80 FR 18472 - Proposed Collection; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 65 (April 6, 2015)

[Federal Register Volume 80, Number 65 (Monday, April 6, 2015)]
[Notices]
[Pages 18472-18473]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-07752]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; 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; SEC File No. 270-438, OMB Control No. 3235-
0495.
    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange 
Commission (``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.
    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

[[Page 18473]]

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 prospectuses for mutual funds. 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 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.
    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 burden of 
the collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden 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: March 31, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015-07752 Filed 4-3-15; 8:45 am]
BILLING CODE 8011-01-P