Proposed Collection; Comment Request, 52077-52078 [2012-21114]
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Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / 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.
Extension:
Rule 31a–2; SEC File No. 270–174; OMB
Control No. 3235–0179.
srobinson on DSK4SPTVN1PROD with NOTICES
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.
Section 31(a)(1) of the Investment
Company Act of 1940 (the ‘‘Act’’) (15
U.S.C. 80a–30(a)(1)) requires registered
investment companies (‘‘funds’’) and
certain underwriters, broker-dealers,
investment advisers, and depositors to
maintain and preserve records as
prescribed by Commission rules. Rule
31a–1 under the Act (17 CFR 270.31a–
1) specifies the books and records that
each of these entities must maintain.
Rule 31a–2 under the Act (17 CFR
270.31a–2), which was adopted on April
17, 1944, specifies the time periods that
entities must retain certain books and
records, including those 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).1
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); 2
1 These include, among other records, journals
detailing daily purchases and sales of 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, by-laws and minute books.
2 These include, among other records, records of
each brokerage order given in connection with
purchases and sales of securities by the fund,
records of all other portfolio purchases or sales,
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
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16:39 Aug 27, 2012
Jkt 226001
b. All vouchers, memoranda,
correspondence, checkbooks, bank
statements, canceled checks, cash
reconciliations, canceled stock
certificates, and all schedules
evidencing and supporting each
computation of net asset value of fund
shares, and other documents required to
be maintained by rule 31a–1(a) and not
enumerated in rule 31a–1(b);
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 (15 U.S.C. 80a–15(c)) in
approving the terms or renewal of a
contract or agreement between the fund
and an investment advisor.3
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 (15
U.S.C. 78q) (‘‘section 17’’) for the
periods established in those rules.
4. Every depositor of a fund, and
every principal underwriter of a fund
(other than a closed-end fund), must
preserve for at least six years records
required to be maintained 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
preserved by investment advisers under
rules adopted under section 204 of the
adviser, and memoranda identifying persons,
committees, or groups authorizing the purchase or
sale of securities for the fund.
3 Section 15 of the Act requires that fund
directors, including a majority of independent
directors, annually approve the fund’s advisory
contract and that the directors first obtain from the
adviser the information reasonably necessary to
evaluate the contract. The information request
requirement in section 15 provides fund directors,
including independent directors, a tool for
obtaining the information they need to represent
shareholder interests.
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
52077
Investment Advisers Act of 1940 (15
U.S.C. 80b–4) (‘‘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,
including any digital storage medium or
system that meets the terms of rule 31a–
2(f). 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.4
We periodically inspect the
operations of all funds to ensure their
compliance with the provisions of the
Act and the rules under the Act. Our
staff spends a significant portion of its
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 3,484 funds currently
operating as of March 31, 2012, 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 total
hours per year complying with rule
31a–2. Our staff estimates that the 220
hours spent by a typical fund would be
split evenly between administrative and
4 In addition, the fund, or person who maintains
and preserves records 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 must separately store, for the time
required for preservation of the original record, a
duplicate copy of the record on any medium
allowed by rule 31a–2(f). 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.
E:\FR\FM\28AUN1.SGM
28AUN1
52078
Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / Notices
srobinson on DSK4SPTVN1PROD with NOTICES
computer operation personnel,5 with
110 hours spent by a general clerk and
110 hours spent by a senior computer
operator. Based on these estimates, our
staff estimates that the total annual
burden for all funds to comply with rule
31a–2 is 766,480 hours.6
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.
Based on conversations with
representatives of the fund industry and
past estimates, our staff estimates that
the average cost of preserving books and
records required by rule 31a–2 is
approximately $70,000 annually per
fund. As discussed previously, there are
3,484 funds currently operating, for a
total cost of preserving records as
required by rule 31a–2 of approximately
$243,880,000 per year.7 Our staff
understands, however, based on
previous conversations with
representatives of the fund industry,
that funds would already spend
approximately half of this amount
($121,940,000) 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 all funds as a
result of compliance with rule 31a–2 is
approximately $121,940,000 per year.
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 collection of information under
rule 31a–2 is mandatory for all funds.
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 invited on: (a)
Whether the proposed collection of
information is necessary for the proper
5 However, the hour burden may be incurred by
a variety of fund staff, and the type of staff position
used for compliance with the rule may vary widely
from fund to fund.
6 This estimate is based on the following
calculations: 3,484 funds × 220 hours = 766,480
total hours.
7 This estimate is based on the following
calculation: 3,484 funds × $70,000 = $243,880,000.
VerDate Mar<15>2010
16:39 Aug 27, 2012
Jkt 226001
performance of the functions of the
Commission, including whether the
information will have practical utility;
(b) the accuracy of the Commission’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 PavlikSimon, 6432 General Green Way,
Alexandria, VA 22312; or send an email
to: PRA_Mailbox@sec.gov.
Dated: August 22, 2012.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–21114 Filed 8–27–12; 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:
Form N–3, SEC File No. 270–281, OMB
Control No. 3235–0316.
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–3 (17 CFR
239.17a and 274.11b) under the
Securities Act of 1933 (15 U.S.C. 77)
and under the Investment Company Act
of 1940 (15 U.S.C. 80a), Registration
Statement of Separate Accounts
Organized as Management Investment
Companies.’’ Form N–3 is the form used
by separate accounts offering variable
annuity contracts which are organized
as management investment companies
to register under the Investment
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
Company Act of 1940 (‘‘Investment
Company Act’’) and/or to register their
securities under the Securities Act of
1933 (‘‘Securities Act’’). Form N–3 is
also the form used to file a registration
statement under the Securities Act (and
any amendments thereto) for variable
annuity contracts funded by separate
accounts which would be required to be
registered under the Investment
Company Act as management
investment companies except for the
exclusion provided by Section 3(c)(11)
of the Investment Company Act (15
U.S.C. 80a–3(c)(11)). Section 5 of the
Securities Act (15 U.S.C. 77e) requires
the filing of a registration statement
prior to the offer of securities to the
public and that the statement be
effective before any securities are sold,
and Section 8 of the Investment
Company Act (15 U.S.C. 80a–8) requires
a separate account to register as an
investment company.
Form N–3 also permits separate
accounts offering variable annuity
contracts which are organized as
investment companies to provide
investors with a prospectus and a
statement of additional information
covering essential information about the
separate account when it makes an
initial or additional offering of its
securities. Section 5(b) of the Securities
Act requires that investors be provided
with a prospectus containing the
information required in a registration
statement prior to the sale or at the time
of confirmation or delivery of the
securities. The form also may be used by
the Commission in its regulatory review,
inspection, and policy-making roles.
Commission staff estimates that there
are zero initial registration statements
and 7 post-effective amendments to
initial registration statements filed on
Form N–3 annually and that the average
number of portfolios referenced in each
post-effective amendment is 2. The
Commission further estimates that the
hour burden for preparing and filing a
post-effective amendment on Form N–3
is 155.2 hours per portfolio. The total
annual hour burden for preparing and
filing post-effective amendments is
2172.8 hours (7 post-effective
amendments × 2 portfolios × 155.2
hours per portfolio). The estimated
annual hour burden for preparing and
filing initial registration statements is 0
hours. The total annual hour burden for
Form N–3, therefore, is estimated to be
2172.8 hours (2172.8 hours + 0 hours).
The information collection
requirements imposed by Form N–3 are
mandatory. Responses to the collection
of information will not be kept
confidential. An agency may not
conduct or sponsor, and a person is not
E:\FR\FM\28AUN1.SGM
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]]>Agencies
[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]
[Notices]
[Pages 52077-52078]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21114]
[[Page 52077]]
-----------------------------------------------------------------------
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 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 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.
Section 31(a)(1) of the Investment Company Act of 1940 (the
``Act'') (15 U.S.C. 80a-30(a)(1)) requires registered investment
companies (``funds'') and certain underwriters, broker-dealers,
investment advisers, and depositors to maintain and preserve records as
prescribed by Commission rules. Rule 31a-1 under the Act (17 CFR
270.31a-1) specifies the books and records that each of these entities
must maintain. Rule 31a-2 under the Act (17 CFR 270.31a-2), which was
adopted on April 17, 1944, specifies the time periods that entities
must retain certain books and records, including those 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).\1\
---------------------------------------------------------------------------
\1\ These include, among other records, journals detailing daily
purchases and sales of 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, by-laws and minute books.
---------------------------------------------------------------------------
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); \2\
---------------------------------------------------------------------------
\2\ These include, among other records, records of each
brokerage order given in connection with purchases and sales of
securities by the fund, records of all other portfolio purchases or
sales, 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 evidencing and supporting each
computation of net asset value of fund shares, and other documents
required to be maintained by rule 31a-1(a) and not enumerated in rule
31a-1(b);
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 (15 U.S.C.
80a-15(c)) in approving the terms or renewal of a contract or agreement
between the fund and an investment advisor.\3\
---------------------------------------------------------------------------
\3\ Section 15 of the Act requires that fund directors,
including a majority of independent directors, annually approve the
fund's advisory contract and that the directors first obtain from
the adviser the information reasonably necessary to evaluate the
contract. The information request requirement in section 15 provides
fund directors, including independent directors, a tool for
obtaining the information they need to represent shareholder
interests.
---------------------------------------------------------------------------
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 (15 U.S.C. 78q) (``section 17'') for
the periods established in those rules.
4. Every depositor of a fund, and every principal underwriter of a
fund (other than a closed-end fund), must preserve for at least six
years records required to be maintained 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 preserved by investment
advisers under rules adopted under section 204 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-4) (``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, including any
digital storage medium or system that meets the terms of rule 31a-2(f).
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.\4\
---------------------------------------------------------------------------
\4\ In addition, the fund, or person who maintains and preserves
records 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 must
separately store, for the time required for preservation of the
original record, a duplicate copy of the record on any medium
allowed by rule 31a-2(f). 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.
---------------------------------------------------------------------------
We periodically inspect the operations of all funds to ensure their
compliance with the provisions of the Act and the rules under the Act.
Our staff spends a significant portion of its 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 3,484 funds currently operating as of March 31, 2012, 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 total hours per year
complying with rule 31a-2. Our staff estimates that the 220 hours spent
by a typical fund would be split evenly between administrative and
[[Page 52078]]
computer operation personnel,\5\ with 110 hours spent by a general
clerk and 110 hours spent by a senior computer operator. Based on these
estimates, our staff estimates that the total annual burden for all
funds to comply with rule 31a-2 is 766,480 hours.\6\
---------------------------------------------------------------------------
\5\ However, the hour burden may be incurred by a variety of
fund staff, and the type of staff position used for compliance with
the rule may vary widely from fund to fund.
\6\ This estimate is based on the following calculations: 3,484
funds x 220 hours = 766,480 total hours.
---------------------------------------------------------------------------
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.
Based on conversations with representatives of the fund industry
and past estimates, our staff estimates that the average cost of
preserving books and records required by rule 31a-2 is approximately
$70,000 annually per fund. As discussed previously, there are 3,484
funds currently operating, for a total cost of preserving records as
required by rule 31a-2 of approximately $243,880,000 per year.\7\ Our
staff understands, however, based on previous conversations with
representatives of the fund industry, that funds would already spend
approximately half of this amount ($121,940,000) 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 all funds as a result of
compliance with rule 31a-2 is approximately $121,940,000 per year.
---------------------------------------------------------------------------
\7\ This estimate is based on the following calculation: 3,484
funds x $70,000 = $243,880,000.
---------------------------------------------------------------------------
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 collection of information under rule 31a-2 is mandatory for all
funds. 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 invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information will
have practical utility; (b) the accuracy of the Commission'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 22, 2012.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21114 Filed 8-27-12; 8:45 am]
BILLING CODE 8011-01-P
