81 FR 39986 - Securities Investor Protection Corporation; Notice of Filing of Proposed Bylaw Amendments Relating to Assessment of SIPC Members
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 118 (June 20, 2016)
Federal Register Volume 81, Issue 118 (June 20, 2016)
| Page Range | 39986-39990 | |
| FR Document | 2016-14499 |
[Federal Register Volume 81, Number 118 (Monday, June 20, 2016)] [Notices] [Pages 39986-39990] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-14499] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. SIPA-177; File No. SIPC-2016-01] Securities Investor Protection Corporation; Notice of Filing of Proposed Bylaw Amendments Relating to Assessment of SIPC Members June 15, 2016. Pursuant to section 3(e)(1) of the Securities Investor Protection Act of 1970 (``SIPA''),\1\ on May 2, 2016 the Securities Investor Protection Corporation (``SIPC'') filed with the Securities and Exchange Commission (``Commission'') proposed bylaw amendments relating to assessments on SIPC member broker-dealers. On May 27, 2016, SIPC consented to a 60-day extension of time before the proposed bylaw amendments take effect pursuant to section 3(e)(1) of SIPA.\2\ Pursuant to section 3(e)(1)(B) of SIPA, the Commission finds that this proposed bylaw change involves a matter of such significant public interest that public comment should be obtained.\3\ Therefore, pursuant to section 3(e)(2)(A) of SIPA,\4\ the Commission is publishing this notice to solicit comments on the proposed bylaw change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78ccc(e)(1). \2\ 15 U.S.C. 78ccc(e)(1). \3\ 15 U.S.C. 78ccc(e)(1)(B). \4\ 15 U.S.C. 78ccc(e)(2)(A). --------------------------------------------------------------------------- In its filing with the Commission, SIPC included statements concerning the purpose of and statutory basis for the proposed bylaw amendments as described below, which description has been substantially prepared by SIPC. I. SIPC's Statement of the Purpose of, and Statutory Basis for, Proposed SIPC Bylaw Amendments Relating to Assessment of SIPC Members Overview Pursuant to Section 3(e)(1) of SIPA, SIPC submits this statement of the purpose of, and statutory basis for, proposed amendments to the SIPC Assessments Bylaw.\5\ Among other things, the Assessments Bylaw, at Article 6 of the SIPC Bylaws (``Article [[Page 39987]] 6''), currently provides for an assessment rate of \1/4\ of one percent of each member's net operating revenues from the securities business until the SIPC Fund reaches $2.5 billion and SIPC determines that the Fund will remain at or above $2.5 billion for at least six months. Once that determination is made, the assessment rate falls to a ``minimum assessment'' of 0.02 percent of the member's net operating revenues from the securities business. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78ccc(e)(1). --------------------------------------------------------------------------- Notwithstanding the foregoing, Article 6 also provides that the assessment rate is \1/4\ of one percent of annual net operating revenues if it is reasonably likely that the balance of the Fund will fall below $2.5 billion and remain at less than $2.5 billion for six months or more. Under the Bylaws, then, it is possible for the rate to change, in relatively short order, from \1/4\ of one percent to a minimum assessment, and back to \1/4\ of one percent. SIPC continues to examine whether the Fund ``target balance'' of $2.5 billion is adequate for SIPC to carry out its mission of customer protection. Whether or not $2.5 billion is sufficient, in furtherance of its mission, SIPC wishes to ensure that at a minimum and to the extent possible, the Fund does not fall below $2.5 billion. Accordingly, in setting the assessment rate, SIPC deems it prudent to consider not only the size of the Fund over a six-month period, but SIPC's actual expenditures and its projected expenditures from the Fund over a longer term. In addition, the size of the Fund is more likely to stay at or above the target balance if there is a more gradual progression in rates, before the minimum assessment rate is imposed. Finally, such measures would make less likely sudden changes in the assessment rate while giving SIPC members some relief in the amount of the assessment that they owe. With these considerations in mind, SIPC proposes to modify the Assessments Bylaw in two respects: One, to impose an intermediary assessment rate that would apply when the balance of the SIPC Fund is expected to be $2.5 billion for at least six months but SIPC's unrestricted net assets, as reflected in its most recent audited Statement of Financial Position, are less than $2.5 billion; and two, to amend the date on which any change in assessments becomes effective. Statement of Purpose and Statutory Basis Background Section 4(a)(1) of SIPA authorizes SIPC to establish a ``SIPC Fund'' (``the SIPC Fund'' or ``Fund'') from which all expenditures by SIPC are to be made.\6\ Examples of SIPC expenditures include advances to trustees to satisfy customer claims, and to pay administrative expenses in SIPA proceedings where the general estate is insufficient. The SIPC Fund also supports the day-to-day operations of SIPC. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78ddd(a)(1). --------------------------------------------------------------------------- All SIPC members pay an assessment into the SIPC Fund.\7\ After consultation by SIPC with self-regulatory organizations, the assessment is in the amount that SIPC deems ``necessary and appropriate,'' to establish and maintain the SIPC Fund and to repay any borrowings by SIPC. Currently, the rate stands at \1/4\ of one percent per year of SIPC members' net operating revenues derived from the securities business.\8\ The rate is to remain at \1/4\ of one percent until the balance of the SIPC Fund, as defined in section 4(a)(2) of SIPA,\9\ excluding SIPC confirmed lines of credit, reaches a target balance of $2.5 billion, and SIPC determines that the Fund will remain at $2.5 billion for at least six months.\10\ If that determination is made, the rate falls to a ``minimum assessment'' which is 0.02 percent of each member's annual net operating revenues from the securities business.\11\ --------------------------------------------------------------------------- \7\ 15 U.S.C. 78ddd(c)(2). \8\ Article 6, Sec. 1(a)(1)(A). \9\ 15 U.S.C. 78ddd(a)(2) \10\ Article 6, Sec. 1(a)(1)(B) \11\ Id. --------------------------------------------------------------------------- Article 6, however, also provides that if SIPC determines that the SIPC Fund is, or is reasonably likely to be, less than $2.5 billion and will likely remain at less than $2.5 billion for six months or more, exclusive of confirmed lines of credit, then the assessment rate is to be \1/4\ of one percent of the member's annual net operating revenue.\12\ --------------------------------------------------------------------------- \12\ Article 6, Sec. 1(a)(1)(C)(i). If the amount is less than $150 million, the assessment is in an amount to be determined by SIPC, but cannot be less than \1/4\ of one percent of the member's annual gross revenues from the securities business. Article 6, Sec. 1(a)(1)(C)(ii). If the Fund is less than $100 million, then the amount of the assessment also is determined by SIPC but, each year, it cannot be less than \1/2\ of one percent of each member's annual gross revenues from the securities business. Article 6, Sec. 1(a)(1)(C)(iii); 15 U.S.C. 78ddd(d)(1)(A) and (B). In no event may the assessment rate be more than \1/2\ of one percent annually of the member's gross revenues from the securities business, unless SIPC determines that a higher rate, but not one that is higher than one (1) percent of gross revenues, will not have a material adverse effect on the financial condition of SIPC members or their customers. Article 6, Sec. 1(a)(1)(C)(iv); 15 U.S.C. 78ddd(c)(3)(B). --------------------------------------------------------------------------- The Proposed Amendments A. Imposition of an Intermediary Assessment Rate Where large SIPA liquidation proceedings are pending that require sizeable advances by SIPC, the SIPC Fund may be at $2.5 billion for six months, but then fall significantly below that amount as additional advances are made. Under Article 6, Section 1(a)(1)(A), once the Fund reaches $2.5 billion and is projected to remain at or above that amount for six months or more, SIPC could change the assessment rate from \1/ 4\ of one percent, to 0.02 percent, of net operating revenues from the securities business. On the other hand, because projected expenditures in pending proceedings could reasonably cause the balance of the SIPC Fund to be less than $2.5 billion, but more than $150 million, for six months or more, SIPC alternatively could require that the assessment rate remain at \1/4\ of one percent.\13\ This situation is problematic not only for SIPC, but for its members. SIPC members might reasonably expect to pay a minimum assessment once the Fund reaches $2.5 billion, but even if they do, they could be subject to a sudden increase in the assessment as the rate returns to \1/4\ of one percent. --------------------------------------------------------------------------- \13\ Article 6, Sec. 1(a)(1)(C)(i). --------------------------------------------------------------------------- To provide clarity in this situation and to maintain the SIPC Fund at or above the target balance, and to offer some relief in the assessment that members must pay while reducing the likelihood of sudden changes in the rates, SIPC proposes to amend Article 6 as follows. First, when the SIPC Fund reaches $2.5 billion and is projected to be at $2.5 billion for six months or more, SIPC will consider the balance of its unrestricted net assets, as reflected in its most recent audited Statement of Financial Position. Among other items, included within the calculation of unrestricted net assets is provision for trustees' estimated costs to complete ongoing customer protection proceedings.\14\ Thus, in setting the assessment rate, SIPC will consider not only the balance of the SIPC Fund, but projected long-term liabilities. --------------------------------------------------------------------------- \14\ See, e.g., 2015 SIPC Annual Report at 20 (http://www.sipc.org/Content/media/annual-reports/2015-annual-report.pdf). --------------------------------------------------------------------------- Second, SIPC will impose an annual assessment rate of 0.15 percent of a member's net operating revenues from the securities business \15\ if (A) the amount of the SIPC Fund is at $2.5 billion or more; (B) SIPC has determined that the Fund will remain at or above $2.5 billion for at least six months; but [[Page 39988]] (C) SIPC's unrestricted net assets, as reflected in its most recent audited Statement of Financial Condition, are less than $2.5 billion. This measure establishes an intermediary assessment rate of 0.15 percent between the \1/4\ of one percent assessment imposed on SIPC members and the minimum assessment, and provides for a more gradual progression toward the imposition of a minimum assessment. --------------------------------------------------------------------------- \15\ Net operating revenues from the securities business are gross revenues from the securities business, as defined in Section 16(9) of SIPA, 15 U.S.C. 78lll(9), less total interest and dividend expense, but not exceeding total interest and dividend income. See Article 6, Sec. 1(g). See also http://www.sipc.org/Content/media/filing-forms/SIPC-6-20130830.PDF. --------------------------------------------------------------------------- B. Amendment of the Effective Date of a Change in the Assessment In addition to the foregoing, SIPC proposes to amend Article 6 with respect to when a change in assessments becomes effective. Currently, Article 6, Section 1(a)(1), provides that a change in assessments is to occur on the first day of the month following the date on which SIPC announces a change in the assessment and continue until SIPC provides otherwise (``Notice Provision''). In the ordinary course and to give as much notice to members as possible, the SIPC Board of Directors determines the rate of assessment at its September Meeting. The Board's determination is announced shortly thereafter but is not made effective until the first day of the following year. See, e.g., http://www.sipc.org/for-members/assessment-rate. SIPC last announced an assessment rate change (from a minimum assessment to the current \1/4\ of one percent) on March 2, 2009, to take effect on April 1, 2009. The assessment rate has continued unchanged since then. In order to give its members as much notice as possible of the assessment rate for the following year, SIPC has determined to amend the Notice Provision. An assessment rate will be effective on the first day of the year following the date on which SIPC announces its determination, consistent with SIPC's practice that the determination of the rate normally will occur in September. There may be emergency situations, however, when the need for an assessment rate to become effective is more immediate. In that case, the assessment rate will be effective on the date announced by SIPC provided that the exigency of the circumstances so warrants. II. Need for Public Comment Section 3(e)(1) of SIPA provides that the Board of Directors of SIPC must file a copy of any proposed bylaw change with the Commission, accompanied by a concise general statement of the basis and purpose of the proposed bylaw change.\16\ The proposed bylaw change will become effective thirty days after the date of filing with the Commission or upon such later date as SIPC may designate or such earlier date as the Commission may determine unless: (A) The Commission, by notice to SIPC setting forth the reasons for such action, disapproves the proposed bylaw change as being contrary to the public interest or contrary to the purposes of SIPA; or (B) the Commission finds that the proposed bylaw change involves a matter of such significant public interest that public comment should be obtained, in which case it may, after notifying SIPC in writing of such finding, require that the procedures for proposed SIPC rule changes in section 3(e)(2) of SIPA be followed with respect to the proposed bylaw change.\17\ --------------------------------------------------------------------------- \16\ 15 U.S.C. 78ccc(e)(1). \17\ 15 U.S.C. 78ccc(e)(1). --------------------------------------------------------------------------- The SIPC Fund, which is built from assessments on its members and the interest earned on the Fund, is used for the protection of customers of members liquidated under SIPA to maintain investor confidence in the securities markets. In light of this fact and that the bylaw change provides for a new assessment methodology, the Commission finds, pursuant to section 3(e)(1)(B) of SIPA,\18\ that the proposed bylaw change involves a matter of such significant public interest that public comment should be obtained and that the procedures applicable to proposed SIPC proposed rule changes in section 3(e)(2) of SIPA \19\ should be followed. As required by section 3(e)(1)(B) of SIPA, the Commission has notified SIPC of this finding in writing. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78ccc(e)(1)(B). \19\ 15 U.S.C. 78ccc(e)(2). --------------------------------------------------------------------------- III. Date of Effectiveness of the Proposed Bylaw Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register, or within such longer period (A) as the Commission may designate of not more than ninety days after such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (B) as to which SIPC consents, the Commission shall: (i) By order approve such proposed rule change; or (ii) Institute proceedings to determine whether such proposed rule change should be disapproved.\20\ --------------------------------------------------------------------------- \20\ 15 U.S.C. 78ccc(e)(2)(B). --------------------------------------------------------------------------- IV. Text of Proposed Bylaw Change The text of the proposed bylaw change is provided below. Proposed new language is in italics; proposed deletions are in brackets. ARTICLE 6 ASSESSMENTS Section 1. General (a) Amount of Assessment. (1) The amount of each member's assessment for the member's fiscal year shall [either be (a) the minimum amount or (b)] be the product of the assessment rate established by SIPC for that fiscal year and either the member's gross or net revenues from the securities business, as follows: (A) The assessment rate shall be one-fourth (\1/4\) of one (1) percent per annum of net operating revenues from the member's securities business [until] for each calendar year or part thereof unless SIPC determines that the balance of the SIPC Fund, as defined in Section 4(a)(2) of the Act, exclusive of confirmed lines of credit, (i) has aggregated a [target] balance of $2.5 billion, and (ii) will remain at or above $2.5 billion for six months or more. (B) Notwithstanding the provisions of Section 1(a)(1)(A) herein, if SIPC determines that the balance of the SIPC Fund, as defined in Section 4(a)(2) of the Act, exclusive of confirmed lines of credit, (i) has aggregated $2.5 billion, and (ii) will remain at or above $2.5 billion for six months or more, but SIPC's unrestricted net assets, as reflected in SIPC's most recent audited Statement of Financial Position, are less than $2.5 billion, the assessment rate shall be 0.15 percent per annum of net operating revenues from the member's securities business for each calendar year or part thereof. (C) If SIPC determines that the balance of the SIPC Fund, as defined in Section 4(a)(2) of the Act, exclusive of confirmed lines of credit, has aggregated $2.5 billion or more, and will remain at or above $2.5 billion for six months or more, and SIPC's unrestricted net assets, as reflected in SIPC's most recent audited Statement of Financial Position, are at or above $2.5 billion, members shall pay a minimum assessment, which shall be 0.02 percent of the net operating revenues from the securities business for each calendar year or part thereof. [C](D) Anything to the contrary herein notwithstanding, if at any time SIPC determines that the balance of the SIPC Fund, as defined in Section 4(a)(2) of the Act, exclusive of confirmed lines of credit, aggregates or is reasonably likely to aggregate: (i) less than [the target balance of] $2.5 billion and will likely remain less than $2.5 billion for a period of six (6) months or more-- the amount of each member's assessment shall be at an [[Page 39989]] assessment rate of one-fourth (\1/4\) of one (1) percent per annum of net operating revenue. (ii) less than $150,000,000--the amount of each member's assessment shall be at an amount to be determined by SIPC, but in no case shall the amount of each member's assessment be less than an assessment rate of one-fourth (\1/4\) of one (1) percent per annum of such member's gross revenues from the securities business. (iii) less than $100,000,000--the amount of each member's assessment shall be at an amount to be determined by SIPC, but in no case shall the amount of each member's assessment be less than an assessment rate of one-half (\1/2\) of one (1) percent per annum of such member's gross revenues from the securities business. (iv) The amount of each member's assessment shall not exceed one- half (\1/2\) of one (1) percent per annum of such member's gross revenues from the securities business, unless SIPC determines that a rate in excess of one-half (\1/2\) of one (1) percent during any twelve (12) month period will not have a material adverse effect on the financial condition of its members or their customers. No assessment made pursuant to this Section 1(a)(1) shall require payments during any such period that exceed in the aggregate one (1) percent of any member's gross revenues from the securities business for such period. (2) Any change in assessments made in accordance with [the above] Section 1(a)(1) herein shall commence on the first day of the [month] year following the date on which SIPC announces its determination, or on such other date if the exigency of the circumstances so warrants in SIPC's determination, and continue until such time as SIPC provides otherwise. (3) Commencing on the first day of the month following the date on which SIPC borrows moneys pursuant to Section 4(f) or Section 4(g) of the Act, and continuing while any such borrowing is outstanding and until such further time as SIPC provides otherwise, the amount of each member's assessment shall be at an assessment rate of not less than one-half (\1/2\) of one (1) percent per annum of such member's gross revenues from the securities business. (b) Payments. Assessments shall be payable at such times and in such manner as may be determined by SIPC's Vice President--Finance with the approval of the Chairman. (c) Collection of General Assessments. Each member of the Corporation who is a member of a self-regulatory organization shall pay assessments to its collection agent. In the case of members who are not members of any self-regulatory organization, assessments shall be paid directly to the Corporation. (d) Report by Collection Agents. Within 45 days after each due date, each self-regulatory organization which is the collection agent shall submit a written report to the Corporation as to any entity for whom it acts as collection agent whose filing or assessment payment has not been received. (e) Interest on Assessments. If all or any part of an assessment payable under Section 4 of the Act has not been received by the collection agent within 15 days after the due date thereof, the member shall pay, in addition to the amount of the assessment, interest at the rate of 20% per annum on the unpaid portion of the assessment for each day it has been overdue. If any broker or dealer has incorrectly filed a claim for exclusion from membership in the Corporation, such broker or dealer shall pay, in addition to assessments due, interest at the rate of 20% per annum on the unpaid assessment for each day it has not been paid since the date on which it should have been paid. (f) Gross Revenues. The term ``gross revenues from the securities business'' includes the revenues in the definition of gross revenues from the securities business set forth in the applicable sections of the Act. (g) Net Operating Revenues. The term ``net operating revenues from the securities business'' means gross revenues from the securities business less interest and dividend expenses, and includes those clarifications as are set forth in the SIPC assessment forms and instructions. Section 2. Overpayments If the final annual reconciliation filed by a terminated member reflects an assessment overpayment carried forward that exceeds $150.00, SIPC may refund such excess to the member upon receipt of the member's written request therefor and after the member's SIPC collection agent has confirmed to SIPC that all of the member's SIPC assessment form filings and payments and reports required by SEC Rule 17a-5 covering periods through the termination date have been reviewed and accepted. Section 3. Interpretation of Terms For purposes of this Article: (a) The term ``securities in trading accounts'' shall mean securities held for sale in the ordinary course of business and not identified as having been held for investment. (b) The term ``securities in investment accounts'' shall mean securities that are clearly identified as having been acquired for investment in accordance with provisions of the Internal Revenue Code applicable to dealers in securities. (c) The term ``fees and other income from such other categories of the securities business'' shall mean all revenue related either directly or indirectly to the securities business except revenue included in Section 16(9)(A)-(K) and revenue specifically excepted in Section 4(c)(3)(C). V. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml); or Send an email to [email protected]. Please include File Number SIPC-2016-01 on the subject line. Paper Comments Send paper comments to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All comments should refer to File Number SIPC-2016-01. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed bylaw change that are filed with the Commission, and all written communications relating to the proposed bylaw change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SIPC-2016-01, and should be submitted on or before July 11, 2016. [[Page 39990]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(f)(2)(i) & 200.30-3(f)(3). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-14499 Filed 6-17-16; 8:45 am] BILLING CODE 8011-01-P
![39986 Federal Register / Vol. 81, No. 118 / Monday, June 20, 2016 / Notices
certain dollar amount (currently, the effects of inflation by reference to with assets held jointly with a spouse)
$2,000,000) (‘‘net worth test’’).3 historic and current levels of the PCE of more than $2,100,000.
The Dodd-Frank Wall Street Reform Index, the dollar amount of the assets- By the Commission.
and Consumer Protection Act (‘‘Dodd- under-management test would remain Brent J. Fields,
Frank Act’’) 4 amended section 205(e) of $1,000,000, and the dollar amount of the
the Advisers Act to provide that, by July Secretary.
net worth test would increase from
21, 2011 and every five years thereafter, [FR Doc. 2016–14450 Filed 6–17–16; 8:45 am]
$2,000,000 to $2,100,000.9 These dollar
the Commission shall adjust for amounts—which are rounded to the BILLING CODE 8011–01–P
inflation the dollar amount thresholds nearest $100,000 as required by section
included in rules issued under section 205(e) of the Advisers Act—would
205(e), rounded to the nearest SECURITIES AND EXCHANGE
reflect inflation from 2011 to the end of
$100,000.5 The Commission last issued COMMISSION
2015.
an order to revise the dollar amount The Commission’s notice established [Release No. SIPA–177; File No. SIPC–2016–
thresholds of the assets-under- a deadline of June 13, 2016 for 01]
management and net worth tests (to submission of requests for a hearing. No
$1,000,000 and $2,000,000, respectively, requests for a hearing have been Securities Investor Protection
as discussed above) on July 12, 2011.6 received by the Commission. Corporation; Notice of Filing of
Rule 205–3 currently codifies the Proposed Bylaw Amendments Relating
threshold amounts revised by the 2011 III. Effective Date of the Order to Assessment of SIPC Members
Order and states that the Commission This Order is effective as of August June 15, 2016.
will issue an order on or about May 1, 15, 2016. To the extent that contractual
2016, and approximately every five Pursuant to section 3(e)(1) of the
relationships are entered into prior to Securities Investor Protection Act of
years thereafter, adjusting for inflation the Order’s effective date, the dollar
the dollar amount thresholds of the 1970 (‘‘SIPA’’),1 on May 2, 2016 the
amount test adjustments in the Order Securities Investor Protection
rule’s assets-under-management and net would not generally apply retroactively
worth tests based on the Personal Corporation (‘‘SIPC’’) filed with the
to such contractual relationships, Securities and Exchange Commission
Consumption Expenditures Chain-Type subject to the transition rules
Price Index (‘‘PCE Index,’’ published by (‘‘Commission’’) proposed bylaw
incorporated in rule 205–3.10 amendments relating to assessments on
the United States Department of
Commerce).7 IV. Conclusion SIPC member broker-dealers. On May
27, 2016, SIPC consented to a 60-day
II. Adjustment of Dollar Amount Accordingly, pursuant to section extension of time before the proposed
Thresholds 205(e) of the Investment Advisers Act of bylaw amendments take effect pursuant
1940 and section 418 of the Dodd-Frank to section 3(e)(1) of SIPA.2 Pursuant to
On May 18, 2016, the Commission
Act, section 3(e)(1)(B) of SIPA, the
published a notice of intent to issue an
order that would adjust for inflation, as It is hereby ordered that, for purposes Commission finds that this proposed
appropriate, the dollar amount of rule 205–3(d)(1)(i) under the bylaw change involves a matter of such
thresholds of the asset-under- Investment Advisers Act of 1940 [17 significant public interest that public
management test and the net worth CFR 275.205–3(d)(1)], a qualified client comment should be obtained.3
test.8 The Commission stated that, based means a natural person who, or a Therefore, pursuant to section 3(e)(2)(A)
on calculations that take into account company that, immediately after of SIPA,4 the Commission is publishing
entering into the contract has at least this notice to solicit comments on the
3 See rule 205–3(d)(1)(i)–(ii); see also infra note 6 $1,000,000 under the management of proposed bylaw change from interested
and accompanying text. the investment adviser; and persons.
4 Public Law 111–203, 124 Stat. 1376 (2010). It is further ordered that, for purposes In its filing with the Commission,
5 See section 418 of the Dodd-Frank Act
of rule 205–3(d)(1)(ii)(A) under the SIPC included statements concerning
(requiring the Commission to issue an order every Investment Advisers Act of 1940 [17
five years revising dollar amount thresholds in a the purpose of and statutory basis for
rule that exempts a person or transaction from CFR 275.205–3(d)(1)(ii)(A)], a qualified the proposed bylaw amendments as
section 205(a)(1) of the Advisers Act if the dollar client means a natural person who, or a described below, which description has
amount threshold was a factor in the Commission’s company that, the investment adviser
determination that the persons do not need the been substantially prepared by SIPC.
protections of that section).
entering into the contract (and any
6 See text accompanying supra note 3; Order person acting on his behalf) reasonably I. SIPC’s Statement of the Purpose of,
Approving Adjustment for Inflation of the Dollar believes, immediately prior to entering and Statutory Basis for, Proposed SIPC
Amount Tests in Rule 205–3 under the Investment into the contract, has a net worth Bylaw Amendments Relating to
Advisers Act of 1940, Investment Advisers Act (together, in the case of a natural person, Assessment of SIPC Members
Release No. 3236 (July 12, 2011) [76 FR 41838 (July
15, 2011)] (‘‘2011 Order’’). The 2011 Order was Overview
effective as of September 19, 2011. It applies to 9 See id. at section II.A.
contractual relationships entered into on or after the 10 See rule 205–3(c)(1) (‘‘If a registered investment Pursuant to Section 3(e)(1) of SIPA,
effective date and does not apply retroactively to adviser entered into a contract and satisfied the SIPC submits this statement of the
contractual relationships previously in existence. conditions of this section that were in effect when purpose of, and statutory basis for,
7 See rule 205–3(e).
the contract was entered into, the adviser will be proposed amendments to the SIPC
asabaliauskas on DSK3SPTVN1PROD with NOTICES
8 See Investment Adviser Performance considered to satisfy the conditions of this section;
Compensation, Investment Advisers Act Release Provided, however, that if a natural person or Assessments Bylaw.5 Among other
No. 4388 (May 18, 2016) [81 FR 32686 (May 24, company who was not a party to the contract things, the Assessments Bylaw, at
2016)]. While the dollar amount of the assets under- becomes a party (including an equity owner of a Article 6 of the SIPC Bylaws (‘‘Article
management test would not change, because the private investment company advised by the
amount of the Commission’s inflation adjustment adviser), the conditions of this section in effect at 1 15 U.S.C. 78ccc(e)(1).
calculation is smaller than the rounding amount that time will apply with regard to that person or 2 15
specified under rule 205–3, the dollar amount of the company.’’); see also Investment Adviser U.S.C. 78ccc(e)(1).
3 15 U.S.C. 78ccc(e)(1)(B).
net worth test would be adjusted as a result of Performance Compensation, Investment Advisers
4 15 U.S.C. 78ccc(e)(2)(A).
Commission’s inflation adjustment calculation Act Release No. 3198 (May 10, 2011) [76 FR 27959
effected pursuant to the rule. (May 13, 2011)], at section II.B.3. 5 15 U.S.C. 78ccc(e)(1).
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(C) SIPC’s unrestricted net assets, as will become effective thirty days after ARTICLE 6
reflected in its most recent audited the date of filing with the Commission ASSESSMENTS
Statement of Financial Condition, are or upon such later date as SIPC may
less than $2.5 billion. This measure designate or such earlier date as the Section 1. General
establishes an intermediary assessment Commission may determine unless: (A) (a) Amount of Assessment.
rate of 0.15 percent between the 1⁄4 of The Commission, by notice to SIPC (1) The amount of each member’s
one percent assessment imposed on setting forth the reasons for such action, assessment for the member’s fiscal year
SIPC members and the minimum disapproves the proposed bylaw change shall [either be (a) the minimum amount
assessment, and provides for a more as being contrary to the public interest or (b)] be the product of the assessment
gradual progression toward the or contrary to the purposes of SIPA; or rate established by SIPC for that fiscal
imposition of a minimum assessment. (B) the Commission finds that the year and either the member’s gross or
B. Amendment of the Effective Date of proposed bylaw change involves a net revenues from the securities
a Change in the Assessment matter of such significant public interest business, as follows:
that public comment should be (A) The assessment rate shall be one-
In addition to the foregoing, SIPC obtained, in which case it may, after fourth (1⁄4) of one (1) percent per annum
proposes to amend Article 6 with notifying SIPC in writing of such of net operating revenues from the
respect to when a change in assessments finding, require that the procedures for member’s securities business [until] for
becomes effective. Currently, Article 6, proposed SIPC rule changes in section each calendar year or part thereof
Section 1(a)(1), provides that a change 3(e)(2) of SIPA be followed with respect
in assessments is to occur on the first unless SIPC determines that the balance
to the proposed bylaw change.17 of the SIPC Fund, as defined in Section
day of the month following the date on
which SIPC announces a change in the The SIPC Fund, which is built from 4(a)(2) of the Act, exclusive of
assessment and continue until SIPC assessments on its members and the confirmed lines of credit, (i) has
provides otherwise (‘‘Notice interest earned on the Fund, is used for aggregated a [target] balance of $2.5
Provision’’). In the ordinary course and the protection of customers of members billion, and (ii) will remain at or above
to give as much notice to members as liquidated under SIPA to maintain $2.5 billion for six months or more.
possible, the SIPC Board of Directors investor confidence in the securities (B) Notwithstanding the provisions of
determines the rate of assessment at its markets. In light of this fact and that the Section 1(a)(1)(A) herein, if SIPC
September Meeting. The Board’s bylaw change provides for a new determines that the balance of the SIPC
determination is announced shortly assessment methodology, the Fund, as defined in Section 4(a)(2) of
thereafter but is not made effective until Commission finds, pursuant to section the Act, exclusive of confirmed lines of
the first day of the following year. See, 3(e)(1)(B) of SIPA,18 that the proposed credit, (i) has aggregated $2.5 billion,
e.g., http://www.sipc.org/for-members/ bylaw change involves a matter of such and (ii) will remain at or above $2.5
assessment-rate. SIPC last announced significant public interest that public billion for six months or more, but
an assessment rate change (from a comment should be obtained and that SIPC’s unrestricted net assets, as
minimum assessment to the current 1⁄4 the procedures applicable to proposed reflected in SIPC’s most recent audited
of one percent) on March 2, 2009, to SIPC proposed rule changes in section Statement of Financial Position, are less
take effect on April 1, 2009. The 3(e)(2) of SIPA 19 should be followed. As than $2.5 billion, the assessment rate
assessment rate has continued required by section 3(e)(1)(B) of SIPA, shall be 0.15 percent per annum of net
unchanged since then. the Commission has notified SIPC of operating revenues from the member’s
In order to give its members as much this finding in writing. securities business for each calendar
notice as possible of the assessment rate year or part thereof.
III. Date of Effectiveness of the
for the following year, SIPC has (C) If SIPC determines that the
Proposed Bylaw Change and Timing for
determined to amend the Notice balance of the SIPC Fund, as defined in
Commission Action
Provision. An assessment rate will be Section 4(a)(2) of the Act, exclusive of
effective on the first day of the year Within 35 days of the date of confirmed lines of credit, has aggregated
following the date on which SIPC publication of this notice in the Federal $2.5 billion or more, and will remain at
announces its determination, consistent Register, or within such longer period or above $2.5 billion for six months or
with SIPC’s practice that the (A) as the Commission may designate of more, and SIPC’s unrestricted net
determination of the rate normally will not more than ninety days after such assets, as reflected in SIPC’s most recent
occur in September. There may be date if it finds such longer period to be audited Statement of Financial Position,
emergency situations, however, when appropriate and publishes its reasons are at or above $2.5 billion, members
the need for an assessment rate to for so finding or (B) as to which SIPC shall pay a minimum assessment, which
become effective is more immediate. In consents, the Commission shall: (i) By shall be 0.02 percent of the net
that case, the assessment rate will be order approve such proposed rule operating revenues from the securities
effective on the date announced by SIPC change; or (ii) Institute proceedings to business for each calendar year or part
provided that the exigency of the determine whether such proposed rule thereof.
circumstances so warrants. change should be disapproved.20 [C](D) Anything to the contrary herein
notwithstanding, if at any time SIPC
II. Need for Public Comment IV. Text of Proposed Bylaw Change determines that the balance of the SIPC
Section 3(e)(1) of SIPA provides that Fund, as defined in Section 4(a)(2) of
asabaliauskas on DSK3SPTVN1PROD with NOTICES
The text of the proposed bylaw
the Board of Directors of SIPC must file change is provided below. Proposed the Act, exclusive of confirmed lines of
a copy of any proposed bylaw change new language is in italics; proposed credit, aggregates or is reasonably likely
with the Commission, accompanied by deletions are in brackets. to aggregate:
a concise general statement of the basis (i) less than [the target balance of]
and purpose of the proposed bylaw 17 15 U.S.C. 78ccc(e)(1). $2.5 billion and will likely remain less
change.16 The proposed bylaw change 18 15 U.S.C. 78ccc(e)(1)(B). than $2.5 billion for a period of six (6)
19 15 U.S.C. 78ccc(e)(2). months or more—the amount of each
16 15 U.S.C. 78ccc(e)(1). 20 15 U.S.C. 78ccc(e)(2)(B). member’s assessment shall be at an
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![Federal Register / Vol. 81, No. 118 / Monday, June 20, 2016 / Notices 39989
assessment rate of one-fourth (1⁄4) of one organization shall pay assessments to its (b) The term ‘‘securities in investment
(1) percent per annum of net operating collection agent. In the case of members accounts’’ shall mean securities that are
revenue. who are not members of any self- clearly identified as having been
(ii) less than $150,000,000—the regulatory organization, assessments acquired for investment in accordance
amount of each member’s assessment shall be paid directly to the Corporation. with provisions of the Internal Revenue
shall be at an amount to be determined (d) Report by Collection Agents. Code applicable to dealers in securities.
by SIPC, but in no case shall the amount Within 45 days after each due date, each (c) The term ‘‘fees and other income
of each member’s assessment be less self-regulatory organization which is the from such other categories of the
than an assessment rate of one-fourth collection agent shall submit a written securities business’’ shall mean all
(1⁄4) of one (1) percent per annum of report to the Corporation as to any revenue related either directly or
such member’s gross revenues from the entity for whom it acts as collection indirectly to the securities business
securities business. agent whose filing or assessment except revenue included in Section
(iii) less than $100,000,000—the payment has not been received. 16(9)(A)–(K) and revenue specifically
amount of each member’s assessment (e) Interest on Assessments. If all or excepted in Section 4(c)(3)(C).
shall be at an amount to be determined any part of an assessment payable under
by SIPC, but in no case shall the amount Section 4 of the Act has not been V. Solicitation of Comments
of each member’s assessment be less received by the collection agent within Interested persons are invited to
than an assessment rate of one-half (1⁄2) 15 days after the due date thereof, the submit written data, views, and
of one (1) percent per annum of such member shall pay, in addition to the arguments concerning the foregoing by
member’s gross revenues from the amount of the assessment, interest at the any of the following methods:
securities business. rate of 20% per annum on the unpaid
(iv) The amount of each member’s portion of the assessment for each day Electronic Comments
assessment shall not exceed one-half it has been overdue. If any broker or • Use the Commission’s Internet
(1⁄2) of one (1) percent per annum of dealer has incorrectly filed a claim for comment form (http://www.sec.gov/
such member’s gross revenues from the exclusion from membership in the rules/other.shtml); or
securities business, unless SIPC Corporation, such broker or dealer shall • Send an email to rule-comments@
determines that a rate in excess of one- pay, in addition to assessments due, sec.gov. Please include File Number
half (1⁄2) of one (1) percent during any interest at the rate of 20% per annum on SIPC–2016–01 on the subject line.
twelve (12) month period will not have the unpaid assessment for each day it
a material adverse effect on the financial has not been paid since the date on Paper Comments
condition of its members or their which it should have been paid. • Send paper comments to Brent J.
customers. No assessment made (f) Gross Revenues. The term ‘‘gross Fields, Secretary, Securities and
pursuant to this Section 1(a)(1) shall revenues from the securities business’’ Exchange Commission, 100 F Street NE.,
require payments during any such includes the revenues in the definition Washington, DC 20549–1090.
period that exceed in the aggregate one of gross revenues from the securities
(1) percent of any member’s gross All comments should refer to File
business set forth in the applicable Number SIPC–2016–01. To help the
revenues from the securities business sections of the Act.
for such period. Commission process and review your
(g) Net Operating Revenues. The term
(2) Any change in assessments made comments more efficiently, please use
‘‘net operating revenues from the
in accordance with [the above] Section only one method. The Commission will
securities business’’ means gross
1(a)(1) herein shall commence on the post all comments on the Commission’s
revenues from the securities business
first day of the [month] year following Internet Web site (http://www.sec.gov/
less interest and dividend expenses, and
the date on which SIPC announces its rules/other.shtml).
includes those clarifications as are set
determination, or on such other date if Copies of the submission, all
forth in the SIPC assessment forms and
the exigency of the circumstances so subsequent amendments, all written
instructions.
warrants in SIPC’s determination, and statements with respect to the proposed
continue until such time as SIPC Section 2. Overpayments bylaw change that are filed with the
provides otherwise. If the final annual reconciliation filed Commission, and all written
(3) Commencing on the first day of the by a terminated member reflects an communications relating to the
month following the date on which assessment overpayment carried proposed bylaw change between the
SIPC borrows moneys pursuant to forward that exceeds $150.00, SIPC may Commission and any person, other than
Section 4(f) or Section 4(g) of the Act, refund such excess to the member upon those that may be withheld from the
and continuing while any such receipt of the member’s written request public in accordance with the
borrowing is outstanding and until such therefor and after the member’s SIPC provisions of 5 U.S.C. 552, will be
further time as SIPC provides otherwise, collection agent has confirmed to SIPC available for Web site viewing and
the amount of each member’s that all of the member’s SIPC printing in the Commission’s Public
assessment shall be at an assessment assessment form filings and payments Reference Room, 100 F Street NE.,
rate of not less than one-half (1⁄2) of one and reports required by SEC Rule 17a– Washington, DC 20549, on official
(1) percent per annum of such member’s 5 covering periods through the business days between the hours of
gross revenues from the securities termination date have been reviewed 10:00 a.m. and 3:00 p.m. All comments
received will be posted without change;
asabaliauskas on DSK3SPTVN1PROD with NOTICES
business. and accepted.
(b) Payments. Assessments shall be the Commission does not edit personal
payable at such times and in such Section 3. Interpretation of Terms identifying information from
manner as may be determined by SIPC’s For purposes of this Article: submissions. You should submit only
Vice President—Finance with the (a) The term ‘‘securities in trading information that you wish to make
approval of the Chairman. accounts’’ shall mean securities held for available publicly.
(c) Collection of General Assessments. sale in the ordinary course of business All submissions should refer to File
Each member of the Corporation who is and not identified as having been held Number SIPC–2016–01, and should be
a member of a self-regulatory for investment. submitted on or before July 11, 2016.
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![39990 Federal Register / Vol. 81, No. 118 / Monday, June 20, 2016 / Notices
For the Commission, by the Division of minimize burden on respondents, the collection instruments by writing to
Trading and Markets, pursuant to delegated including the use of automated the above email address.
authority.21 collection techniques or other forms of
Brent J. Fields,
1. Request for Earnings and Benefit
information technology. Mail, email, or Estimate Statement—20 CFR 404.810—
Secretary. fax your comments and 0960–0466. Section 205(c)(2)(A) of the
[FR Doc. 2016–14499 Filed 6–17–16; 8:45 am] recommendations on the information Social Security Act (Act) requires the
BILLING CODE 8011–01–P collection(s) to the OMB Desk Officer Commissioner of SSA establish and
and SSA Reports Clearance Officer at maintain records of wages paid to, and
the following addresses or fax numbers. amounts of self-employment income
SOCIAL SECURITY ADMINISTRATION (OMB) Office of Management and derived by, each individual as well as
[Docket No: SSA–2016–0027] Budget, Attn: Desk Officer for SSA, the periods in which such wages were
Fax: 202–395–6974, Email address: paid and such income derived. An
Agency Information Collection OIRA_Submission@omb.eop.gov. individual may complete and mail Form
Activities: Proposed Request and (SSA) Social Security Administration, SSA–7004 to SSA’s Data Operations
Comment Request OLCA, Attn: Reports Clearance Center in Wilkes-Barre, PA, to obtain a
Director, 3100 West High Rise, 6401 Statement of Earnings or Quarters of
The Social Security Administration
Security Blvd., Baltimore, MD 21235, Coverage. SSA uses the information
(SSA) publishes a list of information
Fax: 410–966–2830, Email address: Form SSA–7004 collects to identify
collection packages requiring clearance
OR.Reports.Clearance@ssa.gov, or you respondent’s Social Security earnings
by the Office of Management and
Budget (OMB) in compliance with may submit your comments online records; extract posted earnings
Public Law 104–13, the Paperwork through www.regulations.gov, information; calculate potential benefit
Reduction Act of 1995, effective October referencing Docket ID Number [SSA– estimates; produce the resulting Social
1, 1995. This notice includes revisions 2016–0027]. Security statements; and mail them to
of OMB-approved information I. The information collections below the requesters. The respondents are
collections. are pending at SSA. SSA will submit Social Security number holders
SSA is soliciting comments on the them to OMB within 60 days from the requesting information about their
accuracy of the agency’s burden date of this notice. To be sure we Social Security earnings records and
estimate; the need for the information; consider your comments, we must estimates of their potential benefits.
its practical utility; ways to enhance its receive them no later than August 19, Type of Request: Revision of an OMB-
quality, utility, and clarity; and ways to 2016. Individuals can obtain copies of approved information collection.
Average Estimated total
Number of Frequency of burden per
Modality of completion annual burden
respondents response response (hours)
(minutes)
SSA–7004 ........................................................................................................ 40,090 1 5 3,341
2. National Beneficiary Survey— improving employment outcomes for such as health; living arrangements;
0960–0800. SSA is continuing the SSDI beneficiaries and SSI recipients, family structure; current occupation;
National Beneficiary Survey (NBS), a SSA supports the effort to reduce the use of non-SSA programs; knowledge of
survey which gathers data from reliance of people with disabilities on SSDI and SSI work incentive programs;
Supplemental Security Income (SSI) these programs. SSA conducted the obstacles to work; and beneficiary
recipients and Social Security Disability prior NBS in 2004, 2005, 2006, and interest and motivation to return to
Insurance (SSDI) beneficiaries about 2010, which was an important first step work.
their characteristics, their well-being, in understanding the work interest and We propose to conduct the first wave
and other factors that promote or hinder experiences of SSI recipients and SSDI of the NBS-General Waves in 2015. We
employment. In particular, the survey beneficiaries, and in gaining will further conduct subsequent rounds
seeks to uncover important information information about their impairments, in 2017 (round 2) and 2019 (round 3).
about the factors promoting beneficiary health, living arrangements, family The information we will collect is not
self-sufficiency and, conversely, factors structure, pre-disability occupation, and available from SSA administrative data
impeding beneficiary efforts to maintain use of non-SSA programs (e.g., the or other sources. In the NBS-General
employment. We use this data to Supplemental Nutrition Assistance Waves, the sample design is similar to
improve the administration and Program). The prior NBS data is what we used for the prior NBS.
effectiveness of the SSDI and SSI available to researchers and the public. Enhancement of the prior questionnaire
programs. These results are valuable as includes additional questions on the
SSA and other policymakers continue The National Beneficiary Survey (NBS)
factors that promote or hinder
efforts to improve programs and services The primary purpose of the new NBS- employment success. In 2015 we
that help SSDI beneficiaries and SSI
asabaliauskas on DSK3SPTVN1PROD with NOTICES
General Waves is to assess beneficiary conducted semi-structured qualitative
recipients become more self-sufficient. well-being and interest in work, learn interviews to provide SSA an in-depth
Background about beneficiary work experiences understanding of factors that aid or
(successful and unsuccessful), and inhibit individuals in their efforts to
SSDI and SSI programs provide a identify factors that promote or restrict obtain and retain employment and
crucial and necessary safety net for long-term work success. Information advance in the workplace. We use the
working-age people with disabilities. By collected in the survey includes factors qualitative data to add context and
21 17 CFR 200.30–3(f)(2)(i) & 200.30–3(f)(3).
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Document Created: 2016-06-18 00:09:24
Document Modified: 2016-06-18 00:09:24
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 39986 |
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