[Federal Register Volume 80, Number 212 (Tuesday, November 3, 2015)]
[Notices]
[Pages 67821-67822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27916]
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SECURITIES AND EXCHANGE COMMISSION
[Extension: Rule 3a-4; SEC File No. 270-401, OMB Control No. 3235-0459]
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.
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.
Rule 3a-4 (17 CFR 270.3a-4) under the Investment Company Act of
1940 (15 U.S.C. 80a) (``Investment Company Act'' or ``Act'') provides a
nonexclusive safe harbor from the definition of investment company
under the Act for certain investment advisory programs. These programs,
which include ``wrap fee'' programs, generally are designed to provide
professional portfolio management services on a discretionary basis to
clients who are investing less than the minimum investments for
individual accounts usually required by the investment adviser but more
than the minimum account size of most mutual funds. Under wrap fee and
similar programs, a client's account is typically managed on a
discretionary basis according to pre-selected investment objectives.
Clients with similar investment objectives often receive the same
investment advice and may hold the same or substantially similar
securities in their accounts. Because of this similarity of management,
some of these investment advisory programs may meet the definition of
investment company under the Act.
In 1997, the Commission adopted rule 3a-4, which clarifies that
programs organized and operated in accordance with the rule are not
required to register under the Investment Company Act or comply with
the Act's requirements. These programs differ from investment companies
because, among other things, they provide individualized investment
advice to the client. The rule's provisions have the effect of ensuring
that clients in a program relying on the rule receive advice tailored
to the client's needs.
For a program to be eligible for the rule's safe harbor, each
client's account must be managed on the basis of the client's financial
situation and investment objectives and in accordance with any
reasonable restrictions the client imposes on managing the account.
When an account is opened, the sponsor (or its designee) must obtain
information from each client regarding the client's financial situation
and investment objectives, and must allow the client an opportunity to
impose reasonable restrictions on managing the account. In addition,
the sponsor (or its designee) must contact the client annually to
determine whether the client's financial situation or investment
objectives have changed and whether the client wishes to impose any
reasonable restrictions on the management of the account or reasonably
modify existing restrictions. The sponsor (or its designee) must also
notify the client quarterly, in writing, to contact the sponsor (or its
designee) regarding changes to the client's financial situation,
investment objectives, or restrictions on the account's management.
Additionally, the sponsor (or its designee) must provide each
client with a quarterly statement describing all activity in the
client's account during the previous quarter. The sponsor and personnel
of the client's account manager who know about the client's account and
its management must be reasonably available to consult with the client.
Each client also must retain certain indicia of ownership of all
securities and funds in the account.
The Commission staff estimates that 16,537,781 clients participate
each year in investment advisory programs relying on rule 3a-4. Of that
number, the staff estimates that 4,918,064 are new clients and
11,619,717 are continuing clients. The staff estimates that each year
the investment advisory program sponsors'
[[Page 67822]]
staff engage in 1.5 hours per new client and 1 hour per continuing
client to prepare, conduct and/or review interviews regarding the
client's financial situation and investment objectives as required by
the rule. Furthermore, the staff estimates that each year the
investment advisory program sponsors' staff spends 1 hour per client to
prepare and mail quarterly client account statements, including notices
to update information. Based on the estimates above, the Commission
estimates that the total annual burden of the rule's paperwork
requirements is 35,534,594 hours.
The estimate of average 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 and forms. 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 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].
Dated: October 28, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-27916 Filed 11-2-15; 8:45 am]
BILLING CODE 8011-01-P