[Federal Register Volume 79, Number 145 (Tuesday, July 29, 2014)]
[Notices]
[Pages 44069-44070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-17777]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE., Washington, DC
20549-2736.
Extension:
Rule 19a-1.
SEC File No. 270-240, OMB Control No. 3235-0216.
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'') 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.
Section 19(a) (15 U.S.C. 80a-19(a)) of the Investment Company Act
of 1940 (the ``Act'') \1\ makes it unlawful for any registered
investment company to pay any dividend or similar distribution from any
source other than the company's net income, unless the payment is
accompanied by a written statement to the company's shareholders which
adequately discloses the sources of the payment. Section 19(a)
authorizes the Commission to prescribe the form of such statement by
rule.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 80a.
---------------------------------------------------------------------------
Rule 19a-1 (17 CFR 270.19a-1) under the Act, entitled ``Written
Statement to Accompany Dividend Payments by Management Companies,''
sets forth specific requirements for the information that must be
included in statements made pursuant to section 19(a) by or on behalf
of management companies.\2\ The rule requires that the statement
indicate what portions of distribution payments are made from net
income, net profits from the sale of a security or other property
(``capital gains'') and paid-in capital. When any part of the payment
is made from capital gains, Rule 19a-1 also requires that the statement
disclose certain other information relating to the appreciation or
depreciation of portfolio securities. If an estimated portion is
subsequently determined to be significantly inaccurate, a correction
must be made on a statement made pursuant to section 19(a) or in the
first report to shareholders following the discovery of the inaccuracy.
---------------------------------------------------------------------------
\2\ Section 4(3) of the Act (15 U.S. C. 80a-4(3)) defines
``management company'' as ``any investment company other than a face
amount certificate company or a unit investment trust.''
---------------------------------------------------------------------------
The purpose of Rule 19a-1 is to afford fund shareholders adequate
disclosure of the sources from which distribution payments are made.
The rule is intended to prevent shareholders from confusing income
dividends with distributions made from capital sources. Absent Rule
19a-1, shareholders might receive a false impression of fund gains.
Based on a review of filings made with the Commission, the staff
estimates that approximately 11,066 series of registered investment
companies that are management companies may be subject to Rule 19a-1
each year,\3\ and that each portfolio on average mails two statements
per year to meet the requirements of the rule.\4\ The staff further
estimates that the time needed to make the determinations required by
the rule and to prepare the statement required under the rule is
approximately 1 hour per statement. The total annual burden for all
portfolios therefore is estimated to be approximately 22,132 burden
hours.\5\
---------------------------------------------------------------------------
\3\ This estimate is based on statistics compiled by Commission
staff as of May 31, 2014. The number of management investment
company portfolios that make distributions for which compliance with
Rule 19a-1 is required depends on a wide range of factors and can
vary greatly across years. Therefore, the calculation of estimated
burden hours is based on the total number of management investment
company portfolios, each of which may be subject to Rule 19a-1.
\4\ A few portfolios make monthly distributions from sources
other than net income, so the rule requires them to send out a
statement 12 times a year. Other portfolios never make such
distributions.
\5\ This estimate is based on the following calculation: 11,066
management investment company portfolios x 2 statements per year x 1
hour per statement = 22,132 burden hours.
---------------------------------------------------------------------------
The staff estimates that approximately one-third of the total
annual burden (7,377 hours) would be incurred by a paralegal with an
average hourly wage rate of approximately $199 per hour,\6\ and
approximately two-thirds of the annual burden (14,755 hours) would be
incurred by a compliance clerk with an average hourly wage rate of $64
per
[[Page 44070]]
hour.\7\ The staff therefore estimates that the aggregate annual cost
of complying with the paperwork requirements of the rule is
approximately $2,412,343 ((7,377 hours x $199 = $1,468,023) + (14,755
hours x $64 = $944,320)).
---------------------------------------------------------------------------
\6\ Hourly rates are derived from the Securities Industry and
Financial Markets Association (``SIFMA''), Management and
Professional Earnings in the Securities Industry 2013, modified to
account for an 1800-hour work-year and multiplied by 5.35 to account
for bonuses, firm size, employee benefits, and overhead.
\7\ Hourly rates are derived from SIFMA's Office Salaries in the
Securities Industry 2013, modified to account for an 1800-hour work-
year and multiplied by 2.93 to account for bonuses, firm size,
employee benefits and overhead.
---------------------------------------------------------------------------
To comply with state law, many investment companies already must
distinguish the different sources from which a shareholder distribution
is paid and disclose that information to shareholders. Thus, many
investment companies would be required to distinguish the sources of
shareholder dividends whether or not the Commission required them to do
so under Rule 19a-1.
The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act, and is not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules. Compliance with the collection of information
required by Rule 19a-1 is mandatory for management companies that make
statements to shareholders pursuant to section 19(a) of the Act. 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 collections of
information are necessary for the proper performance of the functions
of the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burdens
of the collections of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burdens of the collections 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, Chief
Information Officer, Securities and Exchange Commission, C/O Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email
to: [email protected].
Dated: July 23, 2014.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-17777 Filed 7-28-14; 8:45 am]
BILLING CODE 8011-01-P