80 FR 67821 - Submission for OMB Review; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 212 (November 3, 2015)

[Federal Register Volume 80, Number 212 (Tuesday, November 3, 2015)]
[Notices]
[Pages 67821-67822]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-27916]


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SECURITIES AND EXCHANGE COMMISSION

[Extension: Rule 3a-4; SEC File No. 270-401, OMB Control No. 3235-0459]


Submission for OMB Review; Comment Request

Upon Written Request Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), 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.
    Rule 3a-4 (17 CFR 270.3a-4) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (``Investment Company Act'' or ``Act'') provides a 
nonexclusive safe harbor from the definition of investment company 
under the Act for certain investment advisory programs. These programs, 
which include ``wrap fee'' programs, generally are designed to provide 
professional portfolio management services on a discretionary basis to 
clients who are investing less than the minimum investments for 
individual accounts usually required by the investment adviser but more 
than the minimum account size of most mutual funds. Under wrap fee and 
similar programs, a client's account is typically managed on a 
discretionary basis according to pre-selected investment objectives. 
Clients with similar investment objectives often receive the same 
investment advice and may hold the same or substantially similar 
securities in their accounts. Because of this similarity of management, 
some of these investment advisory programs may meet the definition of 
investment company under the Act.
    In 1997, the Commission adopted rule 3a-4, which clarifies that 
programs organized and operated in accordance with the rule are not 
required to register under the Investment Company Act or comply with 
the Act's requirements. These programs differ from investment companies 
because, among other things, they provide individualized investment 
advice to the client. The rule's provisions have the effect of ensuring 
that clients in a program relying on the rule receive advice tailored 
to the client's needs.
    For a program to be eligible for the rule's safe harbor, each 
client's account must be managed on the basis of the client's financial 
situation and investment objectives and in accordance with any 
reasonable restrictions the client imposes on managing the account. 
When an account is opened, the sponsor (or its designee) must obtain 
information from each client regarding the client's financial situation 
and investment objectives, and must allow the client an opportunity to 
impose reasonable restrictions on managing the account. In addition, 
the sponsor (or its designee) must contact the client annually to 
determine whether the client's financial situation or investment 
objectives have changed and whether the client wishes to impose any 
reasonable restrictions on the management of the account or reasonably 
modify existing restrictions. The sponsor (or its designee) must also 
notify the client quarterly, in writing, to contact the sponsor (or its 
designee) regarding changes to the client's financial situation, 
investment objectives, or restrictions on the account's management.
    Additionally, the sponsor (or its designee) must provide each 
client with a quarterly statement describing all activity in the 
client's account during the previous quarter. The sponsor and personnel 
of the client's account manager who know about the client's account and 
its management must be reasonably available to consult with the client. 
Each client also must retain certain indicia of ownership of all 
securities and funds in the account.
    The Commission staff estimates that 16,537,781 clients participate 
each year in investment advisory programs relying on rule 3a-4. Of that 
number, the staff estimates that 4,918,064 are new clients and 
11,619,717 are continuing clients. The staff estimates that each year 
the investment advisory program sponsors'

[[Page 67822]]

staff engage in 1.5 hours per new client and 1 hour per continuing 
client to prepare, conduct and/or review interviews regarding the 
client's financial situation and investment objectives as required by 
the rule. Furthermore, the staff estimates that each year the 
investment advisory program sponsors' staff spends 1 hour per client to 
prepare and mail quarterly client account statements, including notices 
to update information. Based on the estimates above, the Commission 
estimates that the total annual burden of the rule's paperwork 
requirements is 35,534,594 hours.
    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act. The estimate is not derived 
from a comprehensive or even a representative survey or study of the 
costs of Commission rules and forms. 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 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 burdens 
of the collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burdens 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: October 28, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-27916 Filed 11-2-15; 8:45 am]
 BILLING CODE 8011-01-P