Submission for OMB Review; Comment Request; Extension: Rule 3a-4, 2049-2050 [2025-00248]
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Federal Register / Vol. 90, No. 6 / Friday, January 10, 2025 / Notices
investment trusts (‘‘UITs’’) that invest
substantially all of their assets in shares
of a management investment company
(‘‘fund’’) to send their unitholders
annual and semiannual reports
containing financial information on the
underlying company. Specifically, rule
30e–2 requires that the report contain
all the applicable information and
financial statements or their equivalent,
required by rule 30e–1 under the
Investment Company Act (17 CFR
270.30e–1) to be included in reports of
the underlying fund for the same fiscal
period. Rule 30e–1 requires that the
underlying fund’s report contain, among
other things, the information that is
required to be included in such reports
by the fund’s registration statement form
under the Investment Company Act.
The purpose of this requirement is to
apprise current shareholders of the
operational and financial condition of
the UIT. Absent the requirement to
disclose all material information in
reports, investors would be unable to
obtain accurate information upon which
to base investment decisions and
consumer confidence in the securities
industry might be adversely affected.
Requiring the submission of these
reports to the Commission permits us to
verify compliance with securities law
requirements.
Rule 30e–2, however, permits, under
certain conditions, delivery of a single
shareholder report to investors who
share an address (‘‘householding’’).
Specifically, rule 30e–2 permits
householding of annual and semiannual reports by UITs to satisfy the
delivery requirements of rule 30e–2 if,
in addition to the other conditions set
forth in the rule, the UIT has obtained
from each applicable investor written or
implied consent to the householding of
shareholder reports at such address. The
rule requires UITs that wish to
household shareholder reports with
implied consent to send a notice to each
applicable investor stating that the
investors in the household will receive
one report in the future unless the
investors provide contrary instructions.
In addition, at least once a year, UITs
relying on the rule for householding
must explain to investors who have
provided written or implied consent
how they can revoke their consent. The
purpose of the notice and annual
explanation requirements associated
with the householding provisions of the
rule is to ensure that investors who wish
to receive individual copies of
shareholder reports are able to do so.
The Commission estimates that the
annual burden associated with rule 30e–
2 is 15 hours per respondent. The
Commission estimates that there are
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17:28 Jan 08, 2025
Jkt 265001
currently approximately 671 UITs that
file 1342 reports per year. Therefore, the
Commission estimates that the total
hour burden is approximately 10,065
hours. In addition to the burden hours,
the Commission estimates that the
annual cost of contracting for outside
services associated with rule 30e–2 is
$6,667 per respondent, for a total cost of
approximately $4,495,700.
Estimates of average burden hours are
made solely for the purposes of the
Paperwork Reduction Act and are not
derived from a comprehensive or even
representative survey or study of the
costs of Commission rules and forms.
The collection of information under rule
30e–2 is mandatory. The information
provided under rule 30e–2 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.
The public may view and comment
on this information collection request
at: https://www.reginfo.gov/public/do/
PRAViewICR?ref_nbr=202410-3235-017
or send an email comment to
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov within 30 days of the day
after publication of this notice by
January 10, 2025.
Dated: January 3, 2025.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025–00249 Filed 1–8–25; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–401, OMB Control No.
3235–0459]
Submission for OMB Review;
Comment Request; Extension: Rule
3a–4
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. 3501–3520), 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 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
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
2049
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
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
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.
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10JAN1
2050
Federal Register / Vol. 90, No. 6 / Friday, January 10, 2025 / Notices
khammond on DSK9W7S144PROD with NOTICES
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
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
27,979,460 clients participate each year
in investment advisory programs relying
on rule 3a–4.4 Of that number, the staff
estimates that 2,127,147 are new clients
and 25,852,313 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
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.
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%.
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 9%) 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.
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17:28 Jan 08, 2025
Jkt 265001
per client each year 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 57,022,493
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
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 OMB
control number.
The public may view and comment
on this information collection request
at: https://www.reginfo.gov/public/do/
PRAViewICR?ref_nbr=202410-3235-010
or send an email comment to
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov within 30 days of the day
after publication of this notice by
February 10, 2025.
Dated: January 3, 2025.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025–00248 Filed 1–8–25; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–102091; File No. SR–MRX–
2024–50]
Self-Regulatory Organizations; Nasdaq
MRX, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Increase the
Exchange’s Port Fees in Options 7,
Section 6
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: (25,852,313 continuing clients × 1
hour) + (2,127,147 new clients × 1.5 hours) +
(27,979,460 total clients × (0.25 hours × 4
statements)) = 57,022,493 hours.
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Fmt 4703
II. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.5
Comments may be submitted
electronically by using the
Commission’s internet comment form
(https://www.sec.gov/rules-regulations/
self-regulatory-organizationrulemaking/national-securitiesexchanges?file_number=SR-MRX-202450) or by sending an email to rulecomments@sec.gov. Please include file
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f). At any time within 60 days
of the filing of the proposed rule change, the
Commission summarily may temporarily suspend
such rule change if it appears to the Commission
that such action is necessary or appropriate in the
public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission will institute proceedings to determine
whether the proposed rule change should be
approved or disapproved.
5 Copies of the submission, all subsequent
amendments, all written statements with respect to
the proposed rule change that are filed with the
Commission, and all written communications
relating to the proposed rule change between the
Commission and any person, other than those that
may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the
Commission’s Public Reference Room, 100 F Street
NE, Washington, DC 20549, on official business
days between the hours of 10 a.m. and 3 p.m.
Copies of the filing also will be available for
inspection and copying at the principal office of
SRO.
4 17
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
20, 2024, Nasdaq MRX, LLC
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Item I below,
which Item has been substantially
Frm 00114
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to increase
the Exchange’s port fees in Options 7,
Section 6. While these amendments are
effective upon filing, the Exchange has
designated the proposed amendments to
be operative on January 1, 2025.
The proposed rule change, including
the Exchange’s statement of the purpose
of, and statutory basis for, the proposed
rule change, is available on the
Exchange’s website at https://listing
center.nasdaq.com/rulebook/mrx/rules
and on the Commission’s website at
https://www.sec.gov/rules-regulations/
self-regulatory-organizationrulemaking/national-securitiesexchanges?file_number=SR-MRX-202450.
3 15
January 3, 2025.
PO 00000
prepared by the Exchange. The
Exchange has designated this proposal
for immediate effectiveness pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f) thereunder.4 The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
Sfmt 4703
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10JAN1
]]>Agencies
[Federal Register Volume 90, Number 6 (Friday, January 10, 2025)]
[Notices]
[Pages 2049-2050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00248]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-401, OMB Control No. 3235-0459]
Submission for OMB Review; Comment Request; Extension: Rule 3a-4
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. 3501-3520), 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 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 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
[[Page 2050]]
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 27,979,460 clients participate
each year in investment advisory programs relying on rule 3a-4.\4\ Of
that number, the staff estimates that 2,127,147 are new clients and
25,852,313 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 each year 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 57,022,493 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%.
\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 9%) 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:
(25,852,313 continuing clients x 1 hour) + (2,127,147 new clients x
1.5 hours) + (27,979,460 total clients x (0.25 hours x 4
statements)) = 57,022,493 hours.
---------------------------------------------------------------------------
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 OMB control number.
The public may view and comment on this information collection
request at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202410-3235-010 or send an email comment to
[email protected] within 30 days of the day
after publication of this notice by February 10, 2025.
Dated: January 3, 2025.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025-00248 Filed 1-8-25; 8:45 am]
BILLING CODE 8011-01-P
