[Federal Register Volume 62, Number 187 (Friday, September 26, 1997)]
[Notices]
[Pages 50643-50644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25604]
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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 Filings and Information Services,
Washington, DC 20549.
Extension: Rule 206(4)-2, SEC File No. 270-217, OMB Control No.
3235-0241; Rule 02 and Forms 4-R, 5-R, 6-R, and 7-R, SEC File No. 270-
214, OMB Control No. 3235-0240; Rule 203-2 and Form ADV-W, SEC File No.
270-40; OMB Control No. 3235-0313.
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 (``Commission'') has submitted to the Office of Management
and Budget requests for extension of the previously approved
collections of information discussed below.
Rule 206(4)-2 governs the custody or possession of funds or
securities by Commission-registered investment advisers. Rule 206(4)-2
makes it a fraudulent, deceptive or manipulative act, practice or
course of business for any investment adviser who has custody or
possession of funds or securities of its clients to do any act or take
any action with respect to any such funds or securities unless: (1) The
securities are properly segregated and safely kept; (2) the funds are
held in one or more specially designated client accounts with the
adviser named as trustee; (3) the adviser promptly notifies the client
as to the place and manner of safekeeping; (4) the adviser sends a
detailed written statement to each client at least once every three
months; and (5) at least once each year, on an unannounced basis, an
independent public accountant verifies by actual examination the
clients' funds and securities and files a certificate with the
Commission describing the examination. The rule does not apply to an
investment adviser that is also
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registered as a broker-dealer under the Securities Exchange Act of 1934
(``Exchange Act''), provided the adviser is in compliance with Rule
15c3-1 under the Exchange Act, or, if a member of an exchange, in
compliance with exchange requirements with respect to financial
responsibility and the segregation of funds or securities carried for
the account of the customer.
The information required by Rule 206(4)-2 is used by the Commission
in connection with its investment adviser inspection program to ensure
that advisers are in compliance with Rule 206(4)-2. The information
required by paragraphs (3) and (4) of the rule is also used by clients.
Without the information collected under the rule, the Commission would
be less efficient and effective in its inspection program and clients
would not have information valuable for monitoring the adviser's
handling of their accounts.
The Commission recently adopted amendments to the rule to restrict
the application of the rule to those advisers registered with the
Commission. The likely respondents to this information collection are
those investment advisers that are registered with the Commission after
July 8, 1997, are not also registered as broker-dealers, and have
custody of clients' funds or securities. The Commission estimates that
111 advisers would be subject to Rule 206(4)-2. The number of responses
under Rule 206(4)-2 will vary considerably depending on the number of
clients for which an adviser has custody or possession of funds or
securities. It is estimated that an adviser subject to this rule would
be required to provide an average of 250 responses annually at an
average of .5 hours per response. The total annual burden for each
respondent is estimated to be 125 hours. The total annual aggregate
burden for all respondents is estimated to be 13,875 hours.
Rule 0-2 requires certain non-resident persons to furnish to the
Commission a written irrevocable consent and power of attorney that
designates the Commission as an agent for service of process, and that
stipulates and agrees that any civil suit or action against such person
may be commenced by service of process on the Commission. Regulation
279.4, 279.5, 279.6, and 279.7 [17 CFR 279.4, 279.5, 279.6, and 279.7]
designate Forms 4-R, 5-R, 6-R, and 7-R as the irrevocable appointments
of agent for service of process, pleadings and other papers to be filed
by an individual non-resident adviser or an unincorporated nonresident
investment adviser, a partnership nonresident investment adviser, or a
nonresident general partner of an investment adviser or a nonresident
``managing agent'' of an unincorporated investment adviser,
respectively, which is registered or applying for registration with the
Commission as an investment adviser.
It is necessary to obtain the appropriate consent to ensure that
the Commission and other persons can institute injunctive actions
against nonresident investment advisers and non-resident partners or
managers of investment advisers in cases involving violation of the
Investment Advisers Act of 1940 (``Advisers Act'') that may result in
civil liabilities.
The Commission estimates that there may be an increase in the
number of non-resident registered investment advisers, which may be
offset by those non-resident general partners or non-resident managing
agents of investment advisers that would not register or be registered
with the Commission after July 8, 1997 who would no be subject to the
Rule 0-2 or the forms.\1\ Therefore, non-resident general partners or
non-resident managing agents of investment advisers that would be
registered with the states after the July 8, 1997 effective date would
no longer be subject to Rule 0-2 or be required to file the forms.
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\1\ On October 11, 1996, President Clinton signed into law the
National Securities Markets Improvement Act of 1996 (``1996 Act'').
Title III of the 1996 Act, the Investment Advisers Supervision
Coordination Act (``Coordination Act''), amended the Investment
Advisers Act of 1940 to, among other things, reallocate the
responsibilities for regulating investment advisers between the
Commission and the securities regulatory authorities of the states.
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The Commission estimates that there would be approximately 300
registrants subject to Rule 0-2. An adviser subject to this rule would
be required to file only once, and the Commission estimates that the
preparation and filing of any of the forms designated for use pursuant
to Rule 0-2 would require approximately one hour of the registrant's
time. The total annual burden would be 300 hours.
Rule 203-2 governs withdrawal from registration under the Advisers
Act and Form ADV-W is the form for withdrawing registration under the
Advisers Act.
To enforce the registration provisions of the Advisers Act and to
fulfill its responsibilities under Section 203(h), the Commission must
obtain certain information from persons seeking to withdraw from
registration. The information required by Form ADV-W enables the
Commission to satisfy itself that the activities of person seeking to
withdraw from registration do not require such person to be registered
and to determine whether terms and conditions should be imposed upon a
registrant's withdrawal. Such terms and conditions might include the
making of appropriate arrangements with respect to the transfer to
clients of client funds and securities in the custody and possession of
the adviser or the return to clients of prepaid advisory fees.
After July 8, 1997 (effective date of the Coordination Act), the
Commission estimates that only 28 percent of investment advisers
currently registered with the Commission will remain eligible for
Commission registration. It is estimated that approximately 616
advisers will be withdrawing their registration from the Commission by
filing Form ADV-W. The total annual burden for each respondent is
estimated to be one hour. The annual aggregate burden for all
respondents is estimated to be 616 hours.
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 regarding the above information should be directed
to the following persons: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 3208, New Executive Office
Building, Washington, D.C. 20503; and (ii) Michael E. Bartell,
Associate Executive Director, Office of Information Technology,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. Comments must be submitted to OMB within 30 days of this
notice.
Dated: September 19, 1997.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-25604 Filed 9-25-97; 8:45 am]
BILLING CODE 8010-01-M