[Federal Register Volume 81, Number 223 (Friday, November 18, 2016)]
[Notices]
[Page 81825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27749]
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SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 12d3-1, SEC File No. 270-504, OMB Control No. 3235-0561
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
collections of information summarized below. The Commission plans to
submit these existing collections of information to the Office of
Management and Budget (``OMB'') for extension and approval.
Section 12(d)(3) of the Investment Company Act of 1940 (15 U.S.C.
80a) generally prohibits registered investment companies (``funds''),
and companies controlled by funds, from purchasing securities issued by
a registered investment adviser, broker, dealer, or underwriter
(``securities-related businesses''). Rule 12d3-1 (``Exemption of
acquisitions of securities issued by persons engaged in securities
related businesses'' (17 CFR 270.12d3-1)) permits a fund to invest up
to five percent of its assets in securities of an issuer deriving more
than fifteen percent of its gross revenues from securities-related
businesses, but a fund may not rely on rule 12d3-1 to acquire
securities of its own investment adviser or any affiliated person of
its own investment adviser.
A fund may, however, rely on an exemption in rule 12d3-1 to acquire
securities issued by its subadvisers in circumstances in which the
subadviser would have little ability to take advantage of the fund,
because it is not in a position to direct the fund's securities
purchases. The exemption in rule 12d3-1(c)(3) is available if (i) the
subadviser is not, and is not an affiliated person of, an investment
adviser that provides advice with respect to the portion of the fund
that is acquiring the securities, and (ii) the advisory contracts of
the subadviser, and any subadviser that is advising the purchasing
portion of the fund, prohibit them from consulting with each other
concerning securities transactions of the fund, and limit their
responsibility in providing advice to providing advice with respect to
discrete portions of the fund's portfolio.
Based on an analysis of third-party information, the staff
estimates that approximately 319 fund portfolios enter into subadvisory
agreements each year.\1\ Based on discussions with industry
representatives, the staff estimates that it will require approximately
3 attorney hours to draft and execute additional clauses in new
subadvisory contracts in order for funds and subadvisers to be able to
rely on the exemptions in rule 12d3-1. Because these additional clauses
are identical to the clauses that a fund would need to insert in their
subadvisory contracts to rely on rules 10f-3, 17a-10, and 17e-1 and
because we believe that funds that use one such rule generally use all
of these rules, we apportion this 3 hour time burden equally to all
four rules. Therefore, we estimate that the burden allocated to rule
12d3-1 for this contract change would be 0.75 hours.\2\ Assuming that
all 319 funds that enter into new subadvisory contracts each year make
the modification to their contract required by the rule, we estimate
that the rule's contract modification requirement will result in 239.25
burden hours annually.\3\
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\1\ Based on information available from Morningstar and the ICI
Fact Book, we estimate that 37 percent of funds are advised by
subadvisers.
\2\ This estimate is based on the following calculation (3 hours
/ 4 rules = .75 hours).
\3\ This estimate is based on the following calculation: (0.75
hours x 319 portfolios = 239.25 burden hours).
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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 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: November 14, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016-27749 Filed 11-17-16; 8:45 am]
BILLING CODE 8011-01-P