even representative
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.
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: December 30, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6 Filed 1-6-10; 8:45 am]
BILLING CODE 8011-01-P
