[Federal Register Volume 80, Number 112 (Thursday, June 11, 2015)]
[Notices]
[Pages 33308-33309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14246]
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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 FOIA Services, 100 F Street NE., Washington, DC
20549-2736.
Extension:
Rule 154; OMB Control No. 3235-0495, SEC File No. 270-438.
Notice is hereby given that, under 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.
The federal securities laws generally prohibit an issuer,
underwriter, or dealer from delivering a security for sale unless a
prospectus meeting certain requirements accompanies or precedes the
security. Rule 154 (17 CFR 230.154) under the Securities Act of 1933
(15 U.S.C. 77a) (the ``Securities Act'') permits, under certain
circumstances, delivery of a single prospectus to investors who
purchase securities from the same issuer and share the same address
(``householding'') to satisfy the applicable prospectus delivery
requirements.\1\ The purpose of rule 154 is to reduce the amount of
duplicative prospectuses delivered to investors sharing the same
address.
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\1\ The Securities Act requires the delivery of prospectuses to
investors who buy securities from an issuer or from underwriters or
dealers who participate in a registered distribution of securities.
See Securities Act sections 2(a)(10), 4(1), 4(3), 5(b) (15 U.S.C.
77b(a)(10), 77d(1), 77d(3), 77e(b)); see also rule 174 under the
Securities Act (17 CFR 230.174) (regarding the prospectus delivery
obligation of dealers); rule 15c2-8 under the Securities Exchange
Act of 1934 (17 CFR 240.15c2-8) (prospectus delivery obligations of
brokers and dealers).
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Under rule 154, a prospectus is considered delivered to all
investors at a shared address, for purposes of the federal securities
laws, if the person relying on the rule delivers the prospectus to the
shared address, addresses the prospectus to the investors as a group or
to each of the investors individually, and the investors consent to the
delivery of a single prospectus. The rule applies to prospectuses and
prospectus supplements. Currently, the rule permits householding of all
prospectuses by an issuer, underwriter, or dealer relying on the rule
if, in addition to the other conditions set forth in the rule, the
issuer, underwriter, or dealer has obtained from each investor written
or implied consent to householding.\2\ The rule requires issuers,
underwriters, or dealers that wish to household prospectuses with
implied consent to send a notice to each investor stating that the
investors in the household will receive one prospectus in the future
unless the investors provide contrary instructions. In addition, at
least once a year, issuers, underwriters, or dealers, relying on rule
154 for the householding of prospectuses relating to open-end
management investment companies that are registered under the
Investment Company Act of 1940 (``mutual funds'') must explain to
investors who have provided written or implied consent how they can
revoke their consent.\3\ Preparing and sending the notice and the
annual explanation of the right to revoke are collections of
information.
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\2\ Rule 154 permits the householding of prospectuses that are
delivered electronically to investors only if delivery is made to a
shared electronic address and the investors give written consent to
householding. Implied consent is not permitted in such a situation.
See rule 154(b)(4).
\3\ See Rule 154(c).
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The rule allows issuers, underwriters, or dealers to household
prospectuses if certain conditions are met. Among the conditions with
which a person relying on the rule must comply are providing notice to
each investor that only one prospectus will be sent to the household
and, in the case of issuers that are mutual funds, providing to each
investor who consents to householding an annual explanation of the
right to revoke consent to the delivery of a single prospectus to
multiple investors sharing an address. The purpose of the notice and
annual explanation requirements of the rule is to ensure that investors
who wish to receive individual copies of prospectuses are able to do
so.
Although rule 154 is not limited to mutual funds, the Commission
believes that it is used mainly by mutual funds and by broker-dealers
that deliver mutual fund prospectuses. The Commission is unable to
estimate the number of issuers other than mutual funds that rely on the
rule.
The Commission estimates that, as of March 2015, there are
approximately
[[Page 33309]]
1,640 mutual funds, approximately 410 of which engage in direct
marketing and therefore deliver their own prospectuses. Of the
approximately 410 mutual funds that engage in direct marketing, the
Commission estimates that approximately half of these mutual funds
(205) (i) do not send the implied consent notice requirement because
they obtain affirmative written consent to household prospectuses in
the fund's account opening documentation; or (ii) do not take advantage
of the householding provision because of electronic delivery options
which lessen the economic and operational benefits of rule 154 when
compared with the costs of compliance. Therefore, the Commission
estimates that each direct-marketed fund will spend an average of 20
hours per year complying with the notice requirement of the rule, for a
total of 4,100 hours. Of the 410 mutual funds that engage in direct
marketing, the Commission estimates that approximately seventy-five
percent (308) of these funds will each spend 1 hour complying with the
annual explanation of the right to revoke requirement of the rule, for
a total of 308 hours. The Commission estimates that there are
approximately 200 broker-dealers that carry customer accounts and,
therefore, may be required to deliver mutual fund prospectuses. The
Commission estimates that each affected broker-dealer will spend, on
average, approximately 20 hours complying with the notice requirement
of the rule, for a total of 4,000 hours. Each broker-dealer will also
spend 1 hour complying with the annual explanation of the right to
revoke requirement, for a total of 200 hours. Therefore, the total
number of respondents for rule 154 is 507 (307 mutual funds plus 200
broker-dealers), and the estimated total hour burden is approximately
8,608 hours (4,408 hours for mutual funds plus 4,200 hours for broker-
dealers).
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 and forms.
Compliance with the collection of information requirements of the
rule is necessary to obtain the benefit of relying on the rule.
Responses to the collections of information will not be kept
confidential. The rule does not require these records be retained for
any specific period of time. 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.
The public may view the background documentation for this
information collection at the following Web site, www.reginfo.gov.
Comments should be directed to: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503, or by sending an email to:
[email protected]; and (ii) Pamela Dyson, Director/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]. Comments must be submitted to OMB within 30
days of this notice.
Dated: June 5, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-14246 Filed 6-10-15; 8:45 am]
BILLING CODE 8011-01-P