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Federal Register / Vol. 70, No.

66 / Thursday, April 7, 2005 / Notices 17727

annual burden is approximately 14 SECURITIES AND EXCHANGE industry representatives, the staff
hours.2 COMMISSION estimates that it will require
The staff believes that rules 27d–1 approximately 6 hours to draft and
and 27d–2 and Form N–27D–1 do not Proposed Collection; Comment execute revised subadvisory contracts (5
impose any cost burdens other than Request staff attorney hours, 1 supervisory
those arising from the hour burdens attorney hour), in order for funds and
Upon written request, copies available from:
discussed above. subadvisers to be able to rely on the
Securities and Exchange Commission,
Office of Filings and Information Services, exemptions in rule 17e–1. The staff
The estimates of average burden hours assumes that all of these funds amended
Washington, DC 20549.
and costs are made solely for the their advisory contracts when rule 17e–
Extension:
purposes of the Paperwork Reduction Rule 17e–1; SEC File No. 270–224; OMB 1 was amended in 2002 by conditioning
Act, and are not derived from a Control No. 3235–0217. certain exemptions upon such
comprehensive or even a representative contractual alterations.1
survey or study of the costs of Notice is hereby given that, pursuant
Based on an analysis of fund filings,
Commission rules and forms.3 to the Paperwork Reduction Act of 1995
the staff estimates that approximately
(44 U.S.C. 3501–3520), the Securities
Complying with the collection of 200 new funds are registered annually.
and Exchange Commission (the
information requirements of rule 27d–1 Assuming that the number of these
‘‘Commission’’) is soliciting comments
is mandatory for depositors or principal funds that will use the services of
on the collections of information
underwriters of issuers of periodic subadvisers is proportionate to the
summarized below. The Commission
payment plans unless they comply with number of funds that currently use the
plans to submit these existing
the requirements in rule 27d–2. The services of subadvisers, then
collections of information to the Office
information provided pursuant to rules approximately 46 new funds will enter
of Management and Budget (‘‘OMB’’) for
27d–1 and 27d–2 is public and, into subadvisory agreements each year.2
extension and approval. The Commission staff further estimates,
therefore, will not be kept confidential. Rule 17e–1 [17 CFR 270.17e–1] under
An agency may not conduct or sponsor, based on analysis of fund filings, that 10
the Investment Company Act of 1940
and a person is not required to respond extant funds will employ the services of
(the ‘‘Act’’) is entitled ‘‘Brokerage subadvisers for the first time each year.
to, a collection of information unless it Transactions on a Securities Exchange.’’
displays a currently valid OMB control Thus, the staff estimates that a total of
The rule governs the remuneration that 56 funds, with a total of 78 portfolios,3
number. a broker affiliated with a registered will enter into subadvisory agreements
Written comments are invited on: (a) investment company (‘‘fund’’) may each year. Assuming that each of these
Whether the collection of information is receive in connection with securities funds enters into a contract that permits
necessary for the proper performance of transactions by the fund. The rule it to rely on the exemptions in rule 17e–
the functions of the Commission, requires a fund’s board of directors to 1, we estimate that the rule’s contract
including whether the information has establish, and review as necessary, modification requirement will result in
practical utility; (b) the accuracy of the procedures reasonably designed to 117 burden hours annually.4
Commission’s estimate of the burden of provide that the remuneration to an Based on an analysis of fund filings,
the collection of information; (c) ways to affiliated broker is a fair amount the staff estimates that approximately
enhance the quality, utility, and clarity compared to that received by other 300 funds use at least one affiliated
of the information collected; and (d) brokers in connection with transactions broker. Based on conversations with
ways to minimize the burden of the in similar securities during a fund representatives, the staff estimates
collection of information on comparable period of time. Each that rule 17e–1’s exemption would free
respondents, including through the use quarter, the board must determine that approximately 40 percent of
of automated collection techniques or all transactions with affiliated brokers transactions that occur under rule 17e–
other forms of information technology. during the preceding quarter complied 1 from the rule’s recordkeeping and
Consideration will be given to with the procedures established under review requirements. This would leave
comments and suggestions submitted in the rule. Rule 17e–1 also requires the approximately 180 funds (300 funds × .6
writing within 60 days of this fund to (i) maintain permanently a = 180) still subject to the rule’s
publication. written copy of the procedures adopted recordkeeping and review requirements.
Please direct your written comments by the board for complying with the The staff estimates that each of these
to R. Corey Booth, Director/Chief requirements of the rule; and (ii) funds spends 57 hours per year hours at
Information Officer, Office of maintain for a period of six years a a cost of approximately $3,780 per year
Information Technology, Securities and written record of each transaction complying with rule 17e–1’s
Exchange Commission, 450 5th Street, subject to the rule, setting forth: The requirements that (i) the fund retain
NW., Washington, DC 20549. amount and source of the commission,
fee or other remuneration received; the 1 Rules 12d3–1, 10f–3, 17a–10, and 17e–1 require
Dated: March 29, 2005. identity of the broker; the terms of the virtually identical modifications to fund advisory
Margaret H. McFarland, contracts. The Commission staff assumes that funds
transaction; and the materials used to would rely equally on the exemptions in these
Deputy Secretary. determine that the transactions were rules, and therefore the burden hours associated
[FR Doc. E5–1588 Filed 4–6–05; 8:45 am] effected in compliance with the with the required contract modifications should be
procedures adopted by the board. The apportioned equally among the four rules.
BILLING CODE 8010–01–P 2 Based on information in Commission filings, we
Commission’s examination staff uses estimate that 23 percent of funds are advised by
2 This estimate is based on the following these records to evaluate transactions subadvisers.
calculation: 2 funds × (2 hours negotiating coverage between funds and their affiliated 3 Based on existing statistics, we assume that each

+ 5 hours filing necessary proof of adequate brokers for compliance with the rule. fund has 1.4 portfolios advised by a subadviser.
coverage) = 14 hours. The Commission staff estimates that 4 This estimate is based on the following
3 These estimates are based on telephone calculations: (78 portfolios × 6 hours = 468 burden
interviews between the Commission staff and
3,028 portfolios of approximately 2,126 hours for rules 12d3–1, 10f–3, 17a–10, and 17e–1;
representatives of depositors or principle funds use the services of one or more 468 total burden hours for all of the rules/four rules
underwriters of periodic payment plan issuers. subadvisers. Based on discussions with = 117 annual burden hours per rule.)

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17728 Federal Register / Vol. 70, No. 66 / Thursday, April 7, 2005 / Notices

records of transactions entered into SECURITIES AND EXCHANGE ownership or control of the issuer’s
pursuant to the rule, and (ii) the fund’s COMMISSION voting securities, and that there are
directors review those transactions approximately 1,000 such affiliate
quarterly.5 We estimate, therefore, that Proposed Collection; Comment relationships. Staff discussions with
all funds relying on this exemption Request mutual fund representatives have
incur yearly hourly burdens of 10,260 Upon written request, copies available suggested that no funds currently rely
burden.6 Therefore, the annual aggregate from: Securities and Exchange on rule 17a–6 exemptions. We do not
burden hour associated with rule 17e– Commission, Office of Filings and know definitively the reasons for this
1 is 10,377.7 Information Services, Washington, DC change in transactional behavior, but
20549. differing market conditions from year to
The estimate of average burden hours year may offer some explanation for the
is made solely for the purposes of the Extension: current lack of fund interest in the
Paperwork Reduction Act, and is not Rule 17a–6, SEC File No. 270–506, OMB
Control No. 3235–0564. exemptions under rule 17a–6.
derived from a comprehensive or even Accordingly, we estimate that annually
a representative survey or study. An Notice is hereby given that pursuant there will be no principal transactions
agency may not conduct or sponsor, and to the Paperwork Reduction Act of 1995 under rule 17a–6 that will result in a
a person is not required to respond to, (44 U.S.C. 3501 et seq.) the Securities collection of information.
a collection of information unless it and Exchange Commission (the
The Commission requests
displays a currently valid OMB control ‘‘Commission’’) is soliciting comments
authorization to maintain an inventory
number. on the collections of information
of one burden hour to ease future
summarized below. The Commission
Written comments are invited on: (a) renewals of rule 17a–6’s collection of
plans to submit these existing
Whether the collections of information information analysis should reliance on
collections of information to the Office
are necessary for the proper rule 17a–6 increase in the coming years.
of Management and Budget (‘‘OMB’’) for
performance of the functions of the extension and approval. The estimate of average burden hours
Commission, including whether the Section 17(a) of the Investment is made solely for the purposes of the
information has practical utility; (b) the Company Act of 1940 (the ‘‘Act’’), Paperwork Reduction Act. The estimate
accuracy of the Commission’s estimate prohibits affiliated persons of a is not derived from a comprehensive or
of the burdens of the collections of registered investment company (‘‘fund’’) even a representative survey or study of
information; (c) ways to enhance the from borrowing money or other property the costs of Commission rules.
quality, utility, and clarity of the from, or selling or buying securities or Complying with this collection of
other property to or from the fund, or information requirement is necessary to
information collected; and (d) ways to
any company that the fund controls. obtain the benefit of relying on rule
minimize the burdens of the collections
Rule 17a–6 permits a fund and its 17a–6. An agency may not conduct or
of information on respondents,
‘‘portfolio affiliates’’ (an issuer of which sponsor, and a person is not required to
including through the use of automated respond to, a collection of information
a fund owns more than five percent of
collection techniques or other forms of unless it displays a currently valid
the voting securities) to engage in
information technology. Consideration control number.
principal transactions with if no
will be given to comments and prohibited participants (e.g., directors, Written comments are invited on: (a)
suggestions submitted in writing within officers, employees, or investment Whether the proposed collection of
60 days of this publication. advisers of the fund contain persons information is necessary for the proper
Please direct your written comments controlling and under common control performance of the functions of the
to R. Corey Booth, Director/Chief with the fund, and their affiliates) are agency, including whether the
Information Officer, Office of parties to the transaction or have a information will have practical utility;
Information Technology, Securities and direct or indirect financial interest in (b) the accuracy of the agency’s estimate
Exchange Commission, 450 5th Street, the transaction. Rule 17a–6 specifies of the burden of the collection of
NW., Washington, DC 20549. certain interests that are not ‘‘financial information; (c) ways to enhance the
interests.’’ The rule also provides that quality, utility, and clarity of the
Dated: March 28, 2005.
the term ‘‘financial interest’’ does not information collected; and (d) ways to
Margaret H. McFarland, include any interest that the fund’s minimize the burden of the collection of
Deputy Secretary. board of directors (including a majority information on respondents, including
[FR Doc. E5–1589 Filed 4–6–05; 8:45 am] of the directors who are not interested through the use of automated collection
BILLING CODE 8010–01–P persons of the fund) finds to be not techniques or other forms of information
material, as long as the board records technology. Consideration will be given
5 In calculating the total annual cost of complying the basis for the findings in its meeting to comments and suggestions submitted
with amended rule 17e–1, the Commission staff minutes. in writing within 60 days of this
assumes that the entire burden would be The information collection publication.
attributable to professionals with an average hourly requirements in rule 17a–6 are intended Please direct your written comments
wage rate of $66.31 per hour. Unless stated to ensure that Commission staff can
otherwise, all hourly rates in this Supporting
to R. Corey Booth, Director/Chief
Statement are derived from the average annual
review, in the course of its compliance Information Officer, Office of
salaries reported for employees outside of New and examination functions, the basis for Information Technology, Securities and
York City in Securities Industry Association, a board of director’s finding that the Exchange Commission, 450 5th Street,
Management and Professional Earnings in the financial interest of a prohibited NW., Washington, DC 20549.
Securities Industry (2003) and Securities Industry participant in a party to a transaction
Association, Office Salaries in the Securities Dated: March 28, 2005.
Industry (2003).
with a portfolio affiliate is not material.
Based on analysis of past filings, the Margaret H. McFarland,
6 This estimate is based on the following
Commission’s staff estimates that 148 Deputy Secretary.
calculation: (180 funds × 57 hours = 10,260).
7 This estimate is based on the following funds are affiliated persons of 668 [FR Doc. E5–1590 Filed 4–6–05; 8:45 am]
calculation: (117 hours + 10,260 hours = 10,377). issuers as a result of the fund’s BILLING CODE 8010–01–P

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