[Federal Register Volume 76, Number 194 (Thursday, October 6, 2011)]
[Notices]
[Pages 62100-62101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25821]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IA-3297; File No. S7-39-11]
Approval of Filing Fees for Exempt Reporting Advisers and Private
Fund Advisers
AGENCY: Securities and Exchange Commission.
ACTION: Notice of intent to approve filing fees for exempt reporting
advisers filing Form ADV and private fund advisers filing Form PF.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
providing notice of its intent to approve filing fees for exempt
reporting advisers filing Form ADV and, consistent with one of its
recent rule proposals, private fund advisers filing Form PF.
DATES: The fee for exempt reporting advisers would apply starting with
the date on which the order approving the fee is published in the
Federal Register. If the Form PF proposal is adopted, the fees for
private fund advisers would apply starting with the effective date of
rule 204(b)-1 under the Investment Advisers Act of 1940 (``Advisers
Act'').
Hearing or Notification of Hearing: An order approving the filing
fees will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary.
Hearing requests should be received by the Commission by 5:30 p.m. on
October 21, 2011. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons may request notification of a hearing by writing to
the Commission's Secretary.
ADDRESSES: Elizabeth M. Murphy, Secretary, Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549-1090.
FOR FURTHER INFORMATION CONTACT: Keith Kanyan, IARD System Manager, at
202-551-6737, or [email protected], Office of Investment Adviser
Regulation, Division of Investment Management, Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549-8549.
SUPPLEMENTARY INFORMATION:
Exempt Reporting Adviser Filing Fee
On June 22, 2011, the Commission adopted new rule 204-4, which
requires exempt reporting advisers to file portions of Form ADV with
the Commission.\1\ As with registered advisers, exempt reporting
advisers must file Form ADV through the Investment Adviser Registration
Depository system (``IARD'') and pay the Financial Industry Regulatory
Authority (``FINRA''), which operates the system, a filing fee that the
Commission approves.\2\ FINRA has submitted to Commission staff a
letter recommending that the filing fee for exempt reporting advisers
be set at $150 for each initial and annual report.\3\ Moreover, based
on projections of expected revenues and expenses (including those
resulting from future system enhancements) relating to the exempt
adviser reporting, the Commission believes that this fee
[[Page 62101]]
amount would reflect costs reasonably associated with these filings and
the development and maintenance of the system. This fee would apply
starting with the date on which the order approving the fee is
published in the Federal Register.
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\1\ ``Exempt reporting advisers'' are investment advisers
relying on the exemption from registration under section 203(l) or
203(m) of the Advisers Act. See Rules Implementing Amendments to the
Investment Advisers Act of 1940, Investment Advisers Act Release No.
IA-3221 (June 22, 2011), 76 FR 42950 (July 19, 2011) (``Implementing
Adopting Release'').
\2\ See section 204(c) of the Advisers Act and rule 204-4(d).
\3\ FINRA letter dated September 28, 2011, available at http://www.sec.gov/rules/other/2011/finraletter092811-pferafees.pdf.
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In the Implementing Adopting Release, we indicated that, at the
time, we expected the filing fees for exempt reporting advisers would
be the same as those charged registered investment advisers.\4\ On
further consideration, we believe at this time that a tiered filing fee
structure is unnecessary for exempt reporting advisers. The lowest fee
charged to registered advisers is for advisers having under $25 million
in assets under management. Few exempt reporting advisers are likely to
have less than $25 million in assets under management because advisers
under that threshold are generally prohibited from registering with the
Commission under section 203A of the Advisers Act and, therefore, would
not be relying on the applicable exemptions. In addition, although we
expect that many exempt reporting advisers will have assets under
management that would place them in the group of registered advisers
paying the highest filing fees, we have estimated that exempt reporting
advisers will use the IARD less during the year than registered
advisers.\5\ We agree, therefore, that a single fee is appropriate for
these advisers regardless of their assets under management.
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\4\ See Implementing Adopting Release, supra note 1, at nn. 169
and 566 and accompanying text. Currently, the fees charged
registered investment advisers for both initial and annual reports
on Form ADV are set at $40 for advisers with assets under management
under $25 million; $150 for advisers with assets under management
from $25 million to $100 million; and $225 for advisers with assets
under management of $100 million or higher. See Order Approving
Investment Adviser Registration Depository Filing Fees, Investment
Advisers Act Release No. 3126 (Dec. 22, 2010), 75 FR 82097 (Dec. 29,
2010).
\5\ See Implementing Adopting Release, supra note 1, at nn. 708
and 741 and accompanying text (estimating that each registered
adviser will, on average, file one interim amendment each year while
only 20% of exempt reporting advisers will, on average, file an
interim amendment during that time).
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Form PF Filing Fees
On January 26, 2011, the Commission and the Commodity Futures
Trading Commission released a joint proposal that would require hedge
fund advisers and other private fund advisers to report certain
information regarding the private funds they advise.\6\ Under the
proposal, registered investment advisers managing one or more private
funds would periodically file all or part of the proposed Form PF. The
Commission would make the information they report available to the
Financial Stability Oversight Council for use in monitoring systemic
risk.
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\6\ The Commission proposed to adopt a new rule 204(b)-1, which
would require advisers that are registered with the Commission and
managing private funds (``private fund advisers'') to file proposed
Form PF periodically. See section II.C of Reporting by Investment
Advisers to Private Funds and Certain Commodity Pool Operators and
Commodity Trading Advisors on Form PF, Investment Advisers Act
Release No. 3145 (January 26, 2011), 76 FR 8068 (February 11, 2011)
(``Form PF Proposing Release''). ``Private fund'' is defined in
section 202(a)(29) of the Advisers Act.
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The proposal would require advisers to file Form PF electronically
but left the selection of the filing system and operator for later
consideration. Having considered the options for such a filing system,
the Commission has determined that, if Form PF is adopted, FINRA will
develop and maintain the filing system as an extension of the existing
IARD.\7\ The Commission believes that FINRA, as the current operator of
the IARD, is uniquely situated to develop and deploy the Form PF filing
system in a timely manner. Also, as discussed in the Form PF Proposing
Release, the Commission believes that certain efficiencies, both for
the Commission and for advisers, would be realized by having FINRA
expand its existing platform to accommodate the confidential filing of
Form PF.\8\ Commenters who responded to the Form PF Proposing Release
and addressed this aspect of the proposal supported having FINRA
develop the reporting system as an extension of the IARD platform if
Form PF is adopted.\9\
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\7\ In 2000, the Commission designated FINRA as the operator of
IARD, which is the electronic filing system for Form ADV. This
designation was made pursuant to the Commission's authority under
section 204(c) of the Advisers Act, which allows the Commission to
require investment advisers to file forms ``through any entity
designated [by it] for that purpose'' and ``to pay the reasonable
costs associated with [these] filings * * *.'' (This authority was
added to the Advisers Act as section 203A(d) by section 303(a) of
the National Securities Markets Improvement Act of 1996, Pub. L.
104-290, 110 Stat. 3416; moved to section 204(b) by section 7 of the
Military Personnel Financial Services Protection Act, Pub. L. 109-
290, 102 Stat. 1317 (2006); and re-designated as section 204(c),
effective July 21, 2011, by section 404(1) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, Pub. L. 111-203, 124
Stat. 1376 (2010).) See Designation of NASD Regulation, Inc., to
Establish and Maintain the Investment Adviser Registration
Depository; Approval of IARD Fees, Investment Advisers Act Release
No. 1888 (July 28, 2000), 65 FR 47807 (Aug. 3, 2000). (FINRA was
formerly known as NASD.)
\8\ See section II.E of the Form PF Proposing Release
(discussing efficiencies of expanding existing IARD platform to
accommodate filings of Form PF). See also Form PF Proposing Release
at note 39 and accompanying text (discussing confidentiality of Form
PF information).
\9\ See comment letter of the Alternative Investment Management
Association (Apr. 12, 2011) (agreeing that using the IARD and FINRA
is a ``sensible solution''); comment letter of the Managed Funds
Association (Apr. 8, 2011). We explained in the Form PF Proposing
Release that the filing system would need to be programmed with
special confidentiality protections designed to ensure the
heightened confidentiality protections created for Form PF filing
information under the Dodd-Frank Act. See Form PF Proposing Release
at note 39 and accompanying text and section II.E. These commenters
expressed the view that maintaining the confidentiality of Form PF
data is an important consideration in developing the filing system.
If Form PF is adopted, Commission staff will work closely with FINRA
in designing procedures and systems to ensure that Form PF data is
handled and used in a manner consistent with the protections
established in the Dodd-Frank Act.
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Section 204(c) of the Advisers Act authorizes the Commission to
require that investment advisers pay the reasonable costs associated
with filings, and under the Commission's proposed rule, private fund
advisers would pay fees to the operator of the Form PF filing system in
connection with the filing of Form PF.\10\ Following discussions with
Commission staff, FINRA submitted a schedule of recommended filings
fees for proposed Form PF.\11\ The recommended fees are $150 for the
proposed quarterly filings and $150 for the proposed annual
filings.\12\ As the Commission indicated in the Form PF Proposing
Release, because advisers filing on a quarterly basis would use the
system more frequently and would report more information than advisers
filing on an annual basis, total annual fees would be higher for
quarterly filers. Based on projections of expected revenues and
expenses (including those resulting from future system enhancements)
relating to the filing of the proposed Form PF, the Commission believes
that these fees would reflect costs reasonably associated with these
filings and the development and maintenance of the system. If the
proposal is adopted, these fees would apply starting with the effective
date of rule 204(b)-1.
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\10\ See proposed rule 204(b)-1(d).
\11\ See note 3 above.
\12\ Under the proposal, advisers managing $1 billion or more in
hedge fund assets, combined liquidity fund and registered money
market fund assets or private equity fund assets would file Form PF
on a quarterly basis. All other private fund advisers would file on
an annual basis. See sections II.B and II.C of the Form PF Proposing
Release.
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Dated: September 30, 2011.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25821 Filed 10-5-11; 8:45 am]
BILLING CODE 8011-01-P