82 FR 10832 - Submission for OMB Review; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 30 (February 15, 2017)

Page Range		10832-10833
FR Document		2017-02976
Federal Register, Volume 82 Issue 30 (Wednesday, February 15, 2017)
[Federal Register Volume 82, Number 30 (Wednesday, February 15, 2017)]
[Notices]
[Pages 10832-10833]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02976]


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

SECURITIES AND EXCHANGE COMMISSION


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.

Extension:
    Rule 17d-1; SEC File No. 270-505, OMB Control No. 3235-0562.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') has submitted to the Office of Management 
and Budget (``OMB'') a request for extension of the previously approved 
collection of information discussed below.
    Section 17(d) (15 U.S.C. 80a-17(d)) of the Investment Company Act 
of 1940 (15 U.S.C. 80a et seq.) (the ``Act'') prohibits first- and 
second-tier affiliates of a fund, the fund's principal underwriters, 
and affiliated persons of the fund's principal underwriters, acting as 
principal, to effect any transaction in which the fund or a company 
controlled by the fund is a joint or a joint and several participant in 
contravention of the Commission's rules. Rule 17d-1 (17 CFR 270.17d-1) 
prohibits an affiliated person of or principal underwriter for any fund 
(a ``first-tier affiliate''), or any affiliated person of such person 
or underwriter (a ``second-tier affiliate''), acting as principal, from 
participating in or effecting any transaction in connection with a 
joint enterprise or other joint arrangement in which the fund is a 
participant, unless prior to entering into the enterprise or 
arrangement ``an application regarding [the transaction] has been filed 
with the Commission and has been granted by an order.'' In reviewing 
the proposed affiliated transaction, the rule provides that the 
Commission will consider whether the proposal is (i) consistent with 
the provisions, policies, and purposes of the Act, and (ii) on a basis 
different from or less advantageous than that of other participants in 
determining whether to grant an exemptive application for a proposed 
joint enterprise, joint arrangement, or profit-sharing plan.
    Rule 17d-1 also contains a number of exceptions to the requirement 
that a fund must obtain Commission approval prior to entering into 
joint transactions or arrangements with affiliates. For example, funds 
do not have to obtain Commission approval for certain employee 
compensation plans, certain tax-deferred employee benefit plans, 
certain transactions involving small business investment companies, the 
receipt of securities or cash by certain affiliates pursuant to a plan 
of reorganization, certain arrangements regarding liability insurance 
policies and transactions with ``portfolio affiliates'' (companies that 
are affiliated with the fund solely as a result of the fund (or an 
affiliated fund) controlling them or owning more than five percent of 
their voting securities) so long as certain other affiliated persons of 
the fund (e.g., the fund's adviser, persons controlling the fund, and 
persons under common control with the fund) are not parties to the 
transaction and do not have a ``financial interest'' in a party to the 
transaction. The rule excludes from the definition of ``financial 
interest'' any interest that the fund's board of directors (including a 
majority of the directors who are not interested persons of the fund) 
finds to be not material, as long as the board records the basis for 
its finding in their meeting minutes.
    Thus, the rule contains two filing and recordkeeping requirements 
that constitute collections of information. First, rule 17d-1 requires 
funds that wish to engage in a joint transaction or arrangement with 
affiliates to meet the procedural requirements for obtaining exemptive 
relief from the rule's prohibition on joint transactions or 
arrangements involving first- or second-tier affiliates. Second, rule 
17d-1 permits a portfolio affiliate to enter into a joint transaction 
or arrangement with the fund if a prohibited participant has a 
financial interest that the fund's board determines is not material and 
records the basis for this finding in their meeting minutes. These 
requirements of rule 17d-1 are designed to prevent fund insiders from 
managing funds for their own benefit, rather than for the benefit of 
the funds' shareholders.
    Based on an analysis of past filings, Commission staff estimates 
that 18 funds file applications under section 17(d) and rule 17d-1 per 
year. The staff understands that funds that file an application 
generally obtain assistance from outside counsel to prepare the 
application. The cost burden of using outside counsel is discussed 
below. The Commission staff estimates that each

[[Page 10833]]

applicant will spend an average of 154 hours to comply with the 
Commission's applications process. The Commission staff therefore 
estimates the annual burden hours per year for all funds under rule 
17d-1's application process to be 2772 hours at a cost of 
$1,113,228.\1\ The Commission, therefore, requests authorization to 
increase the inventory of total burden hours per year for all funds 
under rule 17d-1 from the current authorized burden of 2002 hours to 
2772 hours. The increase is due to an increase in the number of funds 
that filed applications for exemptions under rule 17d-1.
---------------------------------------------------------------------------

    \1\ The Commission staff estimates that a senior executive, such 
as the fund's chief compliance officer, will spend an average of 62 
hours and a mid-level compliance attorney will spend an average of 
92 hours to comply with this collection of information: 62 hours + 
92 hours = 154 hours. 18 funds x 154 burden hours = 2772 burden 
hours. The Commission staff estimate that the chief compliance 
officer is paid $493 per hour and the compliance attorney is paid 
$340 per hour. ($493 per hour x 62 hours) + ($340 per hour x 92 
hours) = $61,846 per fund. $61,846 x 18 funds = $1,113,228. The $493 
and $340 per hour figures are based on salary information compiled 
by SIFMA's Management & Professional Earnings in the Securities 
Industry, 2013. The Commission staff has modified SIFMA's 
information to account for an 1800-hour work year and inflation, and 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits, and overhead.
---------------------------------------------------------------------------

    As noted above, the Commission staff understands that funds that 
file an application under rule 17d-1 generally use outside counsel to 
assist in preparing the application. The staff estimates that, on 
average, funds spend an additional $93,131 for outside legal services 
in connection with seeking Commission approval of affiliated joint 
transactions. Thus, the staff estimates that the total annual cost 
burden imposed by the exemptive application requirements of rule 17d-1 
is $1,676,35.\2\
---------------------------------------------------------------------------

    \2\ The estimate is based on the following calculation: $93,131 
x 18 funds = $1,676,358.
---------------------------------------------------------------------------

    We estimate that funds currently do not rely on the exemption from 
the term ``financial interest'' with respect to any interest that the 
fund's board of directors (including a majority of the directors who 
are not interested persons of the fund) finds to be not material. 
Accordingly, we estimate that annually there will be no transactions 
under rule 17d-1 that will result in this aspect of the collection of 
information.
    Based on these calculations, the total annual hour burden is 
estimated to be 2772 hours and the total annual cost burden is 
estimated to be $1,676,358.
    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. Complying with these collections of 
information requirement is necessary to obtain the benefit of relying 
on rule 17d-1. Responses will not be kept confidential. 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.
    The public may view the background documentation for this 
information collection at the following Web site, www.reginfo.gov. 
Comments should be directed to: (i) Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503, or by sending an email to: 
[email protected]; and (ii) 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]. Comments must be submitted to OMB within 30 
days of this notice.

    Dated: February 8, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02976 Filed 2-14-17; 8:45 am]
BILLING CODE 8011-01-P
10832 Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices

IV. Solicitation of Comments For the Commission, by the Division of enterprise, joint arrangement, or profit-
Trading and Markets, pursuant to delegated sharing plan.
Interested persons are invited to authority.19 Rule 17d–1 also contains a number of
submit written data, views, and Eduardo A. Aleman, exceptions to the requirement that a
arguments concerning the foregoing, Assistant Secretary. fund must obtain Commission approval
including whether the proposed rule [FR Doc. 2017–02994 Filed 2–14–17; 8:45 am] prior to entering into joint transactions
change is consistent with the Act. BILLING CODE 8011–01–P or arrangements with affiliates. For
Comments may be submitted by any of example, funds do not have to obtain
the following methods: Commission approval for certain
SECURITIES AND EXCHANGE employee compensation plans, certain
Electronic Comments COMMISSION tax-deferred employee benefit plans,
• Use the Commission’s Internet certain transactions involving small
Submission for OMB Review; business investment companies, the
comment form (http://www.sec.gov/ Comment Request receipt of securities or cash by certain
rules/sro.shtml); or affiliates pursuant to a plan of
• Send an email to rule-comments@ Upon Written Request, Copies Available reorganization, certain arrangements
sec.gov. Please include File Number SR– From: Securities and Exchange regarding liability insurance policies
NYSEMKT–2017–05 on the subject line. Commission, Office of Investor and transactions with ‘‘portfolio
Education and Advocacy, affiliates’’ (companies that are affiliated
Paper Comments Washington, DC 20549–0213. with the fund solely as a result of the
• Send paper comments in triplicate Extension: fund (or an affiliated fund) controlling
to Brent J. Fields, Secretary, Securities Rule 17d–1; SEC File No. 270–505, OMB them or owning more than five percent
Control No. 3235–0562. of their voting securities) so long as
and Exchange Commission, 100 F Street
Notice is hereby given that, pursuant certain other affiliated persons of the
NE., Washington, DC 20549–1090.
to the Paperwork Reduction Act of 1995 fund (e.g., the fund’s adviser, persons
All submissions should refer to File (44 U.S.C. 3501 et seq.), the Securities controlling the fund, and persons under
Number SR–NYSEMKT–2017–05. This and Exchange Commission common control with the fund) are not
file number should be included on the (‘‘Commission’’) has submitted to the parties to the transaction and do not
subject line if email is used. To help the Office of Management and Budget have a ‘‘financial interest’’ in a party to
Commission process and review your (‘‘OMB’’) a request for extension of the the transaction. The rule excludes from
comments more efficiently, please use the definition of ‘‘financial interest’’ any
previously approved collection of
only one method. The Commission will interest that the fund’s board of
information discussed below.
post all comments on the Commission’s directors (including a majority of the
Section 17(d) (15 U.S.C. 80a–17(d)) of directors who are not interested persons
Internet Web site (http://www.sec.gov/ the Investment Company Act of 1940 of the fund) finds to be not material, as
rules/sro.shtml). Copies of the (15 U.S.C. 80a et seq.) (the ‘‘Act’’) long as the board records the basis for
submission, all subsequent prohibits first- and second-tier affiliates its finding in their meeting minutes.
amendments, all written statements of a fund, the fund’s principal Thus, the rule contains two filing and
with respect to the proposed rule underwriters, and affiliated persons of recordkeeping requirements that
change that are filed with the the fund’s principal underwriters, acting constitute collections of information.
Commission, and all written as principal, to effect any transaction in First, rule 17d–1 requires funds that
communications relating to the which the fund or a company controlled wish to engage in a joint transaction or
proposed rule change between the by the fund is a joint or a joint and arrangement with affiliates to meet the
Commission and any person, other than several participant in contravention of procedural requirements for obtaining
those that may be withheld from the the Commission’s rules. Rule 17d–1 (17 exemptive relief from the rule’s
public in accordance with the CFR 270.17d–1) prohibits an affiliated prohibition on joint transactions or
provisions of 5 U.S.C. 552, will be person of or principal underwriter for arrangements involving first- or second-
available for Web site viewing and any fund (a ‘‘first-tier affiliate’’), or any tier affiliates. Second, rule 17d–1
printing in the Commission’s Public affiliated person of such person or permits a portfolio affiliate to enter into
Reference Room, 100 F Street NE., underwriter (a ‘‘second-tier affiliate’’), a joint transaction or arrangement with
acting as principal, from participating in the fund if a prohibited participant has
Washington, DC 20549, on official
or effecting any transaction in a financial interest that the fund’s board
business days between the hours of
connection with a joint enterprise or determines is not material and records
10:00 a.m. and 3:00 p.m. Copies of the
other joint arrangement in which the the basis for this finding in their
filing also will be available for fund is a participant, unless prior to meeting minutes. These requirements of
inspection and copying at the principal entering into the enterprise or rule 17d–1 are designed to prevent fund
office of the Exchange. All comments arrangement ‘‘an application regarding insiders from managing funds for their
received will be posted without change; [the transaction] has been filed with the own benefit, rather than for the benefit
the Commission does not edit personal Commission and has been granted by an of the funds’ shareholders.
identifying information from order.’’ In reviewing the proposed Based on an analysis of past filings,
submissions. You should submit only affiliated transaction, the rule provides Commission staff estimates that 18
information that you wish to make that the Commission will consider funds file applications under section
mstockstill on DSK3G9T082PROD with NOTICES

available publicly. All submissions whether the proposal is (i) consistent 17(d) and rule 17d–1 per year. The staff
should refer to File Number SR– with the provisions, policies, and understands that funds that file an
NYSEMKT–2017–05 and should be purposes of the Act, and (ii) on a basis application generally obtain assistance
submitted on or before March 8, 2017. different from or less advantageous than from outside counsel to prepare the
that of other participants in determining application. The cost burden of using
whether to grant an exemptive outside counsel is discussed below. The
19 17 CFR 200.30–3(a)(12). application for a proposed joint Commission staff estimates that each

VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\15FEN1.SGM 15FEN1
Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices 10833

applicant will spend an average of 154 the costs of Commission rules. if it: (1) Is registered with the
hours to comply with the Commission’s Complying with these collections of Commodity Futures Trading
applications process. The Commission information requirement is necessary to Commission as a futures commission
staff therefore estimates the annual obtain the benefit of relying on rule merchant or an introducing broker, as
burden hours per year for all funds 17d–1. Responses will not be kept those terms are defined in the
under rule 17d–1’s application process confidential. An agency may not Commodity Exchange Act (7 U.S.C. 1, et
to be 2772 hours at a cost of conduct or sponsor, and a person is not seq.); (2) is a member of the National
$1,113,228.1 The Commission, required to respond to, a collection of Futures Association or another national
therefore, requests authorization to information unless it displays a securities association registered under
increase the inventory of total burden currently valid control number. section 15A(k) of the Exchange Act (15
hours per year for all funds under rule The public may view the background U.S.C. 78o–3(k)); and (3) is not required
17d–1 from the current authorized documentation for this information to register as a broker or dealer in
burden of 2002 hours to 2772 hours. collection at the following Web site, connection with transactions in
The increase is due to an increase in the www.reginfo.gov. Comments should be securities other than security futures
number of funds that filed applications directed to: (i) Desk Officer for the products. The rule also requires a broker
for exemptions under rule 17d–1. Securities and Exchange Commission, or dealer registering by notice to do so
As noted above, the Commission staff Office of Information and Regulatory by filing Form BD–N in accordance with
understands that funds that file an Affairs, Office of Management and the instructions to the form. In addition,
application under rule 17d–1 generally Budget, Room 10102, New Executive the rule provides that if the information
use outside counsel to assist in Office Building, Washington, DC 20503, provided by filing the form is or
preparing the application. The staff or by sending an email to: Shagufta_ becomes inaccurate for any reason, the
estimates that, on average, funds spend Ahmed@omb.eop.gov; and (ii) Pamela broker or dealer shall promptly file an
an additional $93,131 for outside legal Dyson, Director/Chief Information amendment on the form correcting such
services in connection with seeking Officer, Securities and Exchange information.
Commission approval of affiliated joint Commission, c/o Remi Pavlik-Simon,
transactions. Thus, the staff estimates 100 F Street NE., Washington, DC 20549 The Commission staff estimates that
that the total annual cost burden or send an email to: PRA_Mailbox@ the total annual reporting burden
imposed by the exemptive application sec.gov. Comments must be submitted to associated with Rule 15b11–1 and Form
requirements of rule 17d–1 is OMB within 30 days of this notice. BD–N is approximately three hours,
$1,676,35.2 based on an average of two initial notice
We estimate that funds currently do Dated: February 8, 2017. registrations per year that each take
not rely on the exemption from the term Eduardo A. Aleman, approximately 30 minutes to complete,
‘‘financial interest’’ with respect to any Assistant Secretary. for one hour, plus an average of nine
interest that the fund’s board of [FR Doc. 2017–02976 Filed 2–14–17; 8:45 am] amendments per year that each take
directors (including a majority of the BILLING CODE 8011–01–P approximately fifteen minutes to
directors who are not interested persons complete, for 2.25 hours, rounded down
of the fund) finds to be not material. to two hours, for a total of three hours.
Accordingly, we estimate that annually SECURITIES AND EXCHANGE An agency may not conduct or
there will be no transactions under rule COMMISSION sponsor, and a person is not required to
17d–1 that will result in this aspect of respond to, a collection of information
the collection of information. Submission for OMB Review;
Comment Request under the PRA unless it displays a
Based on these calculations, the total currently valid OMB control number.
annual hour burden is estimated to be Upon Written Request, Copies Available
2772 hours and the total annual cost The public may view background
From: Securities and Exchange documentation for this information
burden is estimated to be $1,676,358. Commission, Office of FOIA Services,
The estimate of average burden hours collection at the following Web site:
100 F Street NE., Washington, DC www.reginfo.gov. Comments should be
is made solely for the purposes of the
20549–2736. directed to: (i) Desk Officer for the
Paperwork Reduction Act. The estimate
is not derived from a comprehensive or Extension: Securities and Exchange Commission,
even a representative survey or study of Form BD–N/Rule 15b11–1; SEC File No. Office of Information and Regulatory
270–498, OMB Control No. 3235–0556. Affairs, Office of Management and
1 The Commission staff estimates that a senior Notice is hereby given that, pursuant Budget, Room 10102, New Executive
executive, such as the fund’s chief compliance to the Paperwork Reduction Act of 1995 Office Building, Washington, DC 20503,
officer, will spend an average of 62 hours and a or by sending an email to: Shagufta_
mid-level compliance attorney will spend an
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
average of 92 hours to comply with this collection Securities and Exchange Commission Ahmed@omb.eop.gov; and (ii) Pamela
of information: 62 hours + 92 hours = 154 hours. (‘‘Commission’’) has submitted to the Dyson, Director/Chief Information
18 funds × 154 burden hours = 2772 burden hours. Office of Management and Budget Officer, Securities and Exchange
The Commission staff estimate that the chief Commission, c/o Remi Pavlik-Simon,
compliance officer is paid $493 per hour and the
(‘‘OMB’’) a request for approval of
compliance attorney is paid $340 per hour. ($493 extension of the previously approved 100 F Street NE., Washington, DC
per hour × 62 hours) + ($340 per hour × 92 hours) collection of information provided for in 20549, or by sending an email to: PRA_
= $61,846 per fund. $61,846 × 18 funds = Rule 15b11–1 (17 CFR 240.15b11–1) Mailbox@sec.gov. Comments must be
$1,113,228. The $493 and $340 per hour figures are submitted to OMB within 30 days of
under the Securities Exchange Act of
mstockstill on DSK3G9T082PROD with NOTICES

based on salary information compiled by SIFMA’s
Management & Professional Earnings in the 1934 (‘‘Exchange Act’’) (15 U.S.C. 78a et this notice.
Securities Industry, 2013. The Commission staff has seq.) and Form BD–N (17 CFR Dated: February 8, 2017.
modified SIFMA’s information to account for an 249.501b).
1800-hour work year and inflation, and multiplied Eduardo A. Aleman,
Rule 15b11–1 provides that a broker
by 5.35 to account for bonuses, firm size, employee Assistant Secretary.
benefits, and overhead. or dealer may register by notice
2 The estimate is based on the following pursuant to section 15(b)(11)(A) of the [FR Doc. 2017–02975 Filed 2–14–17; 8:45 am]
calculation: $93,131 × 18 funds = $1,676,358. Exchange Act (15 U.S.C. 78o(b)(11)(A)) BILLING CODE 8011–01–P

VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 PO 00000 Frm 00100 Fmt 4703 Sfmt 9990 E:\FR\FM\15FEN1.SGM 15FEN1
Document Created: 2017-02-15 00:55:08
Document Modified: 2017-02-15 00:55:08
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		82 FR 10832