Submission for OMB Review; Comment Request, 11828-11829 [2011-4725]

Download as PDF srobinson on DSKHWCL6B1PROD with NOTICES 11828 Federal Register / Vol. 76, No. 42 / Thursday, March 3, 2011 / Notices (‘‘fund’’) from borrowing money or other property from, or selling or buying securities or other property to or from, the fund or any company that the fund controls.1 Section 2(a)(3) of the Act defines ‘‘affiliated person’’ of a fund to include its investment advisers.2 Rule 17a–10 (17 CFR 270.17a–10) permits (i) a subadviser of a fund to enter into transactions with funds the subadviser does not advise but that are affiliated persons of a fund that it does advise (e.g., other funds in the fund complex), and (ii) a subadviser (and its affiliated persons) to enter into transactions and arrangements with funds the subadviser does advise, but only with respect to discrete portions of the subadvised fund for which the subadviser does not provide investment advice. To qualify for the exemptions in rule 17a–10, the subadvisory relationship must be the sole reason why section 17(a) prohibits the transaction. In addition, the advisory contracts of the subadviser entering into the transaction, and any subadviser that is advising the purchasing portion of the fund, must prohibit the subadvisers from consulting with each other concerning securities transactions of the fund, and limit their responsibility to providing advice with respect to discrete portions of the fund’s portfolio.3 Section 17(a) of the Investment Company Act of 1940 (the ‘‘Act’’), generally prohibits affiliated persons of a registered investment company (‘‘fund’’) from borrowing money or other property from, or selling or buying securities or other property to or from, the fund or any company that the fund controls. Section 2(a)(3) of the Act defines ‘‘affiliated person’’ of a fund to include its investment advisers. Rule 17a–10 permits (i) a subadviser of a fund to enter into transactions with funds the subadviser does not advise but that are affiliated persons of a fund that it does advise (e.g., other funds in the fund complex), and (ii) a subadviser (and its affiliated persons) to enter into transactions and arrangements with funds the subadviser does advise, but only with respect to discrete portions of the subadvised fund for which the subadviser does not provide investment advice. To qualify for the exemptions in rule 17a–10, the subadvisory relationship must be the sole reason why section 17(a) prohibits the transaction. In addition, the advisory contracts of the subadviser entering into the transaction, and any subadviser that is advising the purchasing portion of the fund, must 1 15 U.S.C. 80a–17(a). U.S.C. 80a–2(a)(3)(E). 3 17 CFR 270.17a–10(a)(2). 2 15 VerDate Mar<15>2010 16:47 Mar 02, 2011 Jkt 223001 prohibit the subadvisers from consulting with each other concerning securities transactions of the fund, and limit their responsibility to providing advice with respect to discrete portions of the fund’s portfolio. This requirement regarding the prohibitions and limitations in advisory contracts of subadvisors relying on the rule constitutes a collection of information under the Paperwork Reduction Act of 1995 (‘‘PRA’’).4 The staff assumes that all funds existing in 2003 amended their advisory contracts following the amendments to rule 17a–10 that year that conditioned certain exemptions upon these contractual alterations, and therefore there is no continuing burden for those funds.5 Staff also assumes that funds that came into existence after 2003 included the contractual requirements in rule 17a–10 in their subadvisory agreements and therefore there is no continuing burden for those funds. Based on an analysis of fund filings, the staff estimates that approximately 252 fund portfolios enter into new subadvisory agreements each year.6 Based on discussions with industry representatives, the staff estimates that it will require approximately 3 attorney hours to draft and execute additional clauses in new subadvisory contracts in order for funds and subadvisers to be able to rely on the exemptions in rule 17a–10. Because these additional clauses are identical to the clauses that a fund would need to insert in their subadvisory contracts to rely on rules 10f–3, 12d3–1, and 17e–1, and because we believe that funds that use one such rule generally use all of these rules, we apportion this 3 hour time burden equally among all four rules. Therefore, we estimate that the burden allocated to rule 17a–10 for this contract change would be 0.75 hours.7 Assuming that all 252 funds that enter into new subadvisory contracts each year include in their contract the provisions required by the rule, we estimate that the rule’s contract requirement will result in 189 burden hours annually, with an associated cost of approximately $59,724.8 4 44 U.S.C. 3501. assume that funds formed after 2003 that intended to rely on rule 17a–10 would have included the required provision as a standard element in their initial subadvisory contracts. 6 Based on information in Commission filings, we estimate that 42.5 percent of funds are advised by subadvisers. 7 This estimate is based on the following calculation: 3 hours ÷ 4 rules = 0.75 hours. 8 These estimates are based on the following calculations: 0.75 hours × 252 portfolios = 189 burden hours; $316 per hour × 189 hours = $59,724 total cost. The Commission staff’s estimates 5 We PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 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. Complying with this collection of information requirement is necessary to obtain the benefit of relying on rule 17a–10. Responses will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view the background documentation for this information collection at the following Web site, http://www.reginfo.gov. 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@omb.eop.gov; and (ii) Thomas Bayer, Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 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: February 25, 2011. Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–4730 Filed 3–2–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549–0213. Extension: Rule 12d3–1; SEC File No. 270–504; OMB Control No. 3235–0561. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 concerning the wage rates for attorney time are based on salary information for the securities industry compiled by the Securities Industry and Financial Markets Association. The $316 per hour figure for an attorney is from the Securities Industry and Financial Markets Association’s Management & Professional Earnings in the Securities Industry 2009, modified by Commission staff to account for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead. E:\FR\FM\03MRN1.SGM 03MRN1 srobinson on DSKHWCL6B1PROD with NOTICES Federal Register / Vol. 76, No. 42 / Thursday, March 3, 2011 / Notices (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (the ‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for extension of the previously approved collection of information discussed below. Section 12(d)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a) generally prohibits registered investment companies (‘‘funds’’), and companies controlled by funds, from purchasing securities issued by a registered investment adviser, broker, dealer, or underwriter (‘‘securitiesrelated businesses’’). Rule 12d3–1 (‘‘Exemption of acquisitions of securities issued by persons engaged in securities related businesses’’ (17 CFR 270.12d3– 1)) permits a fund to invest up to five percent of its assets in securities of an issuer deriving more than fifteen percent of its gross revenues from securities-related businesses, but a fund may not rely on rule 12d3–1 to acquire securities of its own investment adviser or any affiliated person of its own investment adviser. A fund may, however, rely on an exemption in rule 12d3–1 to acquire securities issued by its subadvisers in circumstances in which the subadviser would have little ability to take advantage of the fund, because it is not in a position to direct the fund’s securities purchases. The exemption in rule 12d3–1 is available if (i) the subadviser is not, and is not an affiliated person of, an investment adviser that provides advice with respect to the portion of the fund that is acquiring the securities, and (ii) the advisory contracts of the subadviser, and any subadviser that is advising the purchasing portion of the fund, prohibit them from consulting with each other concerning securities transactions of the fund, and limit their responsibility in providing advice to providing advice with respect to discrete portions of the fund’s portfolio. Based on an analysis of fund filings, the staff estimates that approximately 252 fund portfolios enter into subadvisory agreements each year.1 Based on discussions with industry representatives, the staff estimates that it will require approximately 3 attorney hours to draft and execute additional clauses in new subadvisory contracts in order for funds and subadvisers to be able to rely on the exemptions in rule 12d3–1. Because these additional clauses are identical to the clauses that a fund would need to insert in their 1 Based on information in Commission filings, we estimate that 42.5 percent of funds are advised by subadvisers. VerDate Mar<15>2010 16:47 Mar 02, 2011 Jkt 223001 subadvisory contracts to rely on rules 10f–3, 17a–10, and 17e–1 and because we believe that funds that use one such rule generally use all of these rules, we apportion this 3 hour time burden equally to all four rules. Therefore, we estimate that the burden allocated to rule 12d3–1 for this contract change would be 0.75 hours.2 Assuming that all 252 funds that enter into new subadvisory contracts each year make the modification to their contract required by the rule, we estimate that the rule’s contract modification requirement will result in 189 burden hours annually.3 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. Complying with this collection of information requirement is necessary to obtain the benefit of relying on rule 12d3–1. Responses will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view the background documentation for this information collection at the following Web site, http://www.reginfo.gov. 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@omb.eop.gov; and (ii) Thomas Bayer, Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 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: February 25, 2011. Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–4725 Filed 3–2–11; 8:45 am] BILLING CODE 8011–01–P 2 This estimate is based on the following calculation (3 hours ÷ 4 rules = .75 hours). 3 This estimate is based on the following calculation: (0.75 hours × 252 portfolios = 189 burden hours. PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 11829 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63960; File No. SR–FINRA– 2011–008] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Require Public Disclosure of Any Access or Post-Transaction Fees for Executions Against a Public Quotation in an OTC Equity Security February 24, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 18, 2011, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to require members to disclose on the member’s Web site fees imposed against its published quotation in any OTC Equity Security consistent with FINRA Rule 6450 (Restrictions on Access Fees). The text of the proposed rule change is available on FINRA’s Web site at http://www.finra.org, at the principal office of FINRA, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 1 15 2 17 E:\FR\FM\03MRN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 03MRN1

Agencies

[Federal Register Volume 76, Number 42 (Thursday, March 3, 2011)]
[Notices]
[Pages 11828-11829]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-4725]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.
Extension:
    Rule 12d3-1; SEC File No. 270-504; OMB Control No. 3235-0561.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995

[[Page 11829]]

(44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (the 
``Commission'') has submitted to the Office of Management and Budget 
(``OMB'') a request for extension of the previously approved collection 
of information discussed below.
    Section 12(d)(3) of the Investment Company Act of 1940 (15 U.S.C. 
80a) generally prohibits registered investment companies (``funds''), 
and companies controlled by funds, from purchasing securities issued by 
a registered investment adviser, broker, dealer, or underwriter 
(``securities-related businesses''). Rule 12d3-1 (``Exemption of 
acquisitions of securities issued by persons engaged in securities 
related businesses'' (17 CFR 270.12d3-1)) permits a fund to invest up 
to five percent of its assets in securities of an issuer deriving more 
than fifteen percent of its gross revenues from securities-related 
businesses, but a fund may not rely on rule 12d3-1 to acquire 
securities of its own investment adviser or any affiliated person of 
its own investment adviser.
    A fund may, however, rely on an exemption in rule 12d3-1 to acquire 
securities issued by its subadvisers in circumstances in which the 
subadviser would have little ability to take advantage of the fund, 
because it is not in a position to direct the fund's securities 
purchases. The exemption in rule 12d3-1 is available if (i) the 
subadviser is not, and is not an affiliated person of, an investment 
adviser that provides advice with respect to the portion of the fund 
that is acquiring the securities, and (ii) the advisory contracts of 
the subadviser, and any subadviser that is advising the purchasing 
portion of the fund, prohibit them from consulting with each other 
concerning securities transactions of the fund, and limit their 
responsibility in providing advice to providing advice with respect to 
discrete portions of the fund's portfolio.
    Based on an analysis of fund filings, the staff estimates that 
approximately 252 fund portfolios enter into subadvisory agreements 
each year.\1\ Based on discussions with industry representatives, the 
staff estimates that it will require approximately 3 attorney hours to 
draft and execute additional clauses in new subadvisory contracts in 
order for funds and subadvisers to be able to rely on the exemptions in 
rule 12d3-1. Because these additional clauses are identical to the 
clauses that a fund would need to insert in their subadvisory contracts 
to rely on rules 10f-3, 17a-10, and 17e-1 and because we believe that 
funds that use one such rule generally use all of these rules, we 
apportion this 3 hour time burden equally to all four rules. Therefore, 
we estimate that the burden allocated to rule 12d3-1 for this contract 
change would be 0.75 hours.\2\ Assuming that all 252 funds that enter 
into new subadvisory contracts each year make the modification to their 
contract required by the rule, we estimate that the rule's contract 
modification requirement will result in 189 burden hours annually.\3\
---------------------------------------------------------------------------

    \1\ Based on information in Commission filings, we estimate that 
42.5 percent of funds are advised by subadvisers.
    \2\ This estimate is based on the following calculation (3 hours 
/ 4 rules = .75 hours).
    \3\ This estimate is based on the following calculation: (0.75 
hours x 252 portfolios = 189 burden hours.
---------------------------------------------------------------------------

    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. Complying with this collection of 
information requirement is necessary to obtain the benefit of relying 
on rule 12d3-1. Responses will not be kept confidential. An agency may 
not conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid control 
number.
    The public may view the background documentation for this 
information collection at the following Web site, http://www.reginfo.gov. 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@omb.eop.gov; and (ii) Thomas Bayer, Chief 
Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 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: February 25, 2011.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-4725 Filed 3-2-11; 8:45 am]
BILLING CODE 8011-01-P