80_FR_30409 80 FR 30308 - Proposed Collection; Comment Request

80 FR 30308 - Proposed Collection; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 101 (May 27, 2015)

Page Range30308-30310
FR Document2015-12684

Federal Register, Volume 80 Issue 101 (Wednesday, May 27, 2015)
[Federal Register Volume 80, Number 101 (Wednesday, May 27, 2015)]
[Notices]
[Pages 30308-30310]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-12684]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services,

[[Page 30309]]

100 F Street NE., Washington, DC 20549-2736.

Extension:
    Rule 31a-2, OMB Control No. 3235-0179, SEC File No. 270-174.

    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 
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.
    Section 31(a)(1) of the Investment Company Act of 1940 (the 
``Act'') (15 U.S.C. 80a-30(a)(1)) requires registered investment 
companies (``funds'') and certain underwriters, broker-dealers, 
investment advisers, and depositors to maintain and preserve records as 
prescribed by Commission rules. Rule 31a-1 under the Act (17 CFR 
270.31a-1) specifies the books and records that each of these entities 
must maintain. Rule 31a-2 under the Act (17 CFR 270.31a-2), which was 
adopted on April 17, 1944, specifies the time periods that entities 
must retain certain books and records, including those required to be 
maintained under rule 31a-1.
    Rule 31a-2 requires the following:
    1. Every fund must preserve permanently, and in an easily 
accessible place for the first two years, all books and records 
required under rule 31a-1(b)(1)-(4).\1\
---------------------------------------------------------------------------

    \1\ These include, among other records, journals detailing daily 
purchases and sales of securities, general and auxiliary ledgers 
reflecting all asset, liability, reserve, capital, income and 
expense accounts, separate ledgers reflecting separately for each 
portfolio security as of the trade date all ``long'' and ``short'' 
positions carried by the fund for its own account, and corporate 
charters, certificates of incorporation, by-laws and minute books.
---------------------------------------------------------------------------

    2. Every fund must preserve for at least six years, and in an 
easily accessible place for the first two years:
    a. All books and records required under rule 31a-1(b)(5)-(12); \2\
---------------------------------------------------------------------------

    \2\ These include, among other records, records of each 
brokerage order given in connection with purchases and sales of 
securities by the fund, records of all other portfolio purchases or 
sales, records of all puts, calls, spreads, straddles or other 
options in which the fund has an interest, has granted, or has 
guaranteed, records of proof of money balances in all ledger 
accounts, files of all advisory material received from the 
investment adviser, and memoranda identifying persons, committees, 
or groups authorizing the purchase or sale of securities for the 
fund.
---------------------------------------------------------------------------

    b. all vouchers, memoranda, correspondence, checkbooks, bank 
statements, canceled checks, cash reconciliations, canceled stock 
certificates, and all schedules evidencing and supporting each 
computation of net asset value of fund shares, and other documents 
required to be maintained by rule 31a-1(a) and not enumerated in rule 
31a-1(b);
    c. any advertisement, pamphlet, circular, form letter or other 
sales literature addressed or intended for distribution to prospective 
investors;
    d. any record of the initial determination that a director is not 
an interested person of the fund, and each subsequent determination 
that the director is not an interested person of the fund, including 
any questionnaire and any other document used to determine that a 
director is not an interested person of the company;
    e. any materials used by the disinterested directors of a fund to 
determine that a person who is acting as legal counsel to those 
directors is an independent legal counsel; and
    f. any documents or other written information considered by the 
directors of the fund pursuant to section 15(c) of the Act (15 U.S.C. 
80a-15(c)) in approving the terms or renewal of a contract or agreement 
between the fund and an investment advisor.\3\
---------------------------------------------------------------------------

    \3\ Section 15 of the Act requires that fund directors, 
including a majority of independent directors, annually approve the 
fund's advisory contract and that the directors first obtain from 
the adviser the information reasonably necessary to evaluate the 
contract. The information request requirement in section 15 provides 
fund directors, including independent directors, a tool for 
obtaining the information they need to represent shareholder 
interests.
---------------------------------------------------------------------------

    3. Every underwriter, broker, or dealer that is a majority-owned 
subsidiary of a fund must preserve records required to be preserved by 
brokers and dealers under rules adopted under section 17 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78q) (``section 17'') for 
the periods established in those rules.
    4. Every depositor of a fund, and every principal underwriter of a 
fund (other than a closed-end fund), must preserve for at least six 
years records required to be maintained by brokers and dealers under 
rules adopted under section 17 to the extent the records are necessary 
or appropriate to record the entity's transactions with the fund.
    5. Every investment adviser that is a majority-owned subsidiary of 
a fund must preserve the records required to be preserved by investment 
advisers under rules adopted under section 204 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-4) (``section 204'') for the 
periods specified in those rules.
    6. Every investment adviser that is not a majority-owned subsidiary 
of a fund must preserve for at least six years records required to be 
maintained by registered investment advisers under rules adopted under 
section 204 to the extent the records are necessary or appropriate to 
reflect the adviser's transactions with the fund.
    The records required to be maintained and preserved under this part 
may be maintained and preserved for the required time by, or on behalf 
of, a fund on (i) micrographic media, including microfilm, microfiche, 
or any similar medium, or (ii) electronic storage media, including any 
digital storage medium or system that meets the terms of rule 31a-2(f). 
The fund, or person that maintains and preserves records on its behalf, 
must arrange and index the records in a way that permits easy location, 
access, and retrieval of any particular record.\4\
---------------------------------------------------------------------------

    \4\ In addition, the fund, or person who maintains and preserves 
records for the fund, must provide promptly any of the following 
that the Commission (by its examiners or other representatives) or 
the directors of the fund may request: (A) A legible, true, and 
complete copy of the record in the medium and format in which it is 
stored; (B) a legible, true, and complete printout of the record; 
and (C) means to access, view, and print the records; and must 
separately store, for the time required for preservation of the 
original record, a duplicate copy of the record on any medium 
allowed by rule 31a-2(f). In the case of records retained on 
electronic storage media, the fund, or person that maintains and 
preserves records on its behalf, must establish and maintain 
procedures: (i) To maintain and preserve the records, so as to 
reasonably safeguard them from loss, alteration, or destruction; 
(ii) to limit access to the records to properly authorized 
personnel, the directors of the fund, and the Commission (including 
its examiners and other representatives); and (iii) to reasonably 
ensure that any reproduction of a non-electronic original record on 
electronic storage media is complete, true, and legible when 
retrieved.
---------------------------------------------------------------------------

    We periodically inspect the operations of all funds to ensure their 
compliance with the provisions of the Act and the rules under the Act. 
Our staff spends a significant portion of its time in these inspections 
reviewing the information contained in the books and records required 
to be kept by rule 31a-1 and to be preserved by rule 31a-2.
    There are 3146 funds currently operating as of December 31, 2014, 
all of which are required to comply with rule 31a-2. Based on 
conversations with representatives of the fund industry and past 
estimates, our staff estimates that each fund currently spends 220 
total hours per year complying with rule 31a-2. Our staff estimates 
that the 220 hours spent by typical fund would be split evenly between 
administrative and computer operation personnel,\5\ with 110 hours 
spent by a general clerk at a rate of $57 per hour and 110 hours spent 
by a senior computer operator at a rate of $87 per hour.\6\ Based on 
these

[[Page 30310]]

estimates, our staff estimates that the total annual burden for all 
funds to comply with rule 31a-2 is 692,120 hours at an estimated cost 
of $49,832,640.\7\
---------------------------------------------------------------------------

    \5\ However, the hour burden may be incurred by a variety of 
fund staff, and the type of staff position used for compliance with 
the rule may vary widely from fund to fund.
    \6\ The estimated salary rates are derived from SIFMA's Office 
Salaries in the Securities Industry 2013, modified by Commission 
staff to account for an 1800-hour work-year and multiplied by 2.93 
to account for bonuses, firm size, employee benefits and overhead.
    \7\ This estimate is based on the following calculations: 3146 
funds x 220 hours = 692,120 total hours; 692,120 hours/2 = 346,060 
hours; 346,060 x $57 rate per hour for a clerk = $19,725,420; 
346,060 x $87 rate per hour for a computer operator = $30,107,220; 
$19,725,420 + $30,107,220 = $49,832,640 total cost.
---------------------------------------------------------------------------

    The hour burden estimates for retaining records under rule 31a-2 
are based on our experience with registrants and our experience with 
similar requirements under the Act and the rules under the Act. The 
number of burden hours may vary depending on, among other things, the 
complexity of the fund, the issues faced by the fund, and the number of 
series and classes of the fund. The estimated average burden hours are 
made solely for purposes of the Paperwork Reduction Act and are not 
derived from quantitative, comprehensive, or even representative survey 
or study of the burdens associated with our rules and forms.
    Based on conversations with representatives of the fund industry 
and past estimates, our staff estimates that the average cost of 
preserving books and records required by rule 31a-2 is approximately 
$74,782 annually per fund.\8\ As discussed previously, there are 3146 
funds currently operating, for a total cost of preserving records as 
required by rule 31a-2 of approximately $235,264,172 per year.\9\ Our 
staff understands, however, based on previous conversations with 
representatives of the fund industry, that even in the absence of rule 
31a-2 funds would already spend approximately half of this amount 
($117,632,086) to preserve these same books and records, as they are 
also necessary to prepare financial statements, meet various state 
reporting requirements, and prepare their annual federal and state 
income tax returns. Therefore, we estimate that the total annual cost 
burden for all funds as a result of compliance with rule 31a-2 is 
approximately $117,632,086 per year.
---------------------------------------------------------------------------

    \8\ This estimate is based on staff's 2012 estimate of costs of 
preserving books and records required by rule 31a-2 ($70,000), 
adjusted for inflation to January 2015 values using the Personal 
Consumption Expenditures Chain-Type Price Index (``PCE Index''). The 
values of the PCE Index are available from the Bureau of Economic 
Analysis, a bureau of the Department of Commerce. See Bureau of 
Economic Analysis, Table 2.8.6. Real Personal Consumption 
Expenditures by Major Type of Product, Monthly, Chained Dollars 
(Last Revised on March 2, 2015), available at http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=83. 
Thus, $70,000 (2012 estimate) x 11,163.6 (Jan. 2015 PCE Index 
value)/10,449.7 (2012 PCE Index value) = $74,782 (Jan. 2015 
inflation adjusted estimate).
    \9\ This estimate is based on the following calculation: 3146 
funds x $74,782 = $235,264,172.
---------------------------------------------------------------------------

    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.
    The collection of information under rule 31a-2 is mandatory for all 
funds. 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 Commission, including whether the information will 
have practical utility; (b) the accuracy of the Commission'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: May 20, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12684 Filed 5-26-15; 8:45 am]
 BILLING CODE 8011-01-P



                                                  30308                          Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices

                                                  replace their orders and prices as a                     burden on competition that is not                        • Send an email to rule-comments@
                                                  means of attempting to quote with their                  necessary or appropriate in furtherance                sec.gov. Please include File Number SR–
                                                  orders. The Exchange believes that                       of the purposes of the Act. Although the               CBOE–2015–045 on the subject line.
                                                  Professionals should not be a priority                   Exchange recognizes that the proposal
                                                                                                                                                                  Paper Comments
                                                  over non-professional public customer                    will allow the Exchange to exclude
                                                  order flow, which is why, the Exchange                   Professionals from COA, the current                       • Send paper comments in triplicate
                                                  notes, there are separate CBOE rules for                 rules already allow the Exchange to                    to Secretary, Securities and Exchange
                                                  Professionals in the first place.10                      differentiate between order origin types               Commission, 100 F Street NE.,
                                                     The proposed change modifies the                      (i.e., non-broker-dealer public customer,              Washington, DC 20549–1090.
                                                  definition of a ‘‘COA-eligible order’’ to                broker-dealers that are not Market-                    All submissions should refer to File
                                                  give the Exchange the flexibility to                     Makers or specialists on an options                    Number SR–CBOE–2015–045. This file
                                                  distinguish between complex orders                       exchange, and/or Market-Makers or                      number should be included on the
                                                  from Professionals and complex orders                    specialist on an options exchange). The                subject line if email is used. To help the
                                                  from non-professional public customer                    Exchange believes any perceived burden                 Commission process and review your
                                                  order flow. Any changes to the COA-                      on Professionals would be outweighed                   comments more efficiently, please use
                                                  eligible order parameters would be                       by the potential benefits to public                    only one method. The Commission will
                                                  announced via Regulatory Circular.                       customers. In addition, the proposal                   post all comments on the Commission’s
                                                  2. Statutory Basis                                       would not permit the Exchange to                       Internet Web site (http://www.sec.gov/
                                                                                                           discriminate among individual market                   rules/sro.shtml). Copies of the
                                                     The Exchange believes the proposed                    participants of the same origin code                   submission, all subsequent
                                                  rule change is consistent with the                       (e.g., the proposal would not allow the                amendments, all written statements
                                                  Securities Exchange Act of 1934 (the                     Exchange to permit certain Professional                with respect to the proposed rule
                                                  ‘‘Act’’) and the rules and regulations                   orders to the exclusion of orders from a               change that are filed with the
                                                  thereunder applicable to the Exchange                    different Professional).14 The Exchange                Commission, and all written
                                                  and, in particular, the requirements of                  does not believe the proposed changes                  communications relating to the
                                                  Section 6(b) of the Act.11 Specifically,                 will have any burden on intermarket                    proposed rule change between the
                                                  the Exchange believes the proposed rule                  competition.                                           Commission and any person, other than
                                                  change is consistent with the Section
                                                                                                           C. Self-Regulatory Organization’s                      those that may be withheld from the
                                                  6(b)(5) 12 requirements that the rules of
                                                                                                           Statement on Comments on the                           public in accordance with the
                                                  an exchange be designed to prevent
                                                                                                           Proposed Rule Change Received From                     provisions of 5 U.S.C. 552, will be
                                                  fraudulent and manipulative acts and
                                                                                                           Members, Participants, or Others                       available for Web site viewing and
                                                  practices, to promote just and equitable
                                                                                                                                                                  printing in the Commission’s Public
                                                  principles of trade, to foster cooperation                 The Exchange neither solicited nor                   Reference Room, 100 F Street NE.,
                                                  and coordination with persons engaged                    received comments on the proposed                      Washington, DC 20549, on official
                                                  in regulating, clearing, settling,                       rule change.                                           business days between the hours of
                                                  processing information with respect to,
                                                                                                           III. Date of Effectiveness of the                      10:00 a.m. and 3:00 p.m. Copies of such
                                                  and facilitating transactions in
                                                                                                           Proposed Rule Change and Timing for                    filing also will be available for
                                                  securities, to remove impediments to
                                                                                                           Commission Action                                      inspection and copying at the principal
                                                  and perfect the mechanism of a free and
                                                                                                              Within 45 days of the date of                       offices of the Exchange. All comments
                                                  open market and a national market
                                                                                                           publication of this notice in the Federal              received will be posted without change;
                                                  system, and, in general, to protect
                                                                                                           Register or within such longer period                  the Commission does not edit personal
                                                  investors and the public interest.
                                                                                                           up to 90 days (i) as the Commission may                identifying information from
                                                  Additionally, the Exchange believes the
                                                                                                           designate if it finds such longer period               submissions. You should submit only
                                                  proposed rule change is consistent with
                                                                                                           to be appropriate and publishes its                    information that you wish to make
                                                  the Section 6(b)(5) 13 requirement that
                                                                                                           reasons for so finding or (ii) as to which             available publicly. All submissions
                                                  the rules of an exchange not be designed
                                                                                                           the Exchange consents, the Commission                  should refer to File Number SR–CBOE–
                                                  to permit unfair discrimination between
                                                                                                           will:                                                  2015–045, and should be submitted on
                                                  customers, issuers, brokers, or dealers.
                                                     In particular, the Exchange believes                     A. By order approve or disapprove                   or before June 17, 2015.
                                                  the proposed change is in accordance                     such proposed rule change, or                            For the Commission, by the Division of
                                                  with the Act as it is merely intended to                    B. institute proceedings to determine               Trading and Markets, pursuant to delegated
                                                  provide the Exchange the flexibility to                  whether the proposed rule change                       authority.15
                                                  distinguish between Professionals and                    should be disapproved.                                 Robert W. Errett,
                                                  non-professional public customer orders                                                                         Deputy Secretary.
                                                                                                           IV. Solicitation of Comments
                                                  for the purposes of COA, which is                                                                               [FR Doc. 2015–12687 Filed 5–26–15; 8:45 am]
                                                  intended to benefit non-professional                       Interested persons are invited to                    BILLING CODE 8011–01–P
                                                  public customers by providing a more                     submit written data, views, and
                                                  efficient COA for eligible complex                       arguments concerning the foregoing,
                                                  orders.                                                  including whether the proposed rule                    SECURITIES AND EXCHANGE
                                                                                                           change is consistent with the Act.                     COMMISSION
                                                  B. Self-Regulatory Organization’s                        Comments may be submitted by any of
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  Statement on Burden on Competition                       the following methods:                                 Proposed Collection; Comment
                                                    CBOE does not believe that the                                                                                Request
                                                                                                           Electronic Comments
                                                  proposed rule change will impose any
                                                                                                             • Use the Commission’s Internet                      Upon Written Request, Copies Available
                                                    10 See Rules 1.1 (fff) and (ggg).                      comment form (http://www.sec.gov/                       From: Securities and Exchange
                                                    11 15 U.S.C. 78f(b).                                   rules/sro.shtml); or                                    Commission, Office of FOIA Services,
                                                    12 15 U.S.C. 78f(b)(5).
                                                    13 Id.                                                  14 See   supra, note 5.                                 15 17   CFR 200.30–3(a)(12).



                                             VerDate Sep<11>2014    16:45 May 26, 2015   Jkt 235001   PO 00000   Frm 00103    Fmt 4703   Sfmt 4703   E:\FR\FM\27MYN1.SGM     27MYN1


                                                                                 Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices                                                          30309

                                                     100 F Street NE., Washington, DC                        computation of net asset value of fund                  extent the records are necessary or
                                                     20549–2736.                                             shares, and other documents required to                 appropriate to reflect the adviser’s
                                                  Extension:                                                 be maintained by rule 31a–1(a) and not                  transactions with the fund.
                                                    Rule 31a–2, OMB Control No. 3235–0179,                   enumerated in rule 31a–1(b);                               The records required to be maintained
                                                      SEC File No. 270–174.                                     c. any advertisement, pamphlet,                      and preserved under this part may be
                                                                                                             circular, form letter or other sales                    maintained and preserved for the
                                                     Notice is hereby given that, pursuant                   literature addressed or intended for                    required time by, or on behalf of, a fund
                                                  to the Paperwork Reduction Act of 1995                     distribution to prospective investors;                  on (i) micrographic media, including
                                                  (44 U.S.C. 3501 et seq.), the Securities                      d. any record of the initial                         microfilm, microfiche, or any similar
                                                  and Exchange Commission (the                               determination that a director is not an                 medium, or (ii) electronic storage media,
                                                  ‘‘Commission’’) is soliciting comments                     interested person of the fund, and each                 including any digital storage medium or
                                                  on the collection of information                           subsequent determination that the                       system that meets the terms of rule 31a–
                                                  summarized below. The Commission                           director is not an interested person of                 2(f). The fund, or person that maintains
                                                  plans to submit this existing collection                   the fund, including any questionnaire                   and preserves records on its behalf,
                                                  of information to the Office of                            and any other document used to                          must arrange and index the records in
                                                  Management and Budget for extension                        determine that a director is not an                     a way that permits easy location, access,
                                                  and approval.                                              interested person of the company;                       and retrieval of any particular record.4
                                                     Section 31(a)(1) of the Investment                         e. any materials used by the                            We periodically inspect the
                                                  Company Act of 1940 (the ‘‘Act’’) (15                      disinterested directors of a fund to                    operations of all funds to ensure their
                                                  U.S.C. 80a–30(a)(1)) requires registered                   determine that a person who is acting as                compliance with the provisions of the
                                                  investment companies (‘‘funds’’) and                       legal counsel to those directors is an                  Act and the rules under the Act. Our
                                                  certain underwriters, broker-dealers,                      independent legal counsel; and                          staff spends a significant portion of its
                                                  investment advisers, and depositors to                        f. any documents or other written                    time in these inspections reviewing the
                                                  maintain and preserve records as                           information considered by the directors                 information contained in the books and
                                                  prescribed by Commission rules. Rule                       of the fund pursuant to section 15(c) of                records required to be kept by rule 31a–
                                                  31a–1 under the Act (17 CFR 270.31a–                       the Act (15 U.S.C. 80a–15(c)) in                        1 and to be preserved by rule 31a–2.
                                                  1) specifies the books and records that                    approving the terms or renewal of a                        There are 3146 funds currently
                                                  each of these entities must maintain.                      contract or agreement between the fund                  operating as of December 31, 2014, all
                                                  Rule 31a–2 under the Act (17 CFR                           and an investment advisor.3                             of which are required to comply with
                                                  270.31a–2), which was adopted on April                        3. Every underwriter, broker, or dealer              rule 31a–2. Based on conversations with
                                                  17, 1944, specifies the time periods that                  that is a majority-owned subsidiary of a                representatives of the fund industry and
                                                  entities must retain certain books and                     fund must preserve records required to                  past estimates, our staff estimates that
                                                  records, including those required to be                    be preserved by brokers and dealers                     each fund currently spends 220 total
                                                  maintained under rule 31a–1.                               under rules adopted under section 17 of                 hours per year complying with rule
                                                     Rule 31a–2 requires the following:                      the Securities Exchange Act of 1934 (15                 31a–2. Our staff estimates that the 220
                                                     1. Every fund must preserve                             U.S.C. 78q) (‘‘section 17’’) for the                    hours spent by typical fund would be
                                                  permanently, and in an easily accessible                   periods established in those rules.                     split evenly between administrative and
                                                  place for the first two years, all books                      4. Every depositor of a fund, and                    computer operation personnel,5 with
                                                  and records required under rule 31a–                       every principal underwriter of a fund                   110 hours spent by a general clerk at a
                                                  1(b)(1)–(4).1                                              (other than a closed-end fund), must                    rate of $57 per hour and 110 hours spent
                                                     2. Every fund must preserve for at                      preserve for at least six years records                 by a senior computer operator at a rate
                                                  least six years, and in an easily                          required to be maintained by brokers                    of $87 per hour.6 Based on these
                                                  accessible place for the first two years:                  and dealers under rules adopted under
                                                     a. All books and records required                       section 17 to the extent the records are                   4 In addition, the fund, or person who maintains

                                                  under rule 31a–1(b)(5)–(12); 2                             necessary or appropriate to record the                  and preserves records for the fund, must provide
                                                     b. all vouchers, memoranda,                             entity’s transactions with the fund.                    promptly any of the following that the Commission
                                                                                                                                                                     (by its examiners or other representatives) or the
                                                  correspondence, checkbooks, bank                              5. Every investment adviser that is a                directors of the fund may request: (A) A legible,
                                                  statements, canceled checks, cash                          majority-owned subsidiary of a fund                     true, and complete copy of the record in the
                                                  reconciliations, canceled stock                            must preserve the records required to be                medium and format in which it is stored; (B) a
                                                  certificates, and all schedules                            preserved by investment advisers under                  legible, true, and complete printout of the record;
                                                                                                                                                                     and (C) means to access, view, and print the
                                                  evidencing and supporting each                             rules adopted under section 204 of the                  records; and must separately store, for the time
                                                                                                             Investment Advisers Act of 1940 (15                     required for preservation of the original record, a
                                                     1 These include, among other records, journals          U.S.C. 80b–4) (‘‘section 204’’) for the                 duplicate copy of the record on any medium
                                                  detailing daily purchases and sales of securities,         periods specified in those rules.                       allowed by rule 31a–2(f). In the case of records
                                                  general and auxiliary ledgers reflecting all asset,                                                                retained on electronic storage media, the fund, or
                                                  liability, reserve, capital, income and expense
                                                                                                                6. Every investment adviser that is not              person that maintains and preserves records on its
                                                  accounts, separate ledgers reflecting separately for       a majority-owned subsidiary of a fund                   behalf, must establish and maintain procedures: (i)
                                                  each portfolio security as of the trade date all           must preserve for at least six years                    To maintain and preserve the records, so as to
                                                  ‘‘long’’ and ‘‘short’’ positions carried by the fund for   records required to be maintained by                    reasonably safeguard them from loss, alteration, or
                                                  its own account, and corporate charters, certificates                                                              destruction; (ii) to limit access to the records to
                                                  of incorporation, by-laws and minute books.
                                                                                                             registered investment advisers under                    properly authorized personnel, the directors of the
                                                     2 These include, among other records, records of        rules adopted under section 204 to the                  fund, and the Commission (including its examiners
                                                  each brokerage order given in connection with                                                                      and other representatives); and (iii) to reasonably
                                                  purchases and sales of securities by the fund,               3 Section 15 of the Act requires that fund            ensure that any reproduction of a non-electronic
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  records of all other portfolio purchases or sales,         directors, including a majority of independent          original record on electronic storage media is
                                                  records of all puts, calls, spreads, straddles or other    directors, annually approve the fund’s advisory         complete, true, and legible when retrieved.
                                                                                                                                                                        5 However, the hour burden may be incurred by
                                                  options in which the fund has an interest, has             contract and that the directors first obtain from the
                                                  granted, or has guaranteed, records of proof of            adviser the information reasonably necessary to         a variety of fund staff, and the type of staff position
                                                  money balances in all ledger accounts, files of all        evaluate the contract. The information request          used for compliance with the rule may vary widely
                                                  advisory material received from the investment             requirement in section 15 provides fund directors,      from fund to fund.
                                                  adviser, and memoranda identifying persons,                including independent directors, a tool for                6 The estimated salary rates are derived from

                                                  committees, or groups authorizing the purchase or          obtaining the information they need to represent        SIFMA’s Office Salaries in the Securities Industry
                                                  sale of securities for the fund.                           shareholder interests.                                                                                Continued




                                             VerDate Sep<11>2014    16:45 May 26, 2015    Jkt 235001   PO 00000   Frm 00104    Fmt 4703   Sfmt 4703   E:\FR\FM\27MYN1.SGM     27MYN1


                                                  30310                       Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices

                                                  estimates, our staff estimates that the                 requirements, and prepare their annual                SECURITIES AND EXCHANGE
                                                  total annual burden for all funds to                    federal and state income tax returns.                 COMMISSION
                                                  comply with rule 31a–2 is 692,120                       Therefore, we estimate that the total
                                                  hours at an estimated cost of                           annual cost burden for all funds as a                 [Release No. 34–75013; File No. SR–FINRA–
                                                  $49,832,640.7                                           result of compliance with rule 31a–2 is               2014–048]
                                                     The hour burden estimates for                        approximately $117,632,086 per year.
                                                  retaining records under rule 31a–2 are                                                                        Self-Regulatory Organizations;
                                                  based on our experience with registrants                   The estimate of average burden hours               Financial Industry Regulatory
                                                  and our experience with similar                         is made solely for the purposes of the                Authority, Inc.; Notice of Designation
                                                  requirements under the Act and the                      Paperwork Reduction Act, and is not                   of a Longer Period for Commission
                                                  rules under the Act. The number of                      derived from a comprehensive or even                  Action on Proceedings To Determine
                                                  burden hours may vary depending on,                     a representative survey or study of the               Whether To Approve or Disapprove a
                                                  among other things, the complexity of                   costs of Commission rules and forms.                  Proposed Rule Change to Adopt
                                                  the fund, the issues faced by the fund,                    The collection of information under                FINRA Rule 2242 (Debt Research
                                                  and the number of series and classes of                 rule 31a–2 is mandatory for all funds.                Analysts and Debt Research Reports)
                                                  the fund. The estimated average burden                  An agency may not conduct or sponsor,
                                                  hours are made solely for purposes of                                                                         May 20, 2015.
                                                                                                          and a person is not required to respond
                                                  the Paperwork Reduction Act and are                     to, a collection of information unless it             I. Introduction
                                                  not derived from quantitative,                          displays a currently valid control
                                                  comprehensive, or even representative                                                                            On November 14, 2014, Financial
                                                                                                          number.                                               Industry Regulatory Authority, Inc.
                                                  survey or study of the burdens
                                                  associated with our rules and forms.                       Written comments are invited on: (a)               (‘‘FINRA’’) filed with the Securities and
                                                     Based on conversations with                          Whether the proposed collection of                    Exchange Commission (‘‘SEC’’ or
                                                  representatives of the fund industry and                information is necessary for the proper               ‘‘Commission’’), pursuant to Section
                                                  past estimates, our staff estimates that                performance of the functions of the                   19(b)(1) of the Securities Exchange Act
                                                  the average cost of preserving books and                Commission, including whether the                     of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and
                                                  records required by rule 31a–2 is                       information will have practical utility;              Rule 19b–4 thereunder,2 a proposed rule
                                                  approximately $74,782 annually per                      (b) the accuracy of the Commission’s                  to adopt new FINRA Rule 2242 (Debt
                                                  fund.8 As discussed previously, there                                                                         Research Analysts and Debt Research
                                                                                                          estimate of the burden of the collection
                                                  are 3146 funds currently operating, for                                                                       Reports) to address conflicts of interest
                                                                                                          of information; (c) ways to enhance the
                                                  a total cost of preserving records as                                                                         relating to the publication and
                                                                                                          quality, utility, and clarity of the                  distribution of debt research reports.
                                                  required by rule 31a–2 of approximately                 information collected; and (d) ways to
                                                  $235,264,172 per year.9 Our staff                                                                             The proposal was published for
                                                                                                          minimize the burden of the collection of              comment in the Federal Register on
                                                  understands, however, based on                          information on respondents, including
                                                  previous conversations with                                                                                   November 24, 2014.3 The Commission
                                                                                                          through the use of automated collection               received five comments on the
                                                  representatives of the fund industry,                   techniques or other forms of information
                                                  that even in the absence of rule 31a–2                                                                        proposal.4 On February 19, 2015, FINRA
                                                                                                          technology. Consideration will be given               filed Amendment No. 1 responding to
                                                  funds would already spend
                                                                                                          to comments and suggestions submitted                 the comments received to the proposal
                                                  approximately half of this amount
                                                                                                          in writing within 60 days of this                     as well as to propose amendments in
                                                  ($117,632,086) to preserve these same
                                                  books and records, as they are also                     publication.                                          response to these comments. The
                                                  necessary to prepare financial                             Please direct your written comments                proposal, as amended by Amendment
                                                  statements, meet various state reporting                to Pamela Dyson, Director/Chief                       No. 1, was published for comment in
                                                                                                          Information Officer, Securities and                   the Federal Register on March 18,
                                                  2013, modified by Commission staff to account for       Exchange Commission, C/O Remi
                                                  an 1800-hour work-year and multiplied by 2.93 to        Pavlik-Simon, 100 F Street NE.,
                                                                                                                                                                  1 15 U.S.C. 78s(b)(1).
                                                  account for bonuses, firm size, employee benefits                                                               2 17 CFR 240.19b–4.
                                                  and overhead.                                           Washington, DC 20549; or send an email                  3 Exchange Act Release No. 73623 (Nov. 18,
                                                     7 This estimate is based on the following            to: PRA_Mailbox@sec.gov.                              2014); 79 FR 69905 (Nov. 24, 2014). On January 6,
                                                  calculations: 3146 funds × 220 hours = 692,120 total                                                          2015, FINRA consented to extending the time
                                                  hours; 692,120 hours/2 = 346,060 hours; 346,060 ×         Dated: May 20, 2015.
                                                                                                                                                                period for the Commission to either approve or
                                                  $57 rate per hour for a clerk = $19,725,420; 346,060    Robert W. Errett,                                     disapprove the proposed rule change, or to institute
                                                  × $87 rate per hour for a computer operator =                                                                 proceedings to determine whether to approve or
                                                  $30,107,220; $19,725,420 + $30,107,220 =
                                                                                                          Deputy Secretary.
                                                                                                                                                                disapprove the proposed rule change, to February
                                                  $49,832,640 total cost.                                 [FR Doc. 2015–12684 Filed 5–26–15; 8:45 am]           20, 2015.
                                                     8 This estimate is based on staff’s 2012 estimate                                                            4 Letter from Hugh D. Berkson, Executive Vice
                                                                                                          BILLING CODE 8011–01–P
                                                  of costs of preserving books and records required                                                             President and President-Elect, Public Investors
                                                  by rule 31a–2 ($70,000), adjusted for inflation to                                                            Arbitration Bar Association, to Brent J. Fields,
                                                  January 2015 values using the Personal                                                                        Secretary, SEC, dated Dec. 15, 2014; Letter from
                                                  Consumption Expenditures Chain-Type Price Index                                                               Kevin Zambrowicz, Associate General Counsel and
                                                  (‘‘PCE Index’’). The values of the PCE Index are                                                              Managing Director, and Sean Davy, Managing
                                                  available from the Bureau of Economic Analysis, a                                                             Director, Securities Industry and Financial Markets
                                                  bureau of the Department of Commerce. See Bureau                                                              Association, to Brent J. Fields, Secretary, SEC, dated
                                                  of Economic Analysis, Table 2.8.6. Real Personal                                                              Dec. 15, 2014; Letter from Yoon-Young Lee, Wilmer
                                                  Consumption Expenditures by Major Type of                                                                     Cutler Pickering Hale and Dorr LLP, to Brent J.
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  Product, Monthly, Chained Dollars (Last Revised on                                                            Fields, Secretary, SEC, dated Dec. 16, 2014; Letter
                                                  March 2, 2015), available at http://www.bea.gov/                                                              from William Beatty, President, North American
                                                  iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=                                                                Securities Administrators Association, Inc., Brent J.
                                                  3&isuri=1&903=83. Thus, $70,000 (2012 estimate) ×                                                             Fields, Secretary, SEC, dated Dec. 19, 2014; and
                                                  11,163.6 (Jan. 2015 PCE Index value)/10,449.7 (2012                                                           Letter from Kurt N. Schacht, Managing Director,
                                                  PCE Index value) = $74,782 (Jan. 2015 inflation                                                               Standards and Financial Market Integrity, and
                                                  adjusted estimate).                                                                                           Linda L. Rittenhouse, Director, Capital Markets
                                                     9 This estimate is based on the following                                                                  Policy, CFA Institute, to Brent J. Fields, Secretary,
                                                  calculation: 3146 funds × $74,782 = $235,264,172.                                                             SEC, dated Feb. 9, 2015.



                                             VerDate Sep<11>2014   16:45 May 26, 2015   Jkt 235001   PO 00000   Frm 00105   Fmt 4703   Sfmt 4703   E:\FR\FM\27MYN1.SGM   27MYN1



Document Created: 2015-12-15 15:35:41
Document Modified: 2015-12-15 15:35:41
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 30308 

2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR