Submission for OMB Review; Comment Request; Rule 211(h)(2)-1, 88205-88206 [2023-27887]
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88205
Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–XXX, OMB Control No.
3235–XXXX]
Submission for OMB Review;
Comment Request; Rule 211(h)(2)–1
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.) (‘‘PRA’’), the
Securities and Exchange Commission
(‘‘Commission’’) submitted an
information collection request to the
Office of Management and Budget
(‘‘OMB’’) for review and clearance for
the collection of information associated
with the new Rule 211(h)(2)–1 17 CFR
275.211(h)(2)–1) under the Investment
Advisers Act of 1940 that was adopted
by the Commission on August 23,
2023.1 The title for this collection of
information is: ‘‘Rule 211(h)(2)–1 under
the Investment Advisers Act of 1940.’’
Final rule 211(h)(2)–1 prohibits all
private fund advisers from, directly or
indirectly, engaging in the following
activities, unless they provide written
disclosure to investors and, in some
cases, obtain investor consent regarding
such activities: charging the private
fund for fees or expenses associated
with an investigation of the adviser or
its related persons by any governmental
or regulatory authority (other than fees
and expenses related to an investigation
that results or has resulted in a court or
governmental authority imposing a
sanction for a violation of the
Investment Advisers Act of 1940 or the
rules promulgated thereunder); charging
the private fund for any regulatory or
compliance fees or expenses, or fees or
expenses associated with an
examination, of the adviser or its related
persons; reducing the amount of any
adviser clawback by actual, potential, or
hypothetical taxes applicable to the
adviser, its related persons, or their
respective owners or interest holders;
charging or allocating fees and expenses
related to a portfolio investment on a
non-pro rata basis when more than one
private fund or other client advised by
the adviser or its related persons have
invested in the same portfolio company;
and borrowing money, securities, or
other private fund assets, or receiving a
loan or extension of credit, from a
private fund client.
In the Proposing Release, we solicited
comment on whether rule 211(h)(2)–1
should include disclosure and/or
consent requirements.2 In response to
comments received, we have decided to
adopt such a requirement. Accordingly,
the final rule generally will provide
either a disclosure-based exception or a
disclosure- and consent-based exception
for each restricted activity. We believe
that investors will be better informed
and receive enhanced protection as a
result, while still potentially benefiting
from these activities when they are
carried out in the interests of the fund,
if investors are provided with
disclosures and, in some cases, consent
rights regarding these activities. The
collection of information is necessary to
provide private fund investors with
information about their private fund
investments. We believe that many
advisers fail to provide disclosure of the
activities covered by the restrictions or,
when disclosure is provided, it is often
insufficient.
Each requirement to disclose
information, offer to provide
information, or adopt policies and
procedures constitutes a ‘‘collection of
information’’ requirement under the
PRA. This collection of information is
found at 17 CFR 275.211(h)(2)–1 and is
mandatory if the adviser engages in the
restricted activity. The respondents to
these collections of information
requirements will be all investment
advisers that advise one or more private
funds. Based on IARD data, as of
December 31, 2022, there were 12,234
investment advisers (including both
registered and unregistered advisers but
excluding advisers managing solely
securitized asset funds (‘‘SAFs’’)) that
provide advice to private funds.3 We
estimate that these advisers, on average,
each provide advice to 8 private funds
(excluding SAFs). We further estimate
that these private funds will, on average,
each have a total of 63 investors. As a
result, an average private fund adviser
will have a total of 504 investors across
all private funds it advises. Because the
information collected pursuant to final
rule 211(h)(2)–1 requires disclosures to
private fund investors, these disclosures
will not be kept confidential. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid OMB control
number.
We have made certain estimates of
this data solely for this PRA analysis.
The table below summarizes the initial
and ongoing annual burden estimates
associated with the rule.
TABLE 3—RULE 211(h)(2)–1 PRA ESTIMATES
Internal initial
burden hours
Internal annual
burden hours
Wage rate 1
Internal time cost
Annual external
cost burden
Proposed Estimates
ddrumheller on DSK120RN23PROD with NOTICES1
Preparation of written notices ........
15
1 See Private Fund Advisers; Documentation of
Registered Investment Adviser Compliance
Reviews, Investment Advisers Act Release No. IA–
6383 (August 23, 2023) [88 FR 63206 (September
14, 2023)] (‘‘Adopting Release’’); the Adopting
Release solicited comment on the ‘‘collection of
information’’ requirements and associated burdens.
The Commission received no comments in response
to this request in the Adopting Release; however,
we have adjusted certain of the estimates upwards
to reflect updated data/figures for certain estimates.
2 Private Fund Advisers; Documentation of
Registered Investment Adviser Compliance
Reviews, Investment Advisers Act Release No. 5955
VerDate Sep<11>2014
18:02 Dec 19, 2023
Jkt 262001
10 hours 2 ...................
$422 (blended rate for compliance
attorney ($425), accounting
manager ($337), senior portfolio
manager ($383) and assistant
general counsel ($543)).
(Feb. 9, 2022) [87 FR 16886 (Mar. 24, 2022)]
(‘‘Proposing Release’’).
3 The following types of private fund advisers
(excluding advisers managing solely SAFs), among
others, will be subject to the rule: unregistered
advisers (i.e., advisers that may be prohibited from
registering with us), foreign private advisers, and
advisers that rely on the intrastate exemption from
SEC registration and/or the de minimis exemption
from SEC registration; However, we are unable to
estimate the number of advisers in certain of these
categories because these advisers do not file reports
or other information with the SEC and we are
unable to find reliable, public information; as a
PO 00000
Frm 00165
Fmt 4703
Sfmt 4703
$4,220 .........................
$3,178.3
result, the above estimate is based on information
from SEC-registered advisers to private funds,
exempt reporting advisers (at the State and Federal
levels), and State-registered advisers to private
funds, in each instance excluding advisers that
manage solely SAFs; these figures are approximate,
exclude in each instance advisers that manage
solely SAFs, and assume that all exempt reporting
advisers are advisers to private funds; the
breakdown is as follows: 5,248 SEC-registered
advisers to private funds; 5,234 exempt reporting
advisers (at the Federal level); 562 State-registered
advisers to private funds; and 1,922 State exempt
reporting advisers.
E:\FR\FM\20DEN1.SGM
20DEN1
88206
Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices
TABLE 3—RULE 211(h)(2)–1 PRA ESTIMATES—Continued
Internal initial
burden hours
Provision, distribution, collection,
and tracking of written notices
and consents.
9
Internal annual
burden hours
Wage rate 1
6 hours 4 .....................
$73 (rate for general clerk) ...........
Internal time cost
Annual external
cost burden
$438.
Total new annual burden per
private fund.
Avg. number of private funds per
adviser.
Number of advisers ........................
16 hours .....................
$4,658 .........................
$3,178.
8 private funds ............
8 private funds ............
8 private funds.
12,234 advisers ..........
12,234 advisers ..........
9,176 advisers.5
Total new annual burden ........
1,565,952 hours .........
$455,887,776 ..............
$233,290,624.
Notes:
1 The hourly wage rates in these estimates are based on (1) SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by SEC staff
to account for an 1,800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead; and (2) SIFMA’s Office Salaries in the Securities Industry 2013, modified by SEC staff to account for an 1,800-hour work-year and inflation, and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead.
2 This includes the internal initial burden estimate annualized over a three-year period, plus 5 hours of ongoing annual burden hours and assumes notices and consent forms will be issued once a quarter to investors; the estimates assume that most private fund advisers will rely on the disclosure-based or investor consent exceptions to the rules and thus distribute written notices and consent forms to investors (and collect, retain, and track consent forms); however, the estimates also take
into account that certain fund agreements may not permit or otherwise contemplate the activity restricted by the rule (e.g., liquid funds may not contemplate an adviser clawback of performance compensation) and, accordingly, the estimates take into account that advisers to those funds will not prepare written notices (or, if applicable, prepare, collect, retain, and track consent forms) as contemplated by the rule. The estimate of 10 hours is based on the following calculation: ((15 initial
hours/3 years) + 5 hours of additional ongoing burden hours) = 10 hours.
3 This estimated burden is based on the estimated wage rate of $565/hour, for 5 hours, for outside legal services and $353/hour, for one hour, for outside accounting services, at the same frequency as the internal burden hours estimate; the Commission’s estimates of the relevant wage rates for external time costs, such as
outside legal services, take into account staff experience, a variety of sources including general information websites, and adjustments for inflation.
4 This includes the internal initial burden estimate annualized over a three-year period, plus 3 hours of ongoing annual burden hours; the estimate of 6 hours is
based on the following calculation: ((9 initial hours/3 years) + 3 hours of additional ongoing burden hours) = 6 hours.
5 We estimate that 75% of advisers will use outside legal services for these collections of information; this estimate takes into account that advisers may elect to
use outside legal services (along with in-house counsel), based on factors such as adviser budget and the adviser’s standard practices for using outside legal services, as well as personnel availability and expertise.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice by January 19, 2024 to (i)
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov and (ii) David Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission,
c/o John Pezzullo, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: PRA_Mailbox@sec.gov.
Dated: December 14, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–27887 Filed 12–19–23; 8:45 am]
ddrumheller on DSK120RN23PROD with NOTICES1
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99171; File No. SR–ISE–
2023–36]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Fees for
Options on the Nasdaq 100 Index in
the Exchange’s Pricing Schedule at
Options 7
December 14, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
8, 2023, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. 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
The Exchange proposes to amend the
fees for Nasdaq 100 Index options in the
Exchange’s Pricing Schedule at Options
7, Section 5A. While these amendments
1 15
2 17
VerDate Sep<11>2014
18:02 Dec 19, 2023
Jkt 262001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00166
Fmt 4703
Sfmt 4703
are effective upon filing, the Exchange
has designated the proposed
amendments to be operative on
December 1, 2023.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend the fees for NDX 3
3 For purposes of the Pricing Schedule, ‘‘NDX’’
means A.M. or P.M. settled options on the full value
of the Nasdaq 100® Index. See Options 7, Section
1(c).
E:\FR\FM\20DEN1.SGM
20DEN1
]]>Agencies
[Federal Register Volume 88, Number 243 (Wednesday, December 20, 2023)]
[Notices]
[Pages 88205-88206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27887]
[[Page 88205]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-XXX, OMB Control No. 3235-XXXX]
Submission for OMB Review; Comment Request; Rule 211(h)(2)-1
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.) (``PRA''), the Securities and
Exchange Commission (``Commission'') submitted an information
collection request to the Office of Management and Budget (``OMB'') for
review and clearance for the collection of information associated with
the new Rule 211(h)(2)-1 17 CFR 275.211(h)(2)-1) under the Investment
Advisers Act of 1940 that was adopted by the Commission on August 23,
2023.\1\ The title for this collection of information is: ``Rule
211(h)(2)-1 under the Investment Advisers Act of 1940.''
---------------------------------------------------------------------------
\1\ See Private Fund Advisers; Documentation of Registered
Investment Adviser Compliance Reviews, Investment Advisers Act
Release No. IA-6383 (August 23, 2023) [88 FR 63206 (September 14,
2023)] (``Adopting Release''); the Adopting Release solicited
comment on the ``collection of information'' requirements and
associated burdens. The Commission received no comments in response
to this request in the Adopting Release; however, we have adjusted
certain of the estimates upwards to reflect updated data/figures for
certain estimates.
---------------------------------------------------------------------------
Final rule 211(h)(2)-1 prohibits all private fund advisers from,
directly or indirectly, engaging in the following activities, unless
they provide written disclosure to investors and, in some cases, obtain
investor consent regarding such activities: charging the private fund
for fees or expenses associated with an investigation of the adviser or
its related persons by any governmental or regulatory authority (other
than fees and expenses related to an investigation that results or has
resulted in a court or governmental authority imposing a sanction for a
violation of the Investment Advisers Act of 1940 or the rules
promulgated thereunder); charging the private fund for any regulatory
or compliance fees or expenses, or fees or expenses associated with an
examination, of the adviser or its related persons; reducing the amount
of any adviser clawback by actual, potential, or hypothetical taxes
applicable to the adviser, its related persons, or their respective
owners or interest holders; charging or allocating fees and expenses
related to a portfolio investment on a non-pro rata basis when more
than one private fund or other client advised by the adviser or its
related persons have invested in the same portfolio company; and
borrowing money, securities, or other private fund assets, or receiving
a loan or extension of credit, from a private fund client.
In the Proposing Release, we solicited comment on whether rule
211(h)(2)-1 should include disclosure and/or consent requirements.\2\
In response to comments received, we have decided to adopt such a
requirement. Accordingly, the final rule generally will provide either
a disclosure-based exception or a disclosure- and consent-based
exception for each restricted activity. We believe that investors will
be better informed and receive enhanced protection as a result, while
still potentially benefiting from these activities when they are
carried out in the interests of the fund, if investors are provided
with disclosures and, in some cases, consent rights regarding these
activities. The collection of information is necessary to provide
private fund investors with information about their private fund
investments. We believe that many advisers fail to provide disclosure
of the activities covered by the restrictions or, when disclosure is
provided, it is often insufficient.
---------------------------------------------------------------------------
\2\ Private Fund Advisers; Documentation of Registered
Investment Adviser Compliance Reviews, Investment Advisers Act
Release No. 5955 (Feb. 9, 2022) [87 FR 16886 (Mar. 24, 2022)]
(``Proposing Release'').
---------------------------------------------------------------------------
Each requirement to disclose information, offer to provide
information, or adopt policies and procedures constitutes a
``collection of information'' requirement under the PRA. This
collection of information is found at 17 CFR 275.211(h)(2)-1 and is
mandatory if the adviser engages in the restricted activity. The
respondents to these collections of information requirements will be
all investment advisers that advise one or more private funds. Based on
IARD data, as of December 31, 2022, there were 12,234 investment
advisers (including both registered and unregistered advisers but
excluding advisers managing solely securitized asset funds (``SAFs''))
that provide advice to private funds.\3\ We estimate that these
advisers, on average, each provide advice to 8 private funds (excluding
SAFs). We further estimate that these private funds will, on average,
each have a total of 63 investors. As a result, an average private fund
adviser will have a total of 504 investors across all private funds it
advises. Because the information collected pursuant to final rule
211(h)(2)-1 requires disclosures to private fund investors, these
disclosures will not be kept confidential. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number.
---------------------------------------------------------------------------
\3\ The following types of private fund advisers (excluding
advisers managing solely SAFs), among others, will be subject to the
rule: unregistered advisers (i.e., advisers that may be prohibited
from registering with us), foreign private advisers, and advisers
that rely on the intrastate exemption from SEC registration and/or
the de minimis exemption from SEC registration; However, we are
unable to estimate the number of advisers in certain of these
categories because these advisers do not file reports or other
information with the SEC and we are unable to find reliable, public
information; as a result, the above estimate is based on information
from SEC-registered advisers to private funds, exempt reporting
advisers (at the State and Federal levels), and State-registered
advisers to private funds, in each instance excluding advisers that
manage solely SAFs; these figures are approximate, exclude in each
instance advisers that manage solely SAFs, and assume that all
exempt reporting advisers are advisers to private funds; the
breakdown is as follows: 5,248 SEC-registered advisers to private
funds; 5,234 exempt reporting advisers (at the Federal level); 562
State-registered advisers to private funds; and 1,922 State exempt
reporting advisers.
---------------------------------------------------------------------------
We have made certain estimates of this data solely for this PRA
analysis. The table below summarizes the initial and ongoing annual
burden estimates associated with the rule.
Table 3--Rule 211(h)(2)-1 PRA Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Internal
initial burden Internal annual burden Wage rate \1\ Internal time cost Annual external cost
hours hours burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preparation of written notices. 15 10 hours \2\............... $422 (blended rate $4,220.................... $3,178.\3\
for compliance
attorney ($425),
accounting
manager ($337),
senior portfolio
manager ($383)
and assistant
general counsel
($543)).
[[Page 88206]]
Provision, distribution, 9 6 hours \4\................ $73 (rate for $438......................
collection, and tracking of general clerk).
written notices and consents.
------------------------------------------------------------------------------------------------------------------------
Total new annual burden per 16 hours................... $4,658.................... $3,178.
private fund.
Avg. number of private funds 8 private funds............ 8 private funds........... 8 private funds.
per adviser.
Number of advisers............. 12,234 advisers............ 12,234 advisers........... 9,176 advisers.\5\
------------------------------------------------------------------------------------------------------------------------
Total new annual burden.... 1,565,952 hours............ $455,887,776.............. $233,290,624.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\1\ The hourly wage rates in these estimates are based on (1) SIFMA's Management & Professional Earnings in the Securities Industry 2013, modified by
SEC staff to account for an 1,800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and
overhead; and (2) SIFMA's Office Salaries in the Securities Industry 2013, modified by SEC staff to account for an 1,800-hour work-year and inflation,
and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead.
\2\ This includes the internal initial burden estimate annualized over a three-year period, plus 5 hours of ongoing annual burden hours and assumes
notices and consent forms will be issued once a quarter to investors; the estimates assume that most private fund advisers will rely on the disclosure-
based or investor consent exceptions to the rules and thus distribute written notices and consent forms to investors (and collect, retain, and track
consent forms); however, the estimates also take into account that certain fund agreements may not permit or otherwise contemplate the activity
restricted by the rule (e.g., liquid funds may not contemplate an adviser clawback of performance compensation) and, accordingly, the estimates take
into account that advisers to those funds will not prepare written notices (or, if applicable, prepare, collect, retain, and track consent forms) as
contemplated by the rule. The estimate of 10 hours is based on the following calculation: ((15 initial hours/3 years) + 5 hours of additional ongoing
burden hours) = 10 hours.
\3\ This estimated burden is based on the estimated wage rate of $565/hour, for 5 hours, for outside legal services and $353/hour, for one hour, for
outside accounting services, at the same frequency as the internal burden hours estimate; the Commission's estimates of the relevant wage rates for
external time costs, such as outside legal services, take into account staff experience, a variety of sources including general information websites,
and adjustments for inflation.
\4\ This includes the internal initial burden estimate annualized over a three-year period, plus 3 hours of ongoing annual burden hours; the estimate of
6 hours is based on the following calculation: ((9 initial hours/3 years) + 3 hours of additional ongoing burden hours) = 6 hours.
\5\ We estimate that 75% of advisers will use outside legal services for these collections of information; this estimate takes into account that
advisers may elect to use outside legal services (along with in-house counsel), based on factors such as adviser budget and the adviser's standard
practices for using outside legal services, as well as personnel availability and expertise.
The public may view background documentation for this information
collection at the following website: www.reginfo.gov. Find this
particular information collection by selecting ``Currently under 30-day
Review--Open for Public Comments'' or by using the search function.
Written comments and recommendations for the proposed information
collection should be sent within 30 days of publication of this notice
by January 19, 2024 to (i) [email protected]
and (ii) David Bottom, Director/Chief Information Officer, Securities
and Exchange Commission, c/o John Pezzullo, 100 F Street NE,
Washington, DC 20549, or by sending an email to: [email protected].
Dated: December 14, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27887 Filed 12-19-23; 8:45 am]
BILLING CODE 8011-01-P
