Submission for OMB Review; Comment Request, 36013-36014 [2015-15378]
Download as PDF
<![CDATA[
mstockstill on DSK4VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 120 / Tuesday, June 23, 2015 / Notices
place, a written record of each purchase
of securities in Affiliated Underwritings
once an investment by an Unrelated
Fund of Funds in the securities of an
Underlying Fund exceeds the limit in
section 12(d)(1)(A)(i) of the Act, setting
forth from whom the securities were
acquired, the identity of the
underwriting syndicate’s members, the
terms of the purchase and the
information or materials upon which
the Board’s determinations were made.
8. Before investing in shares of an
Underlying Fund in excess of the limits
in section 12(d)(1)(A), each Unrelated
Fund of Funds and Underlying Fund
will execute a Participation Agreement
stating, without limitation, that their
boards of directors or trustees and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order. At the time of its
investment in shares of an Underlying
Fund in excess of the limit in section
12(d)(1)(A)(i), an Unrelated Fund of
Funds will notify the Underlying Fund
of the investment. At such time, the
Unrelated Fund of Funds will also
transmit to the Underlying Fund a list
of the names of each Unrelated Fund of
Funds Affiliate and Underwriting
Affiliate. The Unrelated Fund of Funds
will notify the Underlying Fund of any
changes to the list of the names as soon
as reasonably practicable after a change
occurs. The Underlying Fund and the
Unrelated Fund of Funds will maintain
and preserve a copy of the order, the
Participation Agreement and the list
with any updated information for the
duration of the investment and for a
period of not less than six years
thereafter, the first two years in an
easily accessible place.
9. Prior to approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Unrelated Fund of Funds, including a
majority of the Independent Trustees,
will find that the advisory fees charged
under such advisory contracts are based
on services provided that will be in
addition to, rather than duplicative of,
the services provided under the
advisory contract(s) of any Underlying
Fund (or its respective Master Fund) in
which the Unrelated Fund of Funds
may invest. These findings and their
basis will be recorded fully in the
minute books of the appropriate
Unrelated Fund of Funds.
10. An Unrelated Fund of Funds
Adviser will waive fees otherwise
payable to it by the Unrelated Fund of
Funds in an amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by an
Underlying Fund (or its respective
VerDate Sep<11>2014
18:39 Jun 22, 2015
Jkt 235001
Master Fund) under rule 12b–1 under
the Act) received from an Underlying
Fund (or its respective Master Fund) by
the Unrelated Fund of Funds Adviser,
or an affiliated person of the Unrelated
Fund of Funds Adviser, other than any
advisory fees paid to the Unrelated
Fund of Funds Adviser or its affiliated
person by the Underlying Fund (or its
respective Master Fund), in connection
with the investment by the Unrelated
Fund of Funds in the Underlying Fund.
Any Unrelated Fund of Funds SubAdviser will waive fees otherwise
payable to the Unrelated Fund of Funds
Sub-Adviser, directly or indirectly, by
the Unrelated Fund of Funds in an
amount at least equal to any
compensation received from any
Underlying Fund (or its respective
Master Fund) by the Unrelated Fund of
Funds Sub-Adviser, or an affiliated
person of the Unrelated Fund of Funds
Sub-Adviser, other than any advisory
fees paid to the Unrelated Fund of
Funds Sub-Adviser or its affiliated
person by the Underlying Fund (or its
respective Master Fund), in connection
with the investment by the Unrelated
Fund of Funds in the Underlying Fund
made at the direction of the Unrelated
Fund of Funds Sub-Adviser. In the
event that the Unrelated Fund of Funds
Sub-Adviser waives fees, the benefit of
the waiver will be passed through to the
Unrelated Fund of Funds.
11. With respect to registered separate
accounts that invest in an Unrelated
Fund of Funds, no sales load will be
charged at the Unrelated Fund of Funds
level or at the Underlying Fund level.
Other sales charges and service fees, as
defined in NASD Conduct Rule 2830, if
any, will only be charged at the
Unrelated Fund of Funds level or at the
Underlying Fund level, not both. With
respect to other investments in an
Unrelated Fund of Funds, any sales
charges and/or service fees charged with
respect to shares of the Unrelated Fund
of Funds will not exceed the limits
applicable to a fund of funds as set forth
in NASD Conduct Rule 2830.
12. No Underlying Fund or its
respective Master Fund will acquire
securities of any other investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act in excess of
the limits contained in section
12(d)(1)(A) of the Act, except to the
extent that such Underlying Fund or its
respective Master Fund: (a) Acquires
such securities in compliance with
section 12(d)(1)(E) of the Act; 13 (b)
13 Solely for the purposes of condition 12, the
investment by a Managed Risk Fund in a Managed
Risk Acquired Fund will be deemed to have been
made pursuant to section 12(d)(1)(E),
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
36013
receives securities of another
investment company as a dividend or as
a result of a plan of reorganization of a
company (other than a plan devised for
the purpose of evading section 12(d)(1)
of the Act); or (c) acquires (or is deemed
to have acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such Underlying Fund or its
respective Master Fund to: (i) Acquire
securities of one or more investment
companies for short-term cash
management purposes, or (ii) engage in
inter-fund borrowing and lending
transactions.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015–15337 Filed 6–22–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Extension: Rule 12b–1]; OMB Control No.
3235–0212, SEC File No. 270–188]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736.
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
notwithstanding the fact that such arrangement
does not comply with section 12(d)(1)(E)(ii).
E:\FR\FM\23JNN1.SGM
23JNN1
mstockstill on DSK4VPTVN1PROD with NOTICES
36014
Federal Register / Vol. 80, No. 120 / Tuesday, June 23, 2015 / Notices
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
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
7837 mutual fund portfolios that have at
least one share class subject to a rule
12b–1 plan.1 However, many of these
1 This estimate is based on information from the
Commission’s NSAR database.
VerDate Sep<11>2014
18:39 Jun 22, 2015
Jkt 235001
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 330 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 330 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
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
140,250 hours (330 fund families × 425
hours per fund family = 140,250 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
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 31,348 responses (7837 fund portfolios ×
4 responses per fund portfolio = 31,348 responses)
each year.
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.
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
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 $34,372. Thus the total annual
cost burden of rule 12b–1 to the fund
industry is $103,116 (3 funds requiring
a proxy × $34,372 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) Pamela
Dyson, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE., Washington, DC 20549
or send an email to: PRA_Mailbox@
sec.gov. Comments must be submitted to
OMB within 30 days of this notice.
Dated: June 18, 2015.
Brent Fields,
Secretary.
[FR Doc. 2015–15378 Filed 6–22–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, June 25, 2015 at 2:00 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
E:\FR\FM\23JNN1.SGM
23JNN1
]]>Agencies
[Federal Register Volume 80, Number 120 (Tuesday, June 23, 2015)]
[Notices]
[Pages 36013-36014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15378]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Extension: Rule 12b-1]; OMB Control No. 3235-0212, SEC File No. 270-
188]
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE., Washington, DC
20549-2736.
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
[[Page 36014]]
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 7837 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 330 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
31,348 responses (7837 fund portfolios x 4 responses per fund
portfolio = 31,348 responses) each year.
---------------------------------------------------------------------------
Based on previous conversations with fund representatives,
Commission staff estimates that for each of the 330 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 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 140,250 hours (330 fund families x
425 hours per fund family = 140,250 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 $34,372.
Thus the total annual cost burden of rule 12b-1 to the fund industry is
$103,116 (3 funds requiring a proxy x $34,372 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) Pamela Dyson, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email
to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30
days of this notice.
Dated: June 18, 2015.
Brent Fields,
Secretary.
[FR Doc. 2015-15378 Filed 6-22-15; 8:45 am]
BILLING CODE 8011-01-P
