Proposed Collection; Comment Request, 54816-54818 [2011-22568]
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54816
Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Notices
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.
erowe on DSK5CLS3C1PROD with NOTICES
Extension:
Rule 11a–3, SEC File No. 270–321, OMB
Control No. 3235–0358.
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 11(a) of the Investment
Company Act of 1940 (‘‘Act’’) (15 U.S.C.
80a–11(a)) provides that it is unlawful
for a registered open-end investment
company (‘‘fund’’) or its underwriter to
make an offer to the fund’s shareholders
or the shareholders of any other fund to
exchange the fund’s securities for
securities of the same or another fund
on any basis other than the relative net
asset values (‘‘NAVs’’) of the respective
securities to be exchanged, ‘‘unless the
terms of the offer have first been
submitted to and approved by the
Commission or are in accordance with
such rules and regulations as the
Commission may have prescribed in
respect of such offers.’’ Section 11(a)
was designed to prevent ‘‘switching,’’
the practice of inducing shareholders of
one fund to exchange their shares for
the shares of another fund for the
purpose of exacting additional sales
charges.
Rule 11a–3 (17 CFR 270.11a–3) under
the Act is an exemptive rule that
permits open-end investment
companies (‘‘funds’’), other than
insurance company separate accounts,
and funds’ principal underwriters, to
make certain exchange offers to fund
shareholders and shareholders of other
funds in the same group of investment
companies. The rule requires a fund,
among other things, (i) to disclose in its
prospectus and advertising literature the
amount of any administrative or
redemption fee imposed on an exchange
transaction, (ii) if the fund imposes an
administrative fee on exchange
transactions, other than a nominal one,
to maintain and preserve records with
respect to the actual costs incurred in
connection with exchanges for at least
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six years, and (iii) give the fund’s
shareholders a sixty day notice of a
termination of an exchange offer or any
material amendment to the terms of an
exchange offer (unless the only material
effect of an amendment is to reduce or
eliminate an administrative fee, sales
load or redemption fee payable at the
time of an exchange).
The rule’s requirements are designed
to protect investors against abuses
associated with exchange offers, provide
fund shareholders with information
necessary to evaluate exchange offers
and certain material changes in the
terms of exchange offers, and enable the
Commission staff to monitor funds’ use
of administrative fees charged in
connection with exchange transactions.
The staff estimates that there are
approximately 1790 active open-end
investment companies registered with
the Commission as of June 2011. The
staff estimates that 25 percent (or 448)
of these funds impose a non-nominal
administrative fee on exchange
transactions. The staff estimates that the
recordkeeping requirement of the rule
requires approximately 1 hour annually
of clerical time per fund, for a total of
448 hours for all funds.1
The staff estimates that 5 percent of
these 1790 funds (or 90) terminate an
exchange offer or make a material
change to the terms of their exchange
offer each year, requiring the fund to
comply with the notice requirement of
the rule. The staff estimates that
complying with the notice requirement
of the rule requires approximately 1
hour of attorney time and 2 hours of
clerical time per fund, for a total of
approximately 270 hours for all funds to
comply with the notice requirement.2
The recordkeeping and notice
requirements together therefore impose
a total burden of 718 hours on all
funds.3 The total number of respondents
is 538, each responding once a year.4
The burdens associated with the
disclosure requirement of the rule are
accounted for in the burdens associated
with the Form N–1A registration
statement for funds.
1 This estimate is based on the following
calculations: (1790 funds × 0.25% = 448 funds);
(448 × 1 (clerical hour) = 448 clerical hours).
2 This estimate is based on the following
calculations: (1790 (funds) × 0.05% = 90 funds); (90
× 1 (attorney hour) = 90 total attorney hours); (90
(funds) × 2 (clerical hours) = 180 total clerical
hours); (90 (attorney hours) + 180 (clerical hours)
= 270 total hours).
3 This estimate is based on the following
calculations: (270 (notice hours) + 448
(recordkeeping hours) = 718 total hours).
4 This estimate is based on the following
calculation: (448 funds responding to recordkeeping
requirement + 90 funds responding to notice
requirement = 538 total respondents).
PO 00000
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Fmt 4703
Sfmt 4703
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act, and is not
derived from a comprehensive or even
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 required to respond
to, a collection of information unless it
displays a currently valid control
number.
Written comments are requested on:
(a) Whether the collection of
information is 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 burden(s) 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.
Please direct your written comments
to Thomas Bayer, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way,
Alexandria, VA 22312; or send an email to: PRA_Mailbox@sec.gov .
Dated: August 29, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–22570 Filed 9–1–11; 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 0–1, SEC File No. 270–472, OMB
Control No. 3235–0531.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) plans to submit to the
Office of Management and Budget a
request for extension of the previous
approved collection of information
discussed below.
E:\FR\FM\02SEN1.SGM
02SEN1
Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Notices
The Investment Company Act of 1940
(the ‘‘Act’’) 1 establishes a
comprehensive framework for regulating
the organization and operation of
investment companies (‘‘funds’’). A
principal objective of the Act is to
protect fund investors by addressing the
conflicts of interest that exist between
funds and their investment advisers and
other affiliated persons. The Act places
significant responsibility on the fund
board of directors in overseeing the
operations of the fund and policing the
relevant conflicts of interest.2
In one of its first releases, the
Commission exercised its rulemaking
authority pursuant to sections 38(a) and
40(b) of the Act by adopting rule 0–1 (17
CFR 270.0–1).3 Rule 0–1, as
subsequently amended on numerous
occasions, provides definitions for the
terms used by the Commission in the
rules and regulations it has adopted
pursuant to the Act. The rule also
contains a number of rules of
construction for terms that are defined
either in the Act itself or elsewhere in
the Commission’s rules and regulations.
Finally, rule 0–1 defines terms that
serve as conditions to the availability of
certain of the Commission’s exemptive
rules. More specifically, the term
‘‘independent legal counsel,’’ as defined
in rule 0–1, sets out conditions that
funds must meet in order to rely on any
of ten exemptive rules (‘‘exemptive
rules’’) under the Act.4
The Commission amended rule 0–1 to
include the definition of the term
‘‘independent legal counsel’’ in 2001.5
This amendment was designed to
enhance the effectiveness of fund boards
of directors and to better enable
investors to assess the independence of
those directors. The Commission also
amended the exemptive rules to require
that any person who serves as legal
counsel to the independent directors of
any fund that relies on any of the
exemptive rules must be an
‘‘independent legal counsel.’’ This
requirement was added because
independent directors can better
erowe on DSK5CLS3C1PROD with NOTICES
1 15
U.S.C. 80a.
2 For example, fund directors must approve
investment advisory and distribution contracts. See
15 U.S.C. 80a–15(a), (b), and (c).
3 Investment Company Act Release No. 4 (Oct. 29,
1940) (5 FR 4316 (Oct. 31, 1940)). Note that rule 0–
1 was originally adopted as rule N–1.
4 The relevant exemptive rules are: Rule 10f–3 (17
CFR 270.10f–3), rule 12b–1 (17 CFR 270.12b–1),
rule 15a–4(b)(2) (17 CFR 270.15a–4(b)(2)), rule 17a–
7 (17 CFR 270.17a–7), rule 17a–8 (17 CFR 270.17a–
8), rule 17d–1(d)(7) (17 CFR 270.17d–1(d)(7)), rule
17e–1(c) (17 CFR 270.17e–1(c)), rule 17g–1 (17 CFR
270.17g–1), rule 18f–3 (17 CFR 270.18f–3), and rule
23c–3 (17 CFR 270.23c–3).
5 See Role of Independent Directors of Investment
Companies, Investment Company Act Release No.
24816 (Jan. 2, 2001) (66 FR 3735 (Jan. 16, 2001)).
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Jkt 223001
perform the responsibilities assigned to
them under the Act and the rules if they
have the assistance of truly independent
legal counsel.
If the board’s counsel has represented
the fund’s investment adviser, principal
underwriter, administrator (collectively,
‘‘management organizations’’) or their
‘‘control persons’’ 6 during the past two
years, rule 0–1 requires that the board’s
independent directors make a
determination about the adequacy of the
counsel’s independence. A majority of
the board’s independent directors are
required to reasonably determine, in the
exercise of their judgment, that the
counsel’s prior or current representation
of the management organizations or
their control persons was sufficiently
limited to conclude that it is unlikely to
adversely affect the counsel’s
professional judgment and legal
representation. Rule 0–1 also requires
that a record for the basis of this
determination is made in the minutes of
the directors’ meeting. In addition, the
independent directors must have
obtained an undertaking from the
counsel to provide them with the
information necessary to make their
determination and to update promptly
that information when the person begins
to represent a management organization
or control person, or when he or she
materially increases his or her
representation. Generally, the
independent directors must re-evaluate
their determination no less frequently
than annually.
Any fund that relies on one of the
exemptive rules must comply with the
requirements in the definition of
‘‘independent legal counsel’’ under rule
0–1. We assume that approximately
3796 funds rely on at least one of the
exemptive rules annually.7 We further
assume that the independent directors
of approximately one-third (1265) of
those funds would need to make the
required determination in order for their
counsel to meet the definition of
independent legal counsel.8 We
6 A ‘‘control person’’ is any person—other than a
fund—directly or indirectly controlling, controlled
by, or under common control, with any of the
fund’s management organizations. See 17 CFR
270.01(a)(6)(iv)(B).
7 Based on statistics compiled by Commission
staff, we estimate that there are approximately 4218
funds that could rely on one or more of the
exemptive rules. Of those funds, we assume that
approximately 90 percent (3796) actually rely on at
least one exemptive rules annually.
8 We assume that the independent directors of the
remaining two-thirds of those funds will choose not
to have counsel, or will rely on counsel who has
not recently represented the fund’s management
organizations or control persons. In both
circumstances, it would not be necessary for the
fund’s independent directors to make a
determination about their counsel’s independence.
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
54817
estimate that each of these 1265 funds
would be required to spend, on average,
0.75 hours annually to comply with the
recordkeeping requirement associated
with this determination, for a total
annual burden of approximately 949
hours. Based on this estimate, the total
annual cost for all funds’ compliance
with this rule is approximately
$169,927. To calculate this total annual
cost, the Commission staff assumed that
approximately two-thirds of the total
annual hour burden (633 hours) would
be incurred by compliance staff with an
average hourly wage rate of $235 per
hour,9 and one-third of the annual hour
burden (316 hours) would be incurred
by clerical staff with an average hourly
wage rate of $67 per hour.10
These burden hour estimates are
based upon the Commission staff’s
experience and discussions with the
fund industry. The estimates of average
burden hours are made solely for the
purposes of the Paperwork Reduction
Act. These estimates are not derived
from a comprehensive or even a
representative survey or study of the
costs of Commission rules.
Written comments are invited on: (a)
Whether the collection of information is
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 collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burdens 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.
Please direct your written comments
to Thomas Bayer, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way,
9 The estimated hourly wages used in this PRA
analysis were derived from reports prepared by the
Securities Industry and Financial Markets
Association. See Securities Industry and Financial
Markets Association, Report on Management and
Professional Earnings in the Securities Industry—
2010 (2010), modified to account for an 1800-hour
work year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead;
and Securities Industry and Financial Markets
Association, Office Salaries in the Securities
Industry—2010 (2010), modified to account for an
1800-hour work year and multiplied by 2.93 to
account for bonuses, firm size, employee benefits
and overhead.
10 (633 × $235/hour) + (316 × $67/hour) =
$169,927.
E:\FR\FM\02SEN1.SGM
02SEN1
54818
Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Notices
Alexandria, VA 22312; or send an email to: PRA_Mailbox@sec.gov .
Dated: August 29, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–22568 Filed 9–1–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copy Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
erowe on DSK5CLS3C1PROD with NOTICES
Extension:
Form N–6F, SEC File No. 270–185, OMB
Control No. 3235–0238.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission (the
‘‘Commission’’) 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.
The title for the collection of
information is ‘‘Form N–6F (17 CFR
274.15), Notice of Intent to Elect to be
Subject to Sections 55 through 65 of the
Investment Company Act of 1940.’’ The
purpose of Form N–6F is to notify the
Commission of a company’s intent to
file a notification of election to become
subject to Sections 55 through 65 of the
Investment Company Act of 1940 (15
U.S.C. 80a–1 et seq.) (‘‘1940 Act’’).
Certain companies may have to make a
filing with the Commission before they
are ready to elect to be regulated as a
business development company.1 A
company that is excluded from the
definition of ‘‘investment company’’ by
Section 3(c)(1) because it has fewer than
one hundred shareholders and is not
making a public offering of its securities
may lose such an exclusion solely
because it proposes to make a public
offering of securities as a business
development company. Such company,
under certain conditions, would not
lose its exclusion if it notifies the
Commission on Form N–6F of its intent
to make an election to be regulated as
a business development company. The
1 A company might not be prepared to elect to be
subject to Sections 55 through 65 of the 1940 Act
because its capital structure or management
compensation plan is not yet in compliance with
the requirements of those sections.
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15:37 Sep 01, 2011
Jkt 223001
company only has to file a Form N–6F
once.
The Commission estimates that on
average approximately thirteen
companies file these notifications each
year. Each of those companies need only
make a single filing of Form N–6F. The
Commission further estimates that this
information collection imposes burden
of 0.5 hours, resulting in a total annual
PRA burden of 6.5 hours. Based on the
estimated wage rate, the total cost to the
industry of the hour burden for
complying with Form N–6F would be
approximately $2,080.
The collection of information under
Form N–6F is mandatory. The
information provided under the form is
not 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 OMB control number.
Written comments are invited on: (a)
Whether the proposed 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.
Please direct your written comments
to Thomas Bayer, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Remi
Pavlik-Simon, 6432 General Green Way,
Alexandria, VA 22312; or send an email to: PRA_Mailbox@sec.gov.
Dated: August 29, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–22581 Filed 9–1–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copy Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
Form N–54C, SEC File No. 270–184, OMB
Control No. 3235–0236.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (the ‘‘PRA’’), 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.
Under the Investment Company Act
of 1940 (15 U.S.C. 80a–1 et seq.) (the
‘‘Investment Company Act’’), certain
investment companies can elect to be
regulated as business development
companies, as defined in Section
2(a)(48) of the Investment Company Act
(15 U.S.C. 80a–2(a)(48)). Under Section
54(a) of the Investment Company Act
(15 U.S.C. 80a–53(a)), any company
defined in Section 2(a)(48)(A) and (B) of
the Investment Company Act (15 U.S.C.
80a–2(a)(48)), may if it meets certain
enumerated eligibility requirements
elect to be subject to the provisions of
Sections 55 through 65 of the
Investment Company Act (15 U.S.C.
80a–54 to 80a–64) by filing with the
Commission a notification of election on
Form N–54A (17 CFR 274.53). Under
Section 54(c) of the Investment
Company Act (15 U.S.C. 80a–53(c)), any
business development company may
voluntarily withdraw its election under
Section 54(a) of the Investment
Company Act (15 U.S.C. 80a–53(a)) by
filing a notice of withdrawal of election
with the Commission. The Commission
has adopted Form N–54C (17 CFR
274.54) as the form for notification of
withdrawal of election to be subject to
Sections 55 through 65 of the
Investment Company Act.
The purpose of Form N–54C is to
notify the Commission that the business
development company withdraws its
election to be subject to Sections 55
through 65 of the Investment Company
Act, enabling the Commission to
administer those provisions of the
Investment Company Act to such
companies.
The Commission estimates that on
average approximately 10 business
development companies file these
notifications each year. Each of those
business development companies need
only make a single filing of Form N–
54C. The Commission further estimates
that this information collection imposes
a burden of one hour, resulting in a total
annual PRA burden of 10 hours. Based
on the estimated wage rate, the total cost
to the business development industry of
the hour burden for complying with
E:\FR\FM\02SEN1.SGM
02SEN1
]]>Agencies
[Federal Register Volume 76, Number 171 (Friday, September 2, 2011)]
[Notices]
[Pages 54816-54818]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22568]
-----------------------------------------------------------------------
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 0-1, SEC File No. 270-472, OMB Control No. 3235-0531.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') plans to submit to the Office of Management
and Budget a request for extension of the previous approved collection
of information discussed below.
[[Page 54817]]
The Investment Company Act of 1940 (the ``Act'') \1\ establishes a
comprehensive framework for regulating the organization and operation
of investment companies (``funds''). A principal objective of the Act
is to protect fund investors by addressing the conflicts of interest
that exist between funds and their investment advisers and other
affiliated persons. The Act places significant responsibility on the
fund board of directors in overseeing the operations of the fund and
policing the relevant conflicts of interest.\2\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 80a.
\2\ For example, fund directors must approve investment advisory
and distribution contracts. See 15 U.S.C. 80a-15(a), (b), and (c).
---------------------------------------------------------------------------
In one of its first releases, the Commission exercised its
rulemaking authority pursuant to sections 38(a) and 40(b) of the Act by
adopting rule 0-1 (17 CFR 270.0-1).\3\ Rule 0-1, as subsequently
amended on numerous occasions, provides definitions for the terms used
by the Commission in the rules and regulations it has adopted pursuant
to the Act. The rule also contains a number of rules of construction
for terms that are defined either in the Act itself or elsewhere in the
Commission's rules and regulations. Finally, rule 0-1 defines terms
that serve as conditions to the availability of certain of the
Commission's exemptive rules. More specifically, the term ``independent
legal counsel,'' as defined in rule 0-1, sets out conditions that funds
must meet in order to rely on any of ten exemptive rules (``exemptive
rules'') under the Act.\4\
---------------------------------------------------------------------------
\3\ Investment Company Act Release No. 4 (Oct. 29, 1940) (5 FR
4316 (Oct. 31, 1940)). Note that rule 0-1 was originally adopted as
rule N-1.
\4\ The relevant exemptive rules are: Rule 10f-3 (17 CFR
270.10f-3), rule 12b-1 (17 CFR 270.12b-1), rule 15a-4(b)(2) (17 CFR
270.15a-4(b)(2)), rule 17a-7 (17 CFR 270.17a-7), rule 17a-8 (17 CFR
270.17a-8), rule 17d-1(d)(7) (17 CFR 270.17d-1(d)(7)), rule 17e-1(c)
(17 CFR 270.17e-1(c)), rule 17g-1 (17 CFR 270.17g-1), rule 18f-3 (17
CFR 270.18f-3), and rule 23c-3 (17 CFR 270.23c-3).
---------------------------------------------------------------------------
The Commission amended rule 0-1 to include the definition of the
term ``independent legal counsel'' in 2001.\5\ This amendment was
designed to enhance the effectiveness of fund boards of directors and
to better enable investors to assess the independence of those
directors. The Commission also amended the exemptive rules to require
that any person who serves as legal counsel to the independent
directors of any fund that relies on any of the exemptive rules must be
an ``independent legal counsel.'' This requirement was added because
independent directors can better perform the responsibilities assigned
to them under the Act and the rules if they have the assistance of
truly independent legal counsel.
---------------------------------------------------------------------------
\5\ See Role of Independent Directors of Investment Companies,
Investment Company Act Release No. 24816 (Jan. 2, 2001) (66 FR 3735
(Jan. 16, 2001)).
---------------------------------------------------------------------------
If the board's counsel has represented the fund's investment
adviser, principal underwriter, administrator (collectively,
``management organizations'') or their ``control persons'' \6\ during
the past two years, rule 0-1 requires that the board's independent
directors make a determination about the adequacy of the counsel's
independence. A majority of the board's independent directors are
required to reasonably determine, in the exercise of their judgment,
that the counsel's prior or current representation of the management
organizations or their control persons was sufficiently limited to
conclude that it is unlikely to adversely affect the counsel's
professional judgment and legal representation. Rule 0-1 also requires
that a record for the basis of this determination is made in the
minutes of the directors' meeting. In addition, the independent
directors must have obtained an undertaking from the counsel to provide
them with the information necessary to make their determination and to
update promptly that information when the person begins to represent a
management organization or control person, or when he or she materially
increases his or her representation. Generally, the independent
directors must re-evaluate their determination no less frequently than
annually.
---------------------------------------------------------------------------
\6\ A ``control person'' is any person--other than a fund--
directly or indirectly controlling, controlled by, or under common
control, with any of the fund's management organizations. See 17 CFR
270.01(a)(6)(iv)(B).
---------------------------------------------------------------------------
Any fund that relies on one of the exemptive rules must comply with
the requirements in the definition of ``independent legal counsel''
under rule 0-1. We assume that approximately 3796 funds rely on at
least one of the exemptive rules annually.\7\ We further assume that
the independent directors of approximately one-third (1265) of those
funds would need to make the required determination in order for their
counsel to meet the definition of independent legal counsel.\8\ We
estimate that each of these 1265 funds would be required to spend, on
average, 0.75 hours annually to comply with the recordkeeping
requirement associated with this determination, for a total annual
burden of approximately 949 hours. Based on this estimate, the total
annual cost for all funds' compliance with this rule is approximately
$169,927. To calculate this total annual cost, the Commission staff
assumed that approximately two-thirds of the total annual hour burden
(633 hours) would be incurred by compliance staff with an average
hourly wage rate of $235 per hour,\9\ and one-third of the annual hour
burden (316 hours) would be incurred by clerical staff with an average
hourly wage rate of $67 per hour.\10\
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\7\ Based on statistics compiled by Commission staff, we
estimate that there are approximately 4218 funds that could rely on
one or more of the exemptive rules. Of those funds, we assume that
approximately 90 percent (3796) actually rely on at least one
exemptive rules annually.
\8\ We assume that the independent directors of the remaining
two-thirds of those funds will choose not to have counsel, or will
rely on counsel who has not recently represented the fund's
management organizations or control persons. In both circumstances,
it would not be necessary for the fund's independent directors to
make a determination about their counsel's independence.
\9\ The estimated hourly wages used in this PRA analysis were
derived from reports prepared by the Securities Industry and
Financial Markets Association. See Securities Industry and Financial
Markets Association, Report on Management and Professional Earnings
in the Securities Industry--2010 (2010), modified to account for an
1800-hour work year and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead; and Securities Industry
and Financial Markets Association, Office Salaries in the Securities
Industry--2010 (2010), modified to account for an 1800-hour work
year and multiplied by 2.93 to account for bonuses, firm size,
employee benefits and overhead.
\10\ (633 x $235/hour) + (316 x $67/hour) = $169,927.
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These burden hour estimates are based upon the Commission staff's
experience and discussions with the fund industry. The estimates of
average burden hours are made solely for the purposes of the Paperwork
Reduction Act. These estimates are not derived from a comprehensive or
even a representative survey or study of the costs of Commission rules.
Written comments are invited on: (a) Whether the collection of
information is 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 collection of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burdens 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.
Please direct your written comments to Thomas Bayer, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 6432 General Green Way,
[[Page 54818]]
Alexandria, VA 22312; or send an e-mail to: PRA_Mailbox@sec.gov .
Dated: August 29, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22568 Filed 9-1-11; 8:45 am]
BILLING CODE 8011-01-P
