[Federal Register Volume 77, Number 203 (Friday, October 19, 2012)]
[Notices]
[Pages 64367-64368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-25738]
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SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 38a-1, OMB Control No. 3235-0586, SEC File No. 270-522.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), 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 38a-1 (17 CFR 270.38a-1) under the Investment Company Act of
1940 (15 U.S.C. 80a) (``Investment Company Act'') is intended to
protect investors by fostering better fund compliance with securities
laws. The rule requires every registered investment company and
business development company (``fund'') to: (i) Adopt and implement
written policies and procedures reasonably designed to prevent
violations of the federal securities laws by the fund, including
procedures for oversight of compliance by each investment adviser,
principal underwriter, administrator, and transfer agent of the fund;
(ii) obtain the fund board of directors' approval of those policies and
procedures; (iii) annually review the adequacy of those policies and
procedures and the policies and procedures of each investment adviser,
principal underwriter, administrator, and transfer agent of the fund,
and the effectiveness of their implementation; (iv) designate a chief
compliance officer to administer the fund's policies and procedures and
prepare an annual report to the board that addresses certain specified
items relating to the policies and procedures; and (v) maintain for
five years the compliance policies and procedures and the chief
compliance officer's annual report to the board.
The rule contains certain information collection requirements that
are designed to ensure that funds establish and maintain comprehensive,
written internal compliance programs. The information collections also
assist the Commission's examination staff in assessing the adequacy of
funds' compliance programs.
While Rule 38a-1 requires each fund to maintain written policies
and procedures, most funds are located within a fund complex. The
experience of the Commission's examination and oversight staff suggests
that each fund in a complex is able to draw extensively from the fund
complex's ``master'' compliance program to assemble appropriate
compliance policies and procedures. Many fund complexes already have
written policies and procedures documenting their compliance programs.
Further, a fund needing to develop or revise policies and procedures on
one or more topics in order to achieve a comprehensive compliance
program can draw on a number of outlines and model programs available
from a variety of industry representatives, commentators, and
organizations.
There are approximately 4,237 funds subject to Rule 38a-1. Among
these funds, 146 were newly registered in the past year. These 146
funds, therefore, were required to adopt and document the policies and
procedures that make up their compliance programs. Commission staff
estimates that the average annual hour burden for a fund to adopt and
document these policies and procedures is 105 hours. Thus, we estimate
that the aggregate annual burden hours associated with the adoption and
documentation requirement is 15,330 hours.
In 2010, Commission staff began to estimate the hour burden
associated with money market funds' adoption of certain policies and
procedures aimed at ensuring that these funds meet reasonably
foreseeable shareholder redemptions (the ``general liquidity
requirement''). Commission staff estimates that each newly-registered
money market fund will incur a one-time additional average burden of 9
hours to document and adopt policies and procedures that will assist in
complying with the general liquidity requirement. Approximately 10
money market funds were newly registered in the past year. Thus, we
estimate that the additional aggregate annual burden hours associated
with general liquidity requirement policies and procedures is 90 hours.
All funds are required to conduct an annual review of the adequacy
of their existing policies and procedures and the policies and
procedures of each investment adviser, principal underwriter,
administrator, and transfer agent of the fund, and the effectiveness of
their implementation. In addition, each fund chief compliance officer
is required to prepare an annual report that addresses the operation of
the policies and procedures of the fund and the policies and procedures
of each investment adviser, principal underwriter, administrator, and
transfer agent of the fund, any material changes made to those policies
and procedures since the date of the last report, any material changes
to the policies and procedures recommended as a result of the annual
review, and certain compliance matters that occurred since
[[Page 64368]]
the date of the last report. The staff estimates that each fund spends
49 hours per year, on average, conducting the annual review and
preparing the annual report to the board of directors. Thus, we
estimate that the annual aggregate burden hours associated with the
annual review and annual report requirement is 207,613 hours.
Finally, the staff estimates that each fund spends 6 hours
annually, on average, maintaining the records required by proposed Rule
38a-1. Thus, the aggregate annual burden hours associated with the
recordkeeping requirement is 25,422 hours.
In total, the staff estimates that the aggregate annual information
collection burden of Rule 38a-1 is 248,455 hours. The estimate of
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.
Complying with this collection of information requirement is mandatory.
Responses 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 control number.
Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information collected; and (d)
ways to minimize the burden of the collection 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 Thomas Bayer, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312; or send an
email to: [email protected].
Dated: October 15, 2012.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25738 Filed 10-18-12; 8:45 am]
BILLING CODE 8011-01-P