Submission for OMB Review; Comment Request, 51585-51586 [2012-20825]
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Federal Register / Vol. 77, No. 165 / Friday, August 24, 2012 / Notices
the modification to their contract
required by the rule, we estimate that
the rule’s contract modification
requirement will result in 581 burden
hours annually.10
The staff estimates, therefore, that rule
10f–3 imposes an information collection
burden of 5,665 hours.11 This estimate
does not include the time spent filing
transaction reports on Form N–SAR,
which is encompassed in the
information collection burden estimate
for that form.
The collection of information required
by rule 10f–3 is necessary to obtain the
benefits of the rule. 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 OMB control number.
The public may view the background
documentation for this information
collection at the following Web site,
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 email to:
Shagufta_Ahmed@omb.eop.gov; and (ii)
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. Comments
must be submitted to OMB within 30
days of this notice.
Dated: August 20, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–20824 Filed 8–23–12; 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.
erowe on DSK2VPTVN1PROD with
Extension:
Rule 12b–1; SEC File No. 270–188; OMB
Control No. 3235–0212.
10 These estimates are based on the following
calculations: (0.75 hours × 775 portfolios = 581
burden hours).
11 This estimate is based on the following
calculation: (1,850 hours + 1,233 hours + 1,200
hours + 600 hours + 581 hours + 201 hours = 5,665
total burden hours).
VerDate Mar<15>2010
15:22 Aug 23, 2012
Jkt 226001
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’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Rule 12b–1 under the Investment
Company Act of 1940 (17 CFR 270.12b–
1) permits a registered open-end
investment company (‘‘fund’’ or
‘‘mutual fund’’) to bear expenses
associated with the distribution of its
shares, provided that the mutual fund
complies with certain requirements,
including, among other things, that it
adopt a written plan (‘‘rule 12b–1 plan’’)
and that it has in writing any
agreements relating to the rule 12b–1
plan. The rule in part requires that (i)
The adoption or material amendment of
a rule 12b–1 plan be approved by the
mutual fund’s directors, including its
independent directors, and, in certain
circumstances, its shareholders; (ii) the
board review quarterly reports of
amounts spent under the rule 12b–1
plan; and (iii) the board, including the
independent directors, consider
continuation of the rule 12b–1 plan and
any related agreements at least annually.
Rule 12b–1 also requires mutual funds
relying on the rule to preserve for six
years, the first two years in an easily
accessible place, copies of the rule 12b–
1 plan and any related agreements and
reports, as well as minutes of board
meetings that describe the factors
considered and the basis for adopting or
continuing a rule 12b–1 plan.
Rule 12b–1 also prohibits funds from
paying for distribution of fund shares
with brokerage commissions on their
portfolio transactions. The rule requires
funds that use broker-dealers that sell
their shares to also execute their
portfolio securities transactions, to
implement policies and procedures
reasonably designed to prevent: (i) The
persons responsible for selecting brokerdealers to effect transactions in fund
portfolio securities from taking into
account broker-dealers’ promotional or
sales efforts when making those
decisions; and (ii) a fund, its adviser or
principal underwriter, from entering
into any agreement under which the
fund directs brokerage transactions or
revenue generated by those transactions
to a broker-dealer to pay for distribution
of the fund’s (or any other fund’s)
shares.
The board and shareholder approval
requirements of rule 12b–1 are designed
to ensure that fund shareholders and
directors receive adequate information
to evaluate and approve a rule 12b–1
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
51585
plan and, thus, are necessary for
investor protection. The requirement of
quarterly reporting to the board is
designed to ensure that the rule 12b–1
plan continues to benefit the fund and
its shareholders. The recordkeeping
requirements of the rule are necessary to
enable Commission staff to oversee
compliance with the rule. The
requirement that funds or their advisers
implement, and fund boards approve,
policies and procedures in order to
prevent persons charged with allocating
fund brokerage from taking distribution
efforts into account is designed to
ensure that funds’ selection of brokers to
effect portfolio securities transactions is
not influenced by considerations about
the sale of fund shares.
Based on information filed with the
Commission by funds, Commission staff
estimates that there are approximately
6,771 mutual fund portfolios that have
at least one share class subject to a rule
12b–1 plan.1 However, many of these
portfolios are part of an affiliated group
of funds, or mutual fund family, that is
overseen by a common board of
directors. Although the board must
review and approve the rule 12b–1 plan
for each fund separately, we have
allocated the costs and hourly burden
related to rule 12b–1 based on the
number of fund families that have at
least one fund that charges rule 12b–1
fees, rather than on the total number of
mutual fund portfolios that individually
have a rule 12b–1 plan.2 Based on
information filed with the Commission,
the staff estimates that there are
approximately 375 fund families with
common boards of directors that have at
least one fund with a rule 12b–1 plan.
Based on previous conversations with
fund representatives, Commission staff
estimates that for each of the 375 mutual
fund families with a portfolio that has
a rule 12b–1 plan, the average annual
burden of complying with the rule is
425 hours. This estimate takes into
account the time needed to prepare
quarterly reports to the board of
directors, the board’s consideration of
those reports, and the board’s initial or
1 This estimate is based on information from the
Commission’s NSAR database.
2 This allocation is based on previous
conversations with fund representatives on how
fund boards comply with the requirements of rule
12b–1. Despite this allocation of hourly burdens
and costs, the number of annual responses each
year will continue to depend on the number of fund
portfolios with rule 12b–1 plans rather than the
number of fund families with rule 12b–1 plans. The
staff estimates that the number of annual responses
per fund portfolio will be four per year (quarterly,
with the annual reviews taking place at one of the
quarterly intervals). Thus, we estimate that funds
will make 27,084 responses (6,771 fund portfolios
× 4 responses per fund portfolio = 27,084 responses)
each year.
E:\FR\FM\24AUN1.SGM
24AUN1
51586
Federal Register / Vol. 77, No. 165 / Friday, August 24, 2012 / Notices
erowe on DSK2VPTVN1PROD with
annual consideration of whether to
continue the plan.3 We therefore
estimate that the total hourly burden per
year for all funds to comply with
current information collection
requirements under rule 12b–1, is
159,375 hours (375 fund families × 425
hours per fund family = 159,375 hours).
If a currently operating fund seeks to
(i) adopt a new rule 12b–1 plan or (ii)
materially increase the amount it spends
for distribution under its rule 12b–1
plan, rule 12b–1 requires that the fund
obtain shareholder approval. As a
consequence, the fund will incur the
cost of a proxy.4 Based on previous
conversations with fund representatives,
Commission staff estimates that
approximately three funds per year
prepare a proxy in connection with the
adoption or material amendment of a
rule 12b–1 plan. Funds typically hire
outside legal counsel and proxy
solicitation firms to prepare, print, and
mail such proxies. The staff further
estimates that the cost of each fund’s
proxy is $32,174. Thus the total annual
cost burden of rule 12b–1 to the fund
industry is $96,522 (3 funds requiring a
proxy × $32,174 per proxy).
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.
The collections of information
required by rule 12b–1 are necessary to
obtain the benefits of the rule. Notices
to the Commission 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,
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 email to:
Shagufta_Ahmed@omb.eop.gov; and (ii)
Thomas Bayer, Director/Chief
Information Officer, Securities and
3 We do not estimate any costs or time burden
related to the recordkeeping requirements in rule
12b–1, as funds are either required to maintain
these records pursuant to other rules or would keep
these records in any case as a matter of business
practice.
4 In general, a fund adopts a rule 12b–1 plan
before it begins operations. Therefore, the fund is
not required to obtain the approval of its public
shareholders because the fund’s shares have not yet
been offered to the public.
VerDate Mar<15>2010
15:22 Aug 23, 2012
Jkt 226001
Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way,
Alexandria, VA 22312 or send an email
to: PRA_Mailbox@sec.gov. Comments
must be submitted to OMB within 30
days of this notice.
Dated: August 20, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–20825 Filed 8–23–12; 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 204; SEC File No. 270–586; OMB
Control No. 3235–0647.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (‘‘PRA’’), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 204 (17 CFR 242.204) under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
Rule 204 requires that, subject to
certain limited exceptions, if a
participant of a registered clearing
agency has a fail to deliver position at
a registered clearing agency it must
immediately close out the fail to deliver
position by purchasing or borrowing
securities by no later than the beginning
of regular trading hours on the
settlement day following the day the
participant incurred the fail to deliver
position. Rule 204 is intended to help
further the Commission’s goal of
reducing fails to deliver by maintaining
the reductions in fails to deliver
achieved by the adoption of temporary
Rule 204T, as well as other actions
taken by the Commission. In addition,
Rule 204 is intended to help further the
Commission’s goal of addressing
potentially abusive ‘‘naked’’ short
selling in all equity securities.
The information collected under Rule
204 will continue to be retained and/or
provided to other entities pursuant to
the specific rule provisions and will be
available to the Commission and selfregulatory organization (‘‘SRO’’)
examiners upon request. The
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
information collected will continue to
aid the Commission and SROs in
monitoring compliance with these
requirements. In addition, the
information collected will aid those
subject to Rule 204 in complying with
its requirements. These collections of
information are mandatory.
Several provisions under Rule 204
will impose a ‘‘collection of
information’’ within the meaning of the
Paperwork Reduction Act.
I. Allocation Notification
Requirement: As of December 31, 2011,
there were 4,695 registered brokerdealers. Each of these broker-dealers
could clear trades through a participant
of a registered clearing agency and,
therefore, become subject to the
notification requirements of Rule
204(d). If a broker-dealer has been
allocated a portion of a fail to deliver
position in an equity security and after
the beginning of regular trading hours
on the applicable close-out date, the
broker-dealer has to determine whether
or not that portion of the fail to deliver
position was not closed out in
accordance with Rule 204(a), we
estimate that a broker-dealer will have
to make such determination with
respect to approximately 2.09 equity
securities per day.1 We estimate a total
of 2,472,762 notifications in accordance
with Rule 204(d) across all brokerdealers (that were allocated
responsibility to close out a fail to
deliver position) per year (4,695 brokerdealers notifying participants once per
day 2 on 2.09 securities, multiplied by
252 trading days in a year). The total
estimated annual burden hours per year
will be approximately 395,642 burden
1 As stated in the adopting release for Interim
Final Temporary Rule 204T, the Commission’s
Office of Economic Analysis (‘‘OEA’’) estimates that
there are approximately 9,809 fail to deliver
positions per settlement day. Across 4,695 brokerdealers, the number of securities per broker-dealer
per day is approximately 2.09 equity securities.
During the period from January to July 2008,
approximately 4,321 new fail to deliver positions
occurred per day. The National Securities Clearing
Corporation (‘‘NSCC’’) data for this period includes
only securities with at least 10,000 shares in fails
to deliver. To account for securities with fails to
deliver below 10,000 shares, the figure is multiplied
by a factor of 2.27. The factor is estimated from a
more complete data set obtained from NSCC during
the period from September 16, 2008 to September
22, 2008. It should be noted that these numbers
include securities that were not subject to the closeout requirement of Rule 203(b)(3) of Regulation
SHO. Exchange Act Release No. 58733 (Oct. 14,
2008), 73 FR 61706, 61718 n.107 (Oct. 17, 2008)
(‘‘Rule 204T Adopting Release’’).
2 Because failure to comply with the close-out
requirements of Rule 204(a) is a violation of the
rule, we believe that a broker-dealer would make
the notification to a participant that it is subject to
the borrowing requirements of Rule 204(b) at most
once per day.
E:\FR\FM\24AUN1.SGM
24AUN1
]]>Agencies
[Federal Register Volume 77, Number 165 (Friday, August 24, 2012)]
[Notices]
[Pages 51585-51586]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20825]
-----------------------------------------------------------------------
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 12b-1; SEC File No. 270-188; OMB Control No. 3235-0212.
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'') has submitted to the Office of
Management and Budget a request for extension of the previously
approved collection of information discussed below.
Rule 12b-1 under the Investment Company Act of 1940 (17 CFR
270.12b-1) permits a registered open-end investment company (``fund''
or ``mutual fund'') to bear expenses associated with the distribution
of its shares, provided that the mutual fund complies with certain
requirements, including, among other things, that it adopt a written
plan (``rule 12b-1 plan'') and that it has in writing any agreements
relating to the rule 12b-1 plan. The rule in part requires that (i) The
adoption or material amendment of a rule 12b-1 plan be approved by the
mutual fund's directors, including its independent directors, and, in
certain circumstances, its shareholders; (ii) the board review
quarterly reports of amounts spent under the rule 12b-1 plan; and (iii)
the board, including the independent directors, consider continuation
of the rule 12b-1 plan and any related agreements at least annually.
Rule 12b-1 also requires mutual funds relying on the rule to preserve
for six years, the first two years in an easily accessible place,
copies of the rule 12b-1 plan and any related agreements and reports,
as well as minutes of board meetings that describe the factors
considered and the basis for adopting or continuing a rule 12b-1 plan.
Rule 12b-1 also prohibits funds from paying for distribution of
fund shares with brokerage commissions on their portfolio transactions.
The rule requires funds that use broker-dealers that sell their shares
to also execute their portfolio securities transactions, to implement
policies and procedures reasonably designed to prevent: (i) The persons
responsible for selecting broker-dealers to effect transactions in fund
portfolio securities from taking into account broker-dealers'
promotional or sales efforts when making those decisions; and (ii) a
fund, its adviser or principal underwriter, from entering into any
agreement under which the fund directs brokerage transactions or
revenue generated by those transactions to a broker-dealer to pay for
distribution of the fund's (or any other fund's) shares.
The board and shareholder approval requirements of rule 12b-1 are
designed to ensure that fund shareholders and directors receive
adequate information to evaluate and approve a rule 12b-1 plan and,
thus, are necessary for investor protection. The requirement of
quarterly reporting to the board is designed to ensure that the rule
12b-1 plan continues to benefit the fund and its shareholders. The
recordkeeping requirements of the rule are necessary to enable
Commission staff to oversee compliance with the rule. The requirement
that funds or their advisers implement, and fund boards approve,
policies and procedures in order to prevent persons charged with
allocating fund brokerage from taking distribution efforts into account
is designed to ensure that funds' selection of brokers to effect
portfolio securities transactions is not influenced by considerations
about the sale of fund shares.
Based on information filed with the Commission by funds, Commission
staff estimates that there are approximately 6,771 mutual fund
portfolios that have at least one share class subject to a rule 12b-1
plan.\1\ However, many of these portfolios are part of an affiliated
group of funds, or mutual fund family, that is overseen by a common
board of directors. Although the board must review and approve the rule
12b-1 plan for each fund separately, we have allocated the costs and
hourly burden related to rule 12b-1 based on the number of fund
families that have at least one fund that charges rule 12b-1 fees,
rather than on the total number of mutual fund portfolios that
individually have a rule 12b-1 plan.\2\ Based on information filed with
the Commission, the staff estimates that there are approximately 375
fund families with common boards of directors that have at least one
fund with a rule 12b-1 plan.
---------------------------------------------------------------------------
\1\ This estimate is based on information from the Commission's
NSAR database.
\2\ This allocation is based on previous conversations with fund
representatives on how fund boards comply with the requirements of
rule 12b-1. Despite this allocation of hourly burdens and costs, the
number of annual responses each year will continue to depend on the
number of fund portfolios with rule 12b-1 plans rather than the
number of fund families with rule 12b-1 plans. The staff estimates
that the number of annual responses per fund portfolio will be four
per year (quarterly, with the annual reviews taking place at one of
the quarterly intervals). Thus, we estimate that funds will make
27,084 responses (6,771 fund portfolios x 4 responses per fund
portfolio = 27,084 responses) each year.
---------------------------------------------------------------------------
Based on previous conversations with fund representatives,
Commission staff estimates that for each of the 375 mutual fund
families with a portfolio that has a rule 12b-1 plan, the average
annual burden of complying with the rule is 425 hours. This estimate
takes into account the time needed to prepare quarterly reports to the
board of directors, the board's consideration of those reports, and the
board's initial or
[[Page 51586]]
annual consideration of whether to continue the plan.\3\ We therefore
estimate that the total hourly burden per year for all funds to comply
with current information collection requirements under rule 12b-1, is
159,375 hours (375 fund families x 425 hours per fund family = 159,375
hours).
---------------------------------------------------------------------------
\3\ We do not estimate any costs or time burden related to the
recordkeeping requirements in rule 12b-1, as funds are either
required to maintain these records pursuant to other rules or would
keep these records in any case as a matter of business practice.
---------------------------------------------------------------------------
If a currently operating fund seeks to (i) adopt a new rule 12b-1
plan or (ii) materially increase the amount it spends for distribution
under its rule 12b-1 plan, rule 12b-1 requires that the fund obtain
shareholder approval. As a consequence, the fund will incur the cost of
a proxy.\4\ Based on previous conversations with fund representatives,
Commission staff estimates that approximately three funds per year
prepare a proxy in connection with the adoption or material amendment
of a rule 12b-1 plan. Funds typically hire outside legal counsel and
proxy solicitation firms to prepare, print, and mail such proxies. The
staff further estimates that the cost of each fund's proxy is $32,174.
Thus the total annual cost burden of rule 12b-1 to the fund industry is
$96,522 (3 funds requiring a proxy x $32,174 per proxy).
---------------------------------------------------------------------------
\4\ In general, a fund adopts a rule 12b-1 plan before it begins
operations. Therefore, the fund is not required to obtain the
approval of its public shareholders because the fund's shares have
not yet been offered to the public.
---------------------------------------------------------------------------
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.
The collections of information required by rule 12b-1 are necessary
to obtain the benefits of the rule. Notices to the Commission 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, 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 email to: Shagufta_Ahmed@omb.eop.gov; and (ii) 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. Comments must be submitted to OMB within 30 days of
this notice.
Dated: August 20, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-20825 Filed 8-23-12; 8:45 am]
BILLING CODE 8011-01-P
