Proposed Collection; Comment Request, 64382-64383 [2018-27094]
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Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
approved collection of information
provided for the following rules: Rules
3a68–2 and 3a68–4(c) under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
Rule 3a68–2 creates a process for
interested persons to request a joint
interpretation by the SEC and the
Commodity Futures Trading
Commission (‘‘CFTC’’) (together with
the SEC, the ‘‘Commissions’’) regarding
whether a particular instrument (or
class of instruments) is a swap, a
security-based swap, or both (i.e., a
mixed swap). Under Rule 3a68–2, a
person provides to the Commissions a
copy of all material information
regarding the terms of, and a statement
of the economic characteristics and
purpose of, each relevant agreement,
contract, or transaction (or class
thereof), along with that person’s
determination as to whether each such
agreement, contract, or transaction (or
class thereof) should be characterized as
a swap, security-based swap, or both
(i.e., a mixed swap). The Commissions
also may request the submitting person
to provide additional information.
The SEC expects 25 requests pursuant
to Rule 3a68–2 per year. The SEC
estimates the total paperwork burden
associated with preparing and
submitting each request would be 20
hours to retrieve, review, and submit the
information associated with the
submission. This 20 hour burden is
divided between the SEC and the CFTC,
with 10 hours per response regarding
reporting to the SEC and 10 hours of
response regarding third party
disclosure to the CFTC.1 The SEC
estimates this would result in an
aggregate annual burden of 500 hours
(25 requests × 20 hours/request).
The SEC estimates that the total costs
resulting from a submission under Rule
3a68–2 would be approximately $12,000
for outside attorneys to retrieve, review,
and submit the information associated
with the submission. The SEC estimates
this would result in aggregate costs each
year of $300,000 (25 requests × 30
hours/request × $400).
Rule 3a68–4(c) establishes a process
for persons to request that the
Commissions issue a joint order
permitting such persons (and any other
person or persons that subsequently
lists, trades, or clears that class of mixed
swap) to comply, as to parallel
provisions only, with specified parallel
provisions of either the Commodity
Exchange Act (‘‘CEA’’) or the Securities
Exchange Act of 1934 (‘‘Exchange Act’’),
and related rules and regulations
1 The burdens imposed by the CFTC are included
in this collection of information.
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16:57 Dec 13, 2018
Jkt 247001
(collectively ‘‘specified parallel
provisions’’), instead of being required
to comply with parallel provisions of
both the CEA and the Exchange Act.
The SEC expects ten requests
pursuant to Rule 3a68–4(c) per year.
The SEC estimates that nine of these
requests will have also been made in a
request for a joint interpretation
pursuant to Rule 3a68–2, and one will
not have been. The SEC estimates the
total burden for the one request for
which the joint interpretation pursuant
to 3a68–2 was not requested would be
30 hours, and the total burden
associated with the other nine requests
would be 20 hours per request because
some of the information required to be
submitted pursuant to Rule 3a68–4(c)
would have already been submitted
pursuant to Rule 3a68–2. The burden in
both cases is evenly divided between
the SEC and the CFTC.
The SEC estimates that the total costs
resulting from a submission under Rule
3a68–4(c) would be approximately
$20,000 for the services of outside
attorneys to retrieve, review, and submit
the information associated with the
submission of the one request for which
a request for a joint interpretation
pursuant to Rule 3a68–2 was not
previously made (1 request × 50 hours/
request × $400). For the nine requests
for which a request for a joint
interpretation pursuant to Rule 3a68–2
was previously made, the SEC estimates
the total costs associated with preparing
and submitting a party’s request
pursuant to Rule 3a68–4(c) would be
$6,000 less per request because, as
discussed above, some of the
information required to be submitted
pursuant to Rule 3a68–4(c) already
would have been submitted pursuant to
Rule 3a68–2. The SEC estimates this
would result in an aggregate cost each
year of $126,000 for the services of
outside attorneys (9 requests × 35 hours/
request × $400).
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.
The public may view background
documentation for this information
collection at the following website:
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:
Lindsay.M.Abate@omb.eop.gov; and (ii)
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
PO 00000
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Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549, or by sending an email to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: December 10, 2018.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27089 Filed 12–13–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–401, OMB Control No.
3235–0459]
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:
Rule 3a–4.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l–3520), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 3a–4 (17 CFR 270.3a–4) under
the Investment Company Act of 1940
(15 U.S.C. 80a) (‘‘Investment Company
Act’’ or ‘‘Act’’) provides a nonexclusive
safe harbor from the definition of
investment company under the Act for
certain investment advisory programs.
These programs, which include ‘‘wrap
fee’’ programs, generally are designed to
provide professional portfolio
management services on a discretionary
basis to clients who are investing less
than the minimum investments for
individual accounts usually required by
the investment adviser but more than
the minimum account size of most
mutual funds. Under wrap fee and
similar programs, a client’s account is
typically managed on a discretionary
basis according to pre-selected
investment objectives. Clients with
similar investment objectives often
receive the same investment advice and
may hold the same or substantially
similar securities in their accounts.
Because of this similarity of
management, some of these investment
advisory programs may meet the
E:\FR\FM\14DEN1.SGM
14DEN1
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.
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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
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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
]]>Agencies
[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64382-64383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27094]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-401, OMB Control No. 3235-0459]
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:
Rule 3a-4.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 350l-3520), the Securities and Exchange
Commission (the ``Commission'') is soliciting comments on the
collection of information summarized below. The Commission plans to
submit this existing collection of information to the Office of
Management and Budget for extension and approval.
Rule 3a-4 (17 CFR 270.3a-4) under the Investment Company Act of
1940 (15 U.S.C. 80a) (``Investment Company Act'' or ``Act'') provides a
nonexclusive safe harbor from the definition of investment company
under the Act for certain investment advisory programs. These programs,
which include ``wrap fee'' programs, generally are designed to provide
professional portfolio management services on a discretionary basis to
clients who are investing less than the minimum investments for
individual accounts usually required by the investment adviser but more
than the minimum account size of most mutual funds. Under wrap fee and
similar programs, a client's account is typically managed on a
discretionary basis according to pre-selected investment objectives.
Clients with similar investment objectives often receive the same
investment advice and may hold the same or substantially similar
securities in their accounts. Because of this similarity of management,
some of these investment advisory programs may meet the
[[Page 64383]]
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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\
---------------------------------------------------------------------------
\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 x 1 hour) + (3,531,372 new clients x
1.5 hours) + (19,618,731 total clients x (0.25 hours x 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.
---------------------------------------------------------------------------
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 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: [email protected].
Dated: December 10, 2018.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27094 Filed 12-13-18; 8:45 am]
BILLING CODE 8011-01-P
