82 FR 20402 - Submission for OMB Review; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 82 (May 1, 2017)

Page Range		20402-20403
FR Document		2017-08764
Federal Register, Volume 82 Issue 82 (Monday, May 1, 2017)
[Federal Register Volume 82, Number 82 (Monday, May 1, 2017)]
[Notices]
[Pages 20402-20403]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-08764]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-312, OMB Control No. 3235-0354]


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 
20549-2736.

    Extension:
Rule 19b-1.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange 
Commission (``Commission'') has submitted to the Office of Management 
and Budget (``OMB'') a request for extension of the previously approved 
collection of information discussed below.
    Section 19(b) of the Investment Company Act of 1940 (the ``Act'') 
(15 U.S.C. 80a-19(b)) authorizes the Commission to regulate registered 
investment company (``fund'') distributions of long-term capital gains 
made more frequently than once every twelve months. Accordingly, rule 
19b-1 under the Act (17 CFR 270.19b-1) regulates the frequency of fund 
distributions of capital gains. Rule 19b-1(c) states that the rule does 
not apply to a unit investment trust (``UIT'') if it is engaged 
exclusively in the business of investing in certain eligible securities 
(generally, fixed-income securities), provided that: (i) The capital 
gains distribution falls within one of five categories specified in the 
rule \1\ and (ii) the distribution is accompanied by a report to the 
unitholder that clearly describes the distribution as a capital gains 
distribution (the ``notice requirement'').\2\ Rule 19b-1(e) permits a 
fund to apply to the Commission for permission to distribute long-term 
capital gains that would otherwise be prohibited by the rule if the 
fund did not foresee the circumstances that created the need for the 
distribution. The application must set forth the pertinent facts and 
explain the circumstances that justify the distribution.\3\ An 
application that meets those requirements is deemed to be granted 
unless the Commission denies the request within 15 days after the 
Commission receives the application.
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    \1\ 17 CFR 270.19b-1(c)(1).
    \2\ The notice requirement in rule 19b-1(c)(2) supplements the 
notice requirement of section 19(a) [15 U.S.C. 80a-19(a)], which 
requires any distribution in the nature of a dividend payment to be 
accompanied by a notice disclosing the source of the distribution.
    \3\ Rule 19b-1(e) also requires that the application comply with 
rule 0-2 [17 CFR 270.02] under the Act, which sets forth the general 
requirements for papers and applications filed with the Commission 
pursuant to the Act and rules thereunder.
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    Commission staff estimates that five funds will file an application 
under rule 19b-1(e) each year.\4\ The staff understands that if a fund 
files an application it generally uses outside counsel to prepare the 
application. The cost burden of using outside counsel is discussed 
below. The staff estimates that, on average, a fund's investment 
adviser would spend approximately 4 hours to review an application, 
including 3.5 hours by an assistant general counsel at a cost of $433 
per hour and 0.5 hours by an administrative assistant at a cost of $74 
per hour, and the fund's board of directors would spend an additional 1 
hour at a cost of $4,465 per hour, for a total of 5 hours.\5\ Thus, the 
staff estimates that the annual hour burden of the collection of 
information imposed by rule 19b-1(e) would be approximately five hours 
per fund, at a cost of $6017.50.\6\ Because the staff estimates that, 
each year, five funds will file an application pursuant to rule 19b-
1(e), the total burden for the information collection is 40 hours at a 
cost of $30,087.50.\7\
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    \4\ This estimate is based on the average number of applications 
filed with the Commission pursuant to rule 19b-1(e) in the prior 
three-year period.
    \5\ The estimate for assistant general counsels is from SIFMA's 
Management & Professional Earnings in the Securities Industry 2013, 
modified by Commission staff to account for an 1800-hour work-year 
and inflation (as of January 2016) and multiplied by 5.35 to account 
for bonuses, firm size, employee benefits and overhead. The estimate 
for administrative assistants is from SIFMA's Office Salaries in the 
Securities Industry 2013, modified by Commission staff to account 
for an 1800-hour work-year and inflation (as of January 2016) and 
multiplied by 2.93 to account for bonuses, firm size, employee 
benefits and overhead. The staff previously estimated in 2009 that 
the average cost of board of director time was $4,000 per hour for 
the board as a whole, based on information received from funds and 
their counsel. Adjusting for inflation, the staff estimates that the 
current average cost of board of director time is approximately 
$4,465.
    \6\ This estimate is based on the following calculations: 
$1515.50 (3.5 hours x $433 = $1515.50) plus $37 (0.5 hours x $74 = 
$37) plus $4465 equals $6017.50 (cost of one application).
    \7\ This estimate is based on the following calculation: 
$6017.50 (cost of one application) multiplied by 5 applications = 
$30,087.50 total cost.
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    Commission staff estimates that there is no hour burden associated 
with complying with the collection of information component of rule 
19b-1(c).
    As noted above, Commission staff understands that funds that file 
an application under rule 19b-1(e) generally use outside counsel to 
prepare the application.\8\ The staff estimates that, on average, 
outside counsel spends 10 hours preparing a rule 19b-1(e) application, 
including eight hours by an associate and two hours by a partner. 
Outside counsel billing arrangements and rates vary based on numerous 
factors, but the staff has estimated the average cost of outside 
counsel as $400 per hour, based on information received from funds, 
intermediaries, and their counsel. The staff therefore estimates that 
the average cost of outside counsel preparation of the rule 19b-1(e) 
exemptive application is $4,000.\9\ Because the staff estimates that, 
each year, five funds will file an application pursuant to rule 19b-
1(e), the total annual cost burden imposed by the exemptive application 
requirements of rule 19b-1(e) is estimated to be $20,000.\10\
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    \8\ This understanding is based on conversations with 
representatives from the fund industry.
    \9\ This estimate is based on the following calculation: 10 
hours multiplied by $400 per hour equals $4,000.
    \10\ This estimate is based on the following calculation: $4,000 
multiplied by five (funds) equals $20,000.
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    The Commission staff estimates that there are approximately 2,579 
UITs \11\ that may rely on rule 19b-1(c) to make capital gains 
distributions. The staff estimates that, on average, these UITs rely on 
rule 19b-1(c) once a year to make a capital gains distribution.\12\ In

[[Page 20403]]

most cases, the trustee of the UIT is responsible for preparing and 
sending the notices that must accompany a capital gains distribution 
under rule 19b-1(c)(2). These notices require limited preparation, the 
cost of which accounts for only a small, indiscrete portion of the 
comprehensive fee charged by the trustee for its services to the UIT. 
The staff believes that as a matter of good business practice, and for 
tax preparation reasons, UITs would collect and distribute the capital 
gains information required to be sent to unitholders under rule 19b-
1(c) even in the absence of the rule. The staff estimates that the cost 
of preparing a notice for a capital gains distribution under rule 19b-
1(c)(2) is approximately $50. There is no separate cost to mail the 
notices because they are mailed with the capital gains distribution. 
Thus, the staff estimates that the capital gains distribution notice 
requirement imposes an annual cost on UITs of approximately 
$128,950.\13\ The staff therefore estimates that the total cost imposed 
by rule 19b-1 is $160,950 ($128,950 plus $20,000 (total cost associated 
with rule 19b-1(e)) equals $148,950).
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    \11\ See 2016 Investment Company Fact Book, Investment Company 
Institute, available at https://www.ici.org/pdf/2016_factbook.pdf.
    \12\ The number of times UITs rely on the rule to make capital 
gains distributions depends on a wide range of factors and, thus, 
can vary greatly across years and UITs. UITs may distribute capital 
gains biannually, annually, quarterly, or at other intervals. 
Additionally, a number of UITs are organized as grantor trusts, and 
therefore do not generally make capital gains distributions under 
rule 19b-1(c), or may not rely on rule 19b-1(c) as they do not meet 
the rule's requirements.
    \13\ This estimate is based on the following calculation: 2,579 
UITs multiplied by $50 equals $128,950.
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    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: April 25, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08764 Filed 4-28-17; 8:45 am]
 BILLING CODE 8011-01-P
20402 Federal Register / Vol. 82, No. 82 / Monday, May 1, 2017 / Notices

the costs of Commission rules and (generally, fixed-income securities), Thus, the staff estimates that the annual
forms. provided that: (i) The capital gains hour burden of the collection of
The public may view the background distribution falls within one of five information imposed by rule 19b–1(e)
documentation for this information categories specified in the rule 1 and (ii) would be approximately five hours per
collection at the following Web site, the distribution is accompanied by a fund, at a cost of $6017.50.6 Because the
www.reginfo.gov. Comments should be report to the unitholder that clearly staff estimates that, each year, five funds
directed to: (i) Desk Officer for the describes the distribution as a capital will file an application pursuant to rule
Securities and Exchange Commission, gains distribution (the ‘‘notice 19b–1(e), the total burden for the
Office of Information and Regulatory requirement’’).2 Rule 19b–1(e) permits a information collection is 40 hours at a
Affairs, Office of Management and fund to apply to the Commission for cost of $30,087.50.7
Budget, Room 10102, New Executive permission to distribute long-term Commission staff estimates that there
Office Building, Washington, DC 20503, capital gains that would otherwise be is no hour burden associated with
or by sending an email to: Shagufta_ prohibited by the rule if the fund did complying with the collection of
Ahmed@omb.eop.gov; and (ii) Pamela not foresee the circumstances that information component of rule 19b–1(c).
Dyson, Director/Chief Information created the need for the distribution. As noted above, Commission staff
Officer, Securities and Exchange The application must set forth the understands that funds that file an
Commission, c/o Remi Pavlik-Simon, pertinent facts and explain the application under rule 19b–1(e)
100 F Street, NE., Washington, DC circumstances that justify the generally use outside counsel to prepare
20549 or send an email to: PRA_ distribution.3 An application that meets the application.8 The staff estimates
Mailbox@sec.gov. Comments must be those requirements is deemed to be that, on average, outside counsel spends
submitted to OMB within 30 days of granted unless the Commission denies 10 hours preparing a rule 19b–1(e)
this notice. the request within 15 days after the application, including eight hours by an
Dated: April 25, 2017. Commission receives the application. associate and two hours by a partner.
Commission staff estimates that five Outside counsel billing arrangements
Eduardo A. Aleman,
funds will file an application under rule and rates vary based on numerous
Assistant Secretary.
19b–1(e) each year.4 The staff factors, but the staff has estimated the
[FR Doc. 2017–08760 Filed 4–28–17; 8:45 am] average cost of outside counsel as $400
understands that if a fund files an
BILLING CODE 8011–01–P application it generally uses outside per hour, based on information received
counsel to prepare the application. The from funds, intermediaries, and their
cost burden of using outside counsel is counsel. The staff therefore estimates
SECURITIES AND EXCHANGE that the average cost of outside counsel
discussed below. The staff estimates
COMMISSION that, on average, a fund’s investment preparation of the rule 19b–1(e)
[SEC File No. 270–312, OMB Control No. adviser would spend approximately 4 exemptive application is $4,000.9
3235–0354] hours to review an application, Because the staff estimates that, each
including 3.5 hours by an assistant year, five funds will file an application
Submission for OMB Review; general counsel at a cost of $433 per pursuant to rule 19b–1(e), the total
Comment Request hour and 0.5 hours by an administrative annual cost burden imposed by the
Upon Written Request, Copies Available assistant at a cost of $74 per hour, and exemptive application requirements of
From: Securities and Exchange the fund’s board of directors would rule 19b–1(e) is estimated to be
Commission, Office of FOIA Services, spend an additional 1 hour at a cost of $20,000.10
100 F Street NE., Washington, DC $4,465 per hour, for a total of 5 hours.5 The Commission staff estimates that
20549–2736. there are approximately 2,579 UITs 11
1 17 CFR 270.19b–1(c)(1). that may rely on rule 19b–1(c) to make
Extension: 2 The notice requirement in rule 19b–1(c)(2) capital gains distributions. The staff
Rule 19b–1. supplements the notice requirement of section 19(a) estimates that, on average, these UITs
Notice is hereby given that, pursuant [15 U.S.C. 80a–19(a)], which requires any
distribution in the nature of a dividend payment to rely on rule 19b–1(c) once a year to
to the Paperwork Reduction Act of 1995 be accompanied by a notice disclosing the source make a capital gains distribution.12 In
(44 U.S.C. 3501–3520), the Securities of the distribution.
and Exchange Commission 3 Rule 19b–1(e) also requires that the application
cost of board of director time is approximately
(‘‘Commission’’) has submitted to the comply with rule 0–2 [17 CFR 270.02] under the $4,465.
Act, which sets forth the general requirements for 6 This estimate is based on the following
Office of Management and Budget papers and applications filed with the Commission calculations: $1515.50 (3.5 hours × $433 =
(‘‘OMB’’) a request for extension of the pursuant to the Act and rules thereunder. $1515.50) plus $37 (0.5 hours × $74 = $37) plus
previously approved collection of 4 This estimate is based on the average number of
$4465 equals $6017.50 (cost of one application).
information discussed below. applications filed with the Commission pursuant to 7 This estimate is based on the following
rule 19b–1(e) in the prior three-year period.
Section 19(b) of the Investment 5 The estimate for assistant general counsels is
calculation: $6017.50 (cost of one application)
Company Act of 1940 (the ‘‘Act’’) (15 multiplied by 5 applications = $30,087.50 total cost.
from SIFMA’s Management & Professional Earnings 8 This understanding is based on conversations
U.S.C. 80a–19(b)) authorizes the in the Securities Industry 2013, modified by with representatives from the fund industry.
Commission to regulate registered Commission staff to account for an 1800-hour work- 9 This estimate is based on the following
investment company (‘‘fund’’) year and inflation (as of January 2016) and
calculation: 10 hours multiplied by $400 per hour
multiplied by 5.35 to account for bonuses, firm size,
distributions of long-term capital gains employee benefits and overhead. The estimate for
equals $4,000.
10 This estimate is based on the following
made more frequently than once every administrative assistants is from SIFMA’s Office
Salaries in the Securities Industry 2013, modified calculation: $4,000 multiplied by five (funds)
twelve months. Accordingly, rule 19b–
srobinson on DSK5SPTVN1PROD with NOTICES

by Commission staff to account for an 1800-hour equals $20,000.
1 under the Act (17 CFR 270.19b–1) work-year and inflation (as of January 2016) and 11 See 2016 Investment Company Fact Book,
regulates the frequency of fund multiplied by 2.93 to account for bonuses, firm size, Investment Company Institute, available at https://
distributions of capital gains. Rule 19b– employee benefits and overhead. The staff www.ici.org/pdf/2016_factbook.pdf.
previously estimated in 2009 that the average cost 12 The number of times UITs rely on the rule to
1(c) states that the rule does not apply
of board of director time was $4,000 per hour for make capital gains distributions depends on a wide
to a unit investment trust (‘‘UIT’’) if it the board as a whole, based on information received range of factors and, thus, can vary greatly across
is engaged exclusively in the business of from funds and their counsel. Adjusting for years and UITs. UITs may distribute capital gains
investing in certain eligible securities inflation, the staff estimates that the current average biannually, annually, quarterly, or at other

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Federal Register / Vol. 82, No. 82 / Monday, May 1, 2017 / Notices 20403

most cases, the trustee of the UIT is SECURITIES AND EXCHANGE ADV that the investment adviser has
responsible for preparing and sending COMMISSION concluded that it must register as an
the notices that must accompany a investment adviser with the required
capital gains distribution under rule Submission for OMB Review; number of states; (ii) undertake to
19b–1(c)(2). These notices require Comment Request withdraw from registration with the
limited preparation, the cost of which Upon Written Request, Copies Available Commission if the adviser indicates on
accounts for only a small, indiscrete From: Securities and Exchange an annual updating amendment to Form
portion of the comprehensive fee Commission, Office of FOIA Services, ADV that it would be required by the
charged by the trustee for its services to 100 F Street NE., Washington, DC laws of fewer than 15 states to register
the UIT. The staff believes that as a 20549–2736. as an investment adviser with the state;
matter of good business practice, and for and (iii) maintain in an easily accessible
tax preparation reasons, UITs would Extension: place a record of the states in which the
Rule 203A–2(d), SEC File No. 270–630, investment adviser has determined it
collect and distribute the capital gains OMB Control No. 3235–0689.
information required to be sent to would, but for the exemption, be
unitholders under rule 19b–1(c) even in Notice is hereby given that pursuant required to register for a period of not
the absence of the rule. The staff to the Paperwork Reduction Act of 1995 less than five years from the filing of a
estimates that the cost of preparing a (44 U.S.C. 3501 et seq.) the Securities Form ADV relying on the rule.
notice for a capital gains distribution and Exchange Commission Respondents to this collection of
under rule 19b–1(c)(2) is approximately (‘‘Commission’’) has submitted to the information are investment advisers
$50. There is no separate cost to mail Office of Management and Budget required to register in 15 or more states
the notices because they are mailed with (‘‘OMB’’) a request for extension of the absent the exemption that rely on rule
the capital gains distribution. Thus, the previously approved collection of 203A–2(d) to register with the
staff estimates that the capital gains information discussed below. Commission. The information collected
The title of the collection of under rule 203A–2(d) permits the
distribution notice requirement imposes
information is: ‘‘Exemption for Certain Commission’s examination staff to
an annual cost on UITs of
Multi-State Investment Advisers (Rule determine an adviser’s eligibility for
approximately $128,950.13 The staff
203A–2(d)).’’ Its currently approved registration with the Commission under
therefore estimates that the total cost
OMB control number is 3235–0689. An this exemptive rule and is also
imposed by rule 19b–1 is $160,950
agency may not conduct or sponsor, and necessary for the Commission staff to
($128,950 plus $20,000 (total cost
a person is not required to respond to use in its examination and oversight
associated with rule 19b–1(e)) equals
a collection of information unless it program. This collection of information
$148,950).
displays a currently valid control is codified at 17 CFR 275.203a–2(d) and
An agency may not conduct or
number. is mandatory to qualify for and maintain
sponsor, and a person is not required to
Pursuant to section 203A of the Commission registration eligibility
respond to, a collection of information Investment Advisers Act of 1940 (the
unless it displays a currently valid under rule 203A–2(d). Responses to the
‘‘Act’’) (15 U.S.C. 80b–3a), an recordkeeping requirements under rule
control number. investment adviser that is regulated or
The public may view the background 203A–2(d) in the context of the
required to be regulated as an Commission’s examination and
documentation for this information
investment adviser in the state in which oversight program are generally kept
collection at the following Web site,
it maintains its principal office and confidential.
www.reginfo.gov. Comments should be
place of business is prohibited from The estimated number of investment
directed to: (i) Desk Officer for the registering with the Commission unless
Securities and Exchange Commission, advisers subject to the collection of
that adviser has at least $25 million in information requirements under the rule
Office of Information and Regulatory assets under management or advises a
Affairs, Office of Management and is 142. These advisers will incur an
Commission-registered investment average one-time initial burden of
Budget, Room 10102, New Executive company. Section 203A also prohibits
Office Building, Washington, DC 20503, approximately 8 hours, and an average
from Commission registration an adviser ongoing burden of approximately 8
or by sending an email to: Shagufta_ that: (i) Has assets under management hours per year, to keep records
Ahmed@omb.eop.gov; and (ii) Pamela between $25 million and $100 million; sufficient to demonstrate that they meet
Dyson, Director/Chief Information (ii) is required to be registered as an the 15-state threshold. These estimates
Officer, Securities and Exchange investment adviser with the state in are based on an estimate that each year
Commission, c/o Remi Pavlik-Simon, which it maintains its principal office an investment adviser will spend
100 F Street NE., Washington, DC 20549 and place of business; and (iii) if approximately 0.5 hours creating a
or send an email to: PRA_Mailbox@ registered, would be subject to record of its determination whether it
sec.gov. Comments must be submitted to examination as an adviser by that state must register as an investment adviser
OMB within 30 days of this notice. (a ‘‘mid-sized adviser’’). A mid-sized with each of the 15 states required to
Dated: April 25, 2017. adviser that otherwise would be rely on the exemption, and
Eduardo A. Aleman, prohibited may register with the approximately 0.5 hours to maintain
Assistant Secretary. Commission if it would be required to these records. Accordingly, we estimate
[FR Doc. 2017–08764 Filed 4–28–17; 8:45 am] register with 15 or more states. that rule 203A–2(d) results in an annual
BILLING CODE 8011–01–P
Similarly, Rule 203A–2(d) under the Act aggregate burden of collection for SEC-
(17 CFR 275.203a–2(d)) provides that registered investment advisers of a total
srobinson on DSK5SPTVN1PROD with NOTICES

intervals. Additionally, a number of UITs are the prohibition on registration with the of 1,136 hours. Estimates of average
organized as grantor trusts, and therefore do not Commission does not apply to an burden hours are made solely for the
generally make capital gains distributions under investment adviser that is required to purposes of the Paperwork Reduction
rule 19b–1(c), or may not rely on rule 19b–1(c) as register in 15 or more states. An Act, and are not derived from a
they do not meet the rule’s requirements.
13 This estimate is based on the following investment adviser relying on this comprehensive or even a representative
calculation: 2,579 UITs multiplied by $50 equals exemption also must: (i) Include a survey or study of the costs of
$128,950. representation on Schedule D of Form Commission rules and forms.

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Document Created: 2017-04-29 03:16:28
Document Modified: 2017-04-29 03:16:28
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 20402