Proposed Collection; Comment Request, 64383-64384 [2018-27093]

Download as PDF Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES1 definition of investment company under the Act. In 1997, the Commission adopted rule 3a–4, which clarifies that programs organized and operated in accordance with the rule are not required to register under the Investment Company Act or comply with the Act’s requirements.1 These programs differ from investment companies because, among other things, they provide individualized investment advice to the client. The rule’s provisions have the effect of ensuring that clients in a program relying on the rule receive advice tailored to the client’s needs. For a program to be eligible for the rule’s safe harbor, each client’s account must be managed on the basis of the client’s financial situation and investment objectives and in accordance with any reasonable restrictions the client imposes on managing the account. When an account is opened, the sponsor 2 (or its designee) must obtain information from each client regarding the client’s financial situation and investment objectives, and must allow the client an opportunity to impose reasonable restrictions on managing the account.3 In addition, the sponsor (or its designee) must contact the client annually to determine whether the client’s financial situation or investment objectives have changed and whether the client wishes to impose any reasonable restrictions on the management of the account or reasonably modify existing restrictions. The sponsor (or its designee) must also notify the client quarterly, in writing, to contact the sponsor (or its designee) regarding changes to the client’s financial situation, investment objectives, or restrictions on the account’s management. Additionally, the sponsor (or its designee) must provide each client with a quarterly statement describing all activity in the client’s account during the previous quarter. The sponsor and 1 Status of Investment Advisory Programs Under the Investment Company Act of 1940, Investment Company Act Rel. No. 22579 (Mar. 24, 1997) [62 FR 15098 (Mar. 31,1997)] (‘‘Adopting Release’’). In addition, there are no registration requirements under section 5 of the Securities Act of 1933 for programs that meet the requirements of rule 3a–4. See 17 CFR 270.3a–4, introductory note. 2 For purposes of rule 3a–4, the term ‘‘sponsor’’ refers to any person who receives compensation for sponsoring, organizing or administering the program, or for selecting, or providing advice to clients regarding the selection of, persons responsible for managing the client’s account in the program. 3 Clients specifically must be allowed to designate securities that should not be purchased for the account or that should be sold if held in the account. The rule does not require that a client be able to require particular securities be purchased for the account. VerDate Sep<11>2014 16:57 Dec 13, 2018 Jkt 247001 personnel of the client’s account manager who know about the client’s account and its management must be reasonably available to consult with the client. Each client also must retain certain indicia of ownership of all securities and funds in the account. The Commission staff estimates that 19,618,731 clients participate each year in investment advisory programs relying on rule 3a–4.4 Of that number, the staff estimates that 3,531,372 are new clients and 16,087,359 are continuing clients.5 The staff estimates that each year the investment advisory program sponsors’ staff engage in 1.5 hours per new client and 1 hour per continuing client to prepare, conduct and/or review interviews regarding the client’s financial situation and investment objectives as required by the rule.6 Furthermore, the staff estimates that each year the investment advisory program sponsors’ staff spends 1 hour per client to prepare and mail quarterly client account statements, including notices to update information.7 Based on the estimates above, the Commission estimates that the total annual burden of the rule’s paperwork requirements is 41,003,148 hours.8 The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of 64383 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 invited on: (a) Whether the collections of information are 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 collections of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burdens of the collections 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 Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, C/O Candace Kenner, 100 F Street NE, Washington, DC 20549; or send an email to: PRA_ Mailbox@sec.gov. Dated: December 10, 2018. Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2018–27094 Filed 12–13–18; 8:45 am] 4 These estimates are based on an analysis of the number of individual clients from Form ADV Item 5D(a)(1) and (b)(1) of advisers that report they provide portfolio management to wrap programs as indicated in Form ADV Item 5I(2)(b) and (c), and the number of individual clients of advisers that identify as internet advisers in Form ADV Item 2A(11). From analysis comparing reported individual client assets in Form ADV Item 5D(a)(3) and 5D(b)(3) to reported wrap portfolio manager assets in Form ADV Item 5I(2)(b) and (c), we discount the estimated number of individual clients of non-internet advisers providing portfolio management to wrap programs by 10%. These estimates are based on the number of new clients expected due to average year-over-year growth in individual clients from Form ADV Item 5D(a)(1) and (b)(1) (about 8%) and an assumed rate of yearly client turnover of 10%. 5 These estimates are based on the number of new clients expected due to average year-over-year growth in individual clients from Form ADV Item 5D(a)(1) and (b)(1) (about 8%) and an assumed rate of yearly client turnover of 10%. 6 These estimates are based upon consultation with investment advisers that operate investment advisory programs that rely on rule 3a–4. 7 The staff bases this estimate in part on the fact that, by business necessity, computer records already will be available that contain the information in the quarterly reports. 8 This estimate is based on the following calculation: (16,087,359 continuing clients × 1 hour) + (3,531,372 new clients × 1.5 hours) + (19,618,731 total clients × (0.25 hours × 4 statements)) = 41,003,148 hours. We note that the breakdown of burden hours between professional and staff time discussed below may not equal the estimate of total burden hours due to rounding. PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION SEC File No. 270–774, OMB Control No. 3235–0726] Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Extension: Rules 300–304 of Regulation Crowdfunding (Intermediaries). Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the collection of information provided for Rule 17Ab2–1 (17 CFR 240.17Ab2–1) and Form CA–1: Registration of Clearing Agencies (17 CFR 249b.200) under the Securities Exchange Act of 1934 (‘‘Exchange Act’’) (15 U.S.C. 78a et seq.). The Commission plans to submit this existing collection E:\FR\FM\14DEN1.SGM 14DEN1 amozie on DSK3GDR082PROD with NOTICES1 64384 Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Rules 300–304 of Regulation Crowdfunding enumerate the requirements with which intermediaries must comply to participate in the offer and sale of securities in reliance on Section 4(a)(6) of the Securities Act of 1933 (‘‘Section 4(a)(6)’’). Rule 300 requires an intermediary to be registered with the Commission as a broker or as a funding portal and be a member of a registered national securities association.1 Rule 301 requires intermediaries to have a reasonable basis for believing that an issuer seeking to offer and sell securities in reliance on Section 4(a)(6) through the intermediary’s platform complies with the requirements in Section 4A(b) of the Securities Act and the related requirements in Regulation Crowdfunding. Rule 302 provides that no intermediary or associated person of an intermediary may accept an investment commitment in a transaction involving the offer or sale of securities made in reliance on Section 4(a)(6) until the investor has opened an account with the intermediary and the intermediary has obtained from the investor consent to electronic delivery of materials. Rule 303 requires an intermediary to make publicly available on its platform the information that an issuer of crowdfunding securities is required to provide to potential investors, in a manner that reasonably permits a person accessing the platform to save, download or otherwise store the information, for a minimum of 21 days before any securities are sold in the offering, during which time the intermediary may accept investment commitments. Rule 303 also requires intermediaries to comply with the requirements related to the maintenance and transmission of funds. An intermediary that is a registered broker is required to comply with the requirements of Rule 15c2–4 of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) (Transmission or Maintenance of Payments Received in Connection with Underwritings).2 An intermediary that is a registered funding portal must direct investors to transmit the money or other consideration directly to a qualified third party that has agreed in writing to hold the funds for the benefit of, and to promptly transmit or return the funds to, the 1 Currently, FINRA is the only registered national securities association. 2 17 CFR 240.15c2–4. VerDate Sep<11>2014 16:57 Dec 13, 2018 Jkt 247001 persons entitled thereto in accordance with Regulation Crowdfunding. The rules also require intermediaries to implement and maintain systems to comply with the information disclosure, communication channels, and investor notification requirements. These requirements include providing disclosure about compensation at account opening (Rule 302), obtaining investor acknowledgements to confirm investor qualifications and review of educational materials (Rule 303), providing investor questionnaires (Rule 303), providing communication channels with third parties and among investors (Rule 303), notifying investors of investment commitments (Rule 303), confirming completed transactions (Rule 303) and confirming or reconfirming offering cancellations (Rule 304). The Commission staff estimates that there are 62 intermediaries engaged in crowdfunding activity and therefore subject to Rules 300–304. The Commission staff estimates that annualized industry burden would be 15,621 hours to comply with Rules 300– 304. This estimate is composed of a onetime burden for new intermediaries to comply with the rules and develop the platform and ongoing burdens associated with maintaining the platform. The Commission staff estimates that the costs associated with complying with Rules 300–304 are estimated to be approximately a total amount of $5,772,327. These costs are composed of a one-time burden for new intermediaries to comply with the rules and develop the platform and ongoing burdens associated with maintaining the platform. 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 shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be 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. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 Please direct your written comments to: Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an email to: PRA_ Mailbox@sec.gov. Dated: December 10, 2018. Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2018–27093 Filed 12–13–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–84778; File No. SR– CboeEDGX–2018–058] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Its Provision Related to Its Risk Monitor Mechanism December 10, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 30, 2018, Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) proposes to amend its provision related to its Risk Monitor Mechanism. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://www.cboe.com/ AboutCBOE/CBOELegal RegulatoryHome.aspx), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 2 17 E:\FR\FM\14DEN1.SGM 14DEN1

Agencies

[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64383-64384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27093]


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SECURITIES AND EXCHANGE COMMISSION

SEC File No. 270-774, OMB Control No. 3235-0726]


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

Extension:
    Rules 300-304 of Regulation Crowdfunding (Intermediaries).

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the collection of 
information provided for Rule 17Ab2-1 (17 CFR 240.17Ab2-1) and Form CA-
1: Registration of Clearing Agencies (17 CFR 249b.200) under the 
Securities Exchange Act of 1934 (``Exchange Act'') (15 U.S.C. 78a et 
seq.). The Commission plans to submit this existing collection

[[Page 64384]]

of information to the Office of Management and Budget (``OMB'') for 
extension and approval.
    Rules 300-304 of Regulation Crowdfunding enumerate the requirements 
with which intermediaries must comply to participate in the offer and 
sale of securities in reliance on Section 4(a)(6) of the Securities Act 
of 1933 (``Section 4(a)(6)''). Rule 300 requires an intermediary to be 
registered with the Commission as a broker or as a funding portal and 
be a member of a registered national securities association.\1\
---------------------------------------------------------------------------

    \1\ Currently, FINRA is the only registered national securities 
association.
---------------------------------------------------------------------------

    Rule 301 requires intermediaries to have a reasonable basis for 
believing that an issuer seeking to offer and sell securities in 
reliance on Section 4(a)(6) through the intermediary's platform 
complies with the requirements in Section 4A(b) of the Securities Act 
and the related requirements in Regulation Crowdfunding. Rule 302 
provides that no intermediary or associated person of an intermediary 
may accept an investment commitment in a transaction involving the 
offer or sale of securities made in reliance on Section 4(a)(6) until 
the investor has opened an account with the intermediary and the 
intermediary has obtained from the investor consent to electronic 
delivery of materials. Rule 303 requires an intermediary to make 
publicly available on its platform the information that an issuer of 
crowdfunding securities is required to provide to potential investors, 
in a manner that reasonably permits a person accessing the platform to 
save, download or otherwise store the information, for a minimum of 21 
days before any securities are sold in the offering, during which time 
the intermediary may accept investment commitments. Rule 303 also 
requires intermediaries to comply with the requirements related to the 
maintenance and transmission of funds. An intermediary that is a 
registered broker is required to comply with the requirements of Rule 
15c2-4 of the Securities Exchange Act of 1934 (``Exchange Act'') 
(Transmission or Maintenance of Payments Received in Connection with 
Underwritings).\2\ An intermediary that is a registered funding portal 
must direct investors to transmit the money or other consideration 
directly to a qualified third party that has agreed in writing to hold 
the funds for the benefit of, and to promptly transmit or return the 
funds to, the persons entitled thereto in accordance with Regulation 
Crowdfunding.
---------------------------------------------------------------------------

    \2\ 17 CFR 240.15c2-4.
---------------------------------------------------------------------------

    The rules also require intermediaries to implement and maintain 
systems to comply with the information disclosure, communication 
channels, and investor notification requirements. These requirements 
include providing disclosure about compensation at account opening 
(Rule 302), obtaining investor acknowledgements to confirm investor 
qualifications and review of educational materials (Rule 303), 
providing investor questionnaires (Rule 303), providing communication 
channels with third parties and among investors (Rule 303), notifying 
investors of investment commitments (Rule 303), confirming completed 
transactions (Rule 303) and confirming or reconfirming offering 
cancellations (Rule 304).
    The Commission staff estimates that there are 62 intermediaries 
engaged in crowdfunding activity and therefore subject to Rules 300-
304. The Commission staff estimates that annualized industry burden 
would be 15,621 hours to comply with Rules 300-304. This estimate is 
composed of a one-time burden for new intermediaries to comply with the 
rules and develop the platform and ongoing burdens associated with 
maintaining the platform. The Commission staff estimates that the costs 
associated with complying with Rules 300-304 are estimated to be 
approximately a total amount of $5,772,327. These costs are composed of 
a one-time burden for new intermediaries to comply with the rules and 
develop the platform and ongoing burdens associated with maintaining 
the platform.
    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 
shall have practical utility; (b) the accuracy of the Commission's 
estimates of the burden of the proposed collection of information; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be 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.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: Charles Riddle, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an 
email to: [email protected].

    Dated: December 10, 2018.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27093 Filed 12-13-18; 8:45 am]
BILLING CODE 8011-01-P
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