[Federal Register Volume 61, Number 100 (Wednesday, May 22, 1996)]
[Proposed Rules]
[Pages 25601-25604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12777]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 230, 240, 250, 270, and 275
[Release Nos. 33-7293; 34-37220; 35-26517; IC-21961; IA-1563; File No.
S7-14-96]
RIN 3235-AG79
Proposal To Eliminate Fees Previously Adopted by the Commission
Pursuant to the Independent Offices Appropriations Act of 1952
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: The Securities and Exchange Commission (Commission) is
proposing to eliminate each of the user fees currently adopted under
the Independent Offices Appropriations Act of 1952, in conjunction with
rules under the Securities Act of 1933, the Securities Exchange Act of
1934, the Public Utility Holding Company Act of 1935, the Investment
Company Act of 1940, and the Investment Advisers Act of 1940. These
fees were first adopted in 1972 to contribute towards the cost of
agency operations. However, since that time, the amount of fees
collected by the Commission has increased dramatically. In 1995, the
Commission collected nearly double the amount of fees required to fund
the agency's operations.
DATES: Comments must be received on or before July 8, 1996.
ADDRESSES: All interested persons are invited to submit their views and
comments concerning the rule proposal should be submitted in triplicate
to Jonathan G. Katz, Secretary, U.S. Securities and Exchange
Commission, Mail Stop 6-9, 450 Fifth Street, N.W., Washington, D.C.
20549. Comments also may be submitted electronically at the following
E-mail address: [email protected]. All comment letters should refer
to File Number S7-14-96; this file number should be included in the
subject line if E-mail is used. Comment letters will be available for
inspection and copying in the public reference room at the same
address. Electronically submitted comments will be posted on the
Commission's Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Henry I. Hoffman, Office of the
Comptroller, at (202) 942-0343.
SUPPLEMENTARY INFORMATION: Each fee identified for elimination is
listed on the attached table labeled TABLE OF IOAA FEES PROPOSED FOR
ELIMINATION.
Proposal
In 1972, to offset the cost to the government of related Commission
operations, the Securities and Exchange Commission established through
rulemaking a fee schedule for numerous types of applications,
statements and reports.1 These regulatory fees, authorized under
Title V of the Independent Offices Appropriations Act of 1952 (31
U.S.C.A. 9701), are commonly referred to as IOAA fees.2
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\1\ Securities Act of 1933, Release No. 5229, January 25, 1972.
\2\ The Independent Offices Appropriations Act of 1952,
specifically 31 U.S.C. 9701, authorizes independent agencies of the
federal government to prescribe fees and charges for activities that
provide benefits to individuals and businesses. This statute states
that ``It is the sense of Congress that each service * * * provided
by an agency * * * to a person * * * is to be self-sustaining to the
extent possible.'' The statute also authorizes the head of each
agency to prescribe regulations establishing the charge for a
service. Notably, a separate provision of the Securities Exchange
Act of 1934 (Exchange Act) specifically authorizes the Commission to
impose fees authorized by this act. 15 U.S.C. 14(g)(4).
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Today, the Commission is proposing the elimination of each of its
current IOAA fees.3 The collection of these fees
[[Page 25602]]
is no longer appropriate since the amount of revenue currently
generated by statutory fees imposed under the securities laws far
exceeds the annual cost of Commission operations. The additional
revenue added by the IOAA fees is an insignificant portion of the total
revenue received. In fiscal 1972, the Commission collected $19 million
in fees and cost $27 million to operate. IOAA fees represented 12
percent of the total 1972 revenue. In fiscal 1995, the Commission
collected $559 million in fees and was appropriated $297 million for
operating costs. IOAA fees represented just 2 percent of the total 1995
revenue.4
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\3\ See attached table of IOAA fees. Note that the Commission's
proposal would only eliminate the collection of regulatory fees
imposed under the IOAA; it would not affect other fees imposed by
statute that are also collected by the Commission. These statutory
fees include registration fees collected pursuant to Section 6(b) of
the Securities Act of 1933 (Securities Act) and Section 307(b) of
the Trust Indenture Act of 1939, going private fees collected
pursuant to Section 13 of the Exchange Act, proxy and tender offer
fees collected pursuant to Section 14 of the Exchange Act, and
transaction fees collected pursuant to Section 31 of the Exchange
Act.
\4\ The vast increase in Commission fee revenue between 1972 and
1995 has developed from two basic sources. First is a significant
increase in the underlying value of the securities on which the
statutory fees are based. The underlying value of securities
registered with the Commission under Section 6(b) of the Securities
Act increased from $62 billion to $1.2 trillion from 1972 to 1995.
Further, during the same period, the value of shares transacted on
the U.S. securities exchanges and subject to a fee under Section 31
of the Exchange Act increased from $196 billion to $3 trillion.
Second is the increased use of offsetting collections under Section
6(b) of the Securities Act to fund agency operations since 1990. The
amount of offsetting revenue collected under Section 6(b) in 1991,
the first year fee revenue was used to directly offset Commission
funding, was $37 million at a fee rate of \1/40\ of one percent, and
in 1995 was $157 million at an increased fee rate of \1/29\ of one
percent.
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This significant difference between the amount of fee revenue
collected by the Commission and the amount of its annual funding level
has been of continuing concern to Congress. In 1988, the Securities
Subcommittee of the Senate Committee on Banking, Housing and Urban
Affairs directed the Commission to study its fee structure and funding
status (Commission Fee Study).5
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\5\ Senate Report 100-105, 100th Cong., 1st Session, and, in
response, Commission issued findings in a U.S. Securities and
Exchange Commission ``Self Funding Study'' (January 1989) and
accompanying ``Legislative Proposals and Fee Options'' (January
1989).
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As a result of the Commission Fee Study and continuing
Congressional concerns about the level of the Commission's fees, in
1993 the House passed H.R. 2239, the Securities and Exchange Commission
Authorization Act of 1993. One of the stated purposes of this bill was
to ``establish a system for the annual adjustment of fees collected by
the Commission so that the total amount appropriated to the Commission
for any fiscal year will be offset by the amount collected during such
fiscal year * * *'' 6
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\6\ H.R. 2239, Section 31A.(a).
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Although Congress did not enact H.R. 2239, in 1995 members of the
Commission's authorization committee in the Senate stated that the
total amount of fees collected annually by the agency far exceed the
cost of its regulation and, therefore, should be reduced.7
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\7\ Letter dated April 6, 1995, from Senator D'Amato, Chairman
of the Senate Banking Committee, to Senators Domenici and Exon,
respectively Chairman and Ranking Member of the Senate Committee on
the Budget.
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On March 12, 1996, the House passed H.R. 2972, the ``Securities and
Exchange Commission Authorization Act of 1996.'' This bill has as a
major purpose, ``to reduce over time the rates of fees charged under
the Federal securities laws.'' 8 Notably, H.R. 2972 contains a
sense of the Congress resolution that the Commission should eliminate
its fees imposed under the IOAA.9
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\8\ H.R. 2972, Section 2(2).
\9\ Ibid, Section 7(1) states that ``the fees authorized by the
amendments made by this Act are in lieu of, and not in addition to,
any fees that the Securities and Exchange Commission is authorized
to impose or collect pursuant to Section 9701 of title 31, United
States Code * * *''.
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The Commission is proposing to eliminate IOAA fees for two
additional reasons. First, the Commission is committed, consistent with
its mission of investor protection, to eliminate unnecessary
regulations imposed on the capital formation process. The Commission
has determined that eliminating these IOAA fees will reduce such
burdens but neither harm investors nor the Commission's mission to
protect them. Second, the collection of these IOAA fees imposes a
disproportionate cost on the Commission. In 1995, IOAA fees represented
less than 2% of the total fee revenue collected by the Commission, but
more than one-half of the total number of fee payments processed by
Commission staff, making recordkeeping for these fees
disproportionately costly.
Cost/Benefit Analysis
Comments are requested related to any costs or benefits associated
with the elimination of the Commission's current IOAA fees. The
elimination of IOAA fees will provide an obvious benefit to persons
obligated to pay such fees, i.e., they will no longer have to pay the
fees. In addition, the Commission will avoid the costs associated with
processing and auditing the collection of such fees; Commission
resources spent on those tasks will be reallocated to other mandated
tasks. Other costs and benefits are expected to be de minimis.
Summary of Regulatory Flexibility Analysis
The Commission has prepared an Initial Regulatory Flexibility
Analysis in accordance with 5 U.S.C. 603 regarding the proposed rule
changes. The analysis reiterates the reasons and objectives for the
proposed rule changes discussed above in this release. The analysis
also describes the legal basis for the proposal and discusses its
effect on small entities as defined by the Securities Act, the Exchange
Act, the Public Utility Holding Company Act of 1935, the Investment
Company Act of 1940, and the Investment Advisers Act of 1940. This
proposed rule imposes no additional reporting, recordkeeping or other
compliance requirements on small businesses, and the Commission
believes that there are no overlapping or conflicting federal rules. In
addition, the Commission does not believe that any significant
alternative to the proposal would both accomplish the stated objectives
and minimize any significant impact on small companies. In fact, the
alternatives to eliminating the fee would be to maintain or increase
the current fees. Neither alternative provides any increased benefit
nor is appropriate in the public interest. The Commission encourages
the submission of written comments with respect to the Initial
Regulatory Flexibility Analysis. A copy of the Initial Regulatory
Flexibility Analysis may be obtained by contacting Henry I. Hoffman,
Securities and Exchange Commission, Office of the Comptroller, Room
2080, Washington, D.C. 20549.
Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
elimination of IOAA fees does not impose recordkeeping or information
collection requirements, or other collections of information which
require the approval of the Office of Management and Budget under 44
U.S.C. 3501 et seq.
Statutory Basis: The Commission's authority for this action is
31 U.S.C. 9701 and 15 U.S.C. 14(g)(4).
[[Page 25603]]
Securities and Exchange Commission Table of IOAA Fees Proposed for Elimination
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Fee cite Rule/form/schedule Amount Description
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Securities Act of 1933
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17 CFR 230.236(a),(c).................. Rule 236.................. $100 Exemption of shares offered in
connection with certain
transactions.
17 CFR 230.252(f)...................... Form 1-A.................. 500 Offering statement under
Regulation A.
17 CFR 230.310(a)...................... Schedules A, B, C or D.... 100 Offering sheet under
Regulation B.
17 CFR 230.604(a)...................... Form 1-E.................. 100 Notification of offering under
Regulation E by a small
business investment company.
17 CFR 230.652......................... Form 1-F.................. 100 Notification under Regulation
F.
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Securities Exchange Act of 1934
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17 CFR 240.0-11(c)(1)(ii).............. Schedule 14A.............. 125 Proxy Statement.
17 CFR 240.0-11(c)(1)(ii) 17 CFR Schedule 14C.............. 125 Information Statement.
240.14c-5(g).
17 CFR 240.12b-7....................... Form 8-A.................. 250 Registration of certain
classes of securities
pursuant to Section 12(b) or
(g).
17 CFR 240.12b-7....................... Form 8-B.................. 250 Registration of securities of
certain successor issuers
pursuant to Section 12(b) or
(g).
17 CFR 240.12b-7....................... Form 10................... 250 General form for registration
of securities pursuant to
Section 12(b) or (g).
17 CFR 240.12b-7....................... Form 10-SB................ 250 Optional form for the
registration of securities of
a small business issuer.
17 CFR 240.12b-7....................... Form 18................... 250 Application for registration
of securities of foreign
governments and political
subdivisions thereof.
17 CFR 240.12b-7, 17 CFR 240.13a-1, 17 Form 20-F................. 250 Registration of securities of
CFR 240.15d-1. foreign private issuers
pursuant to Section 12 (b) or
(g) and annual reports
pursuant to Sections 13 and
15(d)
17 CFR 240.12b-7, 17 CFR 240.13a-1, 17 Form 40-F................. 250 Registration of securities of
CFR 240.15d-1. certain Canadian issuers
pursuant to Section 12(b) or
(g) and for reports pursuant
to Section 15(d) and Rule 15d-
4.
17 CFR 240.13a-1, 17 CFR 240.15d-1..... Form 10-K................. 250 Annual report pursuant to
Sections 13 and 15(d).
17 CFR 240.13a-1, 17 CFR 240.15d-1..... Form 10-KSB............... 250 Optional form for annual
report of small business
issuers under Sections 13 and
15(d).
17 CFR 240.13a-1....................... Form 18-K................. 250 Annual report for foreign
governments and political
subdivisions thereof.
17 CFR 240.13d-7....................... Schedule 13D, Schedule 13D/ 100 Schedule for reporting
A (if amended to >5%). beneficial ownership of more
than five percent in an
equity security.
17 CFR 240.13d-7....................... Schedule 13G, Schedule 13G/ 100 Short form schedule for
A (if amended to >5%). reporting beneficial
ownership of more than five
percent in an equity security
17 CFR 240.14a-6(i).................... Schedule 14A.............. 125/500 Proxy Statement.
17 CFR 240.14a-101 (Item 22(a)(2))..... Schedule 14A.............. 125 Proxy filing fee for
investment companies.
17 CFR 240.15d-1....................... Form 11-K................. 250 Annual report for employee
stock purchase savings and
similar plans.
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Public Utility Holding Company Act of 1935
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17 CFR 250.1(d)........................ Form U5S.................. 250 Annual report of registered
holding company.
17 CFR 250.94(b)....................... Form U-13-60.............. 250 Annual report of mutual or
subsidiary service company.
17 CFR 250.106......................... Form U-1.................. 2,000 Application-declaration
statement.
17 CFR 250.106......................... Form U-3A-2............... 2,000/500 Annual holding company
exemption statement.
17 CFR 250.106......................... Form U-3A3-1.............. 500 Bank exemption statement.
17 CFR 250.106......................... Form U-13-1............... 2,000 Application for approval of
mutual or subsidiary service
company.
17 CFR 250.106......................... Form U-7D................. 200/100 Certificate of lease of
utility facilities.
17 CFR 250.106......................... Form U-R-1................ 2,000 Declaration regarding a
reorganization.
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Investment Company Act of 1940
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17 CFR 240.14a-101 (Item 22(a)(2))..... Schedule 14A.............. 125 Proxy filing fee.
17 CFR 270.0-5(d)...................... Rule 0-5.................. 500 Application under the 1940
Act.
17 CFR 270.8b-6........................ Rule 8b-6, Forms N-1A, N- 1,000 1940 Act registration fee.
2, N-3, N-4 and N-5.
17 CFR 270.24f-2(a)(3)................. Rule 24f-2................ 500 Registration of an indefinite
amount of securities.
17 CFR 270-30a-1....................... Rule 30-1................. 125 Form N-SAR filing fee.
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[[Page 25604]]
Investment Advisers Act of 1940 (``Advisers Act'')
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17 CFR 275.0-5(d)...................... Rule 0-5.................. 150 Application under the Advisers
Act.
17 CFR 275.203-3(a).................... Rule 203-3................ 150 Advisers Act registration fee.
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\1\ (First/subseq.).
Dated: May 16, 1996.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12777 Filed 5-21-96; 8:45 am]
BILLING CODE 8010-01-P