82 FR 42566 - Proposed Collection; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 173 (September 8, 2017)

Page Range		42566-42567
FR Document		2017-19072
Federal Register, Volume 82 Issue 173 (Friday, September 8, 2017)
[Federal Register Volume 82, Number 173 (Friday, September 8, 2017)]
[Notices]
[Pages 42566-42567]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-19072]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; 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 0-1, SEC File No. 270-472, OMB Control No. 3235-0531

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 350l et seq.), the Securities and Exchange 
Commission (``Commission'') plans to submit to the Office of Management 
and Budget a request for extension of the previous approved collection 
of information discussed below.
    The Investment Company Act of 1940 (the ``Act'') \1\ establishes a 
comprehensive framework for regulating the organization and operation 
of investment companies (``funds''). A principal objective of the Act 
is to protect fund investors by addressing the conflicts of interest 
that exist between funds and their investment advisers and other 
affiliated persons. The Act places significant responsibility on the 
fund board of directors in overseeing the operations of the fund and 
policing the relevant conflicts of interest.\2\
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    \1\ 15 U.S.C. 80a.
    \2\ For example, fund directors must approve investment advisory 
and distribution contracts. See 15 U.S.C. 80a-15(a), (b), and (c).
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    In one of its first releases, the Commission exercised its 
rulemaking authority pursuant to sections 38(a) and 40(b) of the Act by 
adopting rule 0-1 (17 CFR 270.0-1).\3\ Rule 0-1, as subsequently 
amended on numerous occasions, provides definitions for the terms used 
by the Commission in the rules and regulations it has adopted pursuant 
to the Act. The rule also contains a number of rules of construction 
for terms that are defined either in the Act itself or elsewhere in the 
Commission's rules and regulations. Finally, rule 0-1 defines terms 
that serve as conditions to the availability of certain of the 
Commission's exemptive rules. More specifically, the term ``independent 
legal counsel,'' as defined in rule 0-1, sets out conditions that funds 
must meet in order to rely on any of ten exemptive rules (``exemptive 
rules'') under the Act.\4\
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    \3\ Investment Company Act Release No. 4 (Oct. 29, 1940) (5 FR 
4316 (Oct. 31, 1940)). Note that rule 0-1 was originally adopted as 
rule N-1.
    \4\ The relevant exemptive rules are: Rule 10f-3 (17 CFR 
270.10f-3), rule 12b-1 (17 CFR 270.12b-1), rule 15a-4(b)(2) (17 CFR 
270.15a-4(b)(2)), rule 17a-7 (17 CFR 270.17a-7), rule 17a-8 (17 CFR 
270.17a-8), rule 17d-1(d)(7) (17 CFR 270.17d-1(d)(7)), rule 17e-1(c) 
(17 CFR 270.17e-1(c)), rule 17g-1 (17 CFR 270.17g-1), rule 18f-3 (17 
CFR 270.18f-3), and rule 23c-3 (17 CFR 270.23c-3).
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    The Commission amended rule 0-1 to include the definition of the 
term ``independent legal counsel'' in 2001.\5\ This amendment was 
designed to enhance the effectiveness of fund boards of directors and 
to better enable investors to assess the independence of those 
directors. The Commission also amended the exemptive rules to require 
that any person who serves as legal counsel to the independent 
directors of any fund that relies on any of the exemptive rules must be 
an ``independent legal counsel.'' This requirement was added because 
independent directors can better perform the responsibilities assigned 
to them under the Act and the rules if they have the assistance of 
truly independent legal counsel.
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    \5\ See Role of Independent Directors of Investment Companies, 
Investment Company Act Release No. 24816 (Jan. 2, 2001) (66 FR 3735 
(Jan. 16, 2001)).
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    If the board's counsel has represented the fund's investment 
adviser, principal underwriter, administrator (collectively, 
``management organizations'') or their ``control persons'' \6\ during 
the past two years, rule 0-1 requires that the board's independent 
directors make a determination about the adequacy of the counsel's 
independence. A majority of the board's independent directors are 
required to reasonably determine, in the exercise of their judgment, 
that the counsel's prior or current representation of the management 
organizations or their control persons was sufficiently limited to 
conclude that it is unlikely to adversely affect the counsel's 
professional judgment and legal representation. Rule 0-1 also requires 
that a record for the basis of this determination is made in the 
minutes of the directors' meeting. In addition, the independent 
directors must have obtained an undertaking from the counsel to provide 
them with the information necessary to make their determination and to 
update promptly that information when the person begins to represent a 
management organization or control person, or when he or she materially 
increases his or her representation. Generally, the independent 
directors must re-evaluate their determination no less frequently than 
annually.
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    \6\ A ``control person'' is any person--other than a fund--
directly or indirectly controlling, controlled by, or under common 
control, with any of the fund's management organizations. See 17 CFR 
270.01(a)(6)(iv)(B).
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    Any fund that relies on one of the exemptive rules must comply with 
the requirements in the definition of ``independent legal counsel'' 
under rule 0-1. We assume that approximately 3,108 funds rely on at 
least one of the exemptive rules annually.\7\ We further assume that 
the independent directors of approximately one-third (1,036) of those 
funds would need to make the required determination in order for their 
counsel to meet the definition of

[[Page 42567]]

independent legal counsel.\8\ We estimate that each of these 1,036 
funds would be required to spend, on average, 0.75 hours annually to 
comply with the recordkeeping requirement associated with this 
determination, for a total annual burden of approximately 777 hours. 
Based on this estimate, the total annual cost for all funds' compliance 
with this rule is approximately $168,350. To calculate this total 
annual cost, the Commission staff assumed that approximately two-thirds 
of the total annual hour burden (518 hours) would be incurred by a 
compliance manager with an average hourly wage rate of $292 per 
hour,\9\ and one-third of the annual hour burden (259 hours) would be 
incurred by compliance clerk with an average hourly wage rate of $66 
per hour.\10\
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    \7\ Based on statistics compiled by Commission staff, we 
estimate that there are approximately 3,453 funds that could rely on 
one or more of the exemptive rules (this figure reflects the three-
year average of open-end and closed-end funds (3,349) and business 
development companies (104)). Of those funds, we assume that 
approximately 90 percent (3,108) actually rely on at least one 
exemptive rules annually.
    \8\ We assume that the independent directors of the remaining 
two-thirds of those funds will choose not to have counsel, or will 
rely on counsel who has not recently represented the fund's 
management organizations or control persons. In both circumstances, 
it would not be necessary for the fund's independent directors to 
make a determination about their counsel's independence.
    \9\ The estimated hourly wages used in this PRA analysis were 
derived from the Securities Industry and Financial Markets 
Association's Reports on Management and Professional Earnings in the 
Securities Industry (2013) (modified to account for an 1800-hour 
work year and multiplied by 5.35 to account for bonuses, firm size, 
employee benefits and overhead) (adjusted for inflation), and Office 
Salaries in the Securities Industry (2013) (modified to account for 
an 1800-hour work year and multiplied by 2.93 to account for 
bonuses, firm size, employee benefits and overhead) (adjusted for 
inflation).
    \10\ (518 x $292/hour) + (259 x $66/hour) = $168,350.
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    These burden hour estimates are based upon the Commission staff's 
experience and discussions with the fund industry. The estimates of 
average burden hours are made solely for the purposes of the Paperwork 
Reduction Act. These estimates are not derived from a comprehensive or 
even a representative survey or study of the costs of Commission rules.
    Written comments are invited on: (a) Whether the collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimate of the burdens 
of the collection of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burdens of the collection of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Consideration will be given to 
comments and suggestions submitted in writing within 60 days of this 
publication.
    Please direct your written comments to Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Remi 
Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email 
to: [email protected].

    Dated: September 5, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19072 Filed 9-7-17; 8:45 am]
 BILLING CODE 8011-01-P
42566 Federal Register / Vol. 82, No. 173 / Friday, September 8, 2017 / Notices

the requirement will take each (‘‘Commission’’) plans to submit to the any fund that relies on any of the
respondent approximately four hours to Office of Management and Budget a exemptive rules must be an
complete. The Commission staff request for extension of the previous ‘‘independent legal counsel.’’ This
estimates that compliance staff work at approved collection of information requirement was added because
registered transfer agents to comply discussed below. independent directors can better
with the third party disclosure The Investment Company Act of 1940 perform the responsibilities assigned to
requirement will result in an internal (the ‘‘Act’’) 1 establishes a them under the Act and the rules if they
cost of compliance, at an estimated comprehensive framework for regulating have the assistance of truly independent
hourly wage of $283, of $1,128 per year the organization and operation of legal counsel.
per transfer agent (4 hours × $283 per investment companies (‘‘funds’’). A If the board’s counsel has represented
hour = $1,128 per year). Therefore, the principal objective of the Act is to the fund’s investment adviser, principal
aggregate annual internal cost of protect fund investors by addressing the underwriter, administrator (collectively,
compliance for the approximately one conflicts of interest that exist between ‘‘management organizations’’) or their
registered transfer agent each year to funds and their investment advisers and ‘‘control persons’’ 6 during the past two
comply with Rule 17Ad–3(b) is also other affiliated persons. The Act places years, rule 0–1 requires that the board’s
$1,128. There are no external labor costs significant responsibility on the fund independent directors make a
associated with sending the notice to board of directors in overseeing the determination about the adequacy of the
issuers. operations of the fund and policing the counsel’s independence. A majority of
An agency may not conduct or relevant conflicts of interest.2 the board’s independent directors are
sponsor, and a person is not required to In one of its first releases, the required to reasonably determine, in the
respond to, a collection of information Commission exercised its rulemaking exercise of their judgment, that the
under the PRA unless it displays a authority pursuant to sections 38(a) and counsel’s prior or current representation
currently valid OMB control number. 40(b) of the Act by adopting rule 0–1 (17 of the management organizations or
The public may view background CFR 270.0–1).3 Rule 0–1, as their control persons was sufficiently
documentation for this information subsequently amended on numerous limited to conclude that it is unlikely to
collection at the following Web site: occasions, provides definitions for the adversely affect the counsel’s
www.reginfo.gov. Comments should be terms used by the Commission in the professional judgment and legal
directed to: (i) Desk Officer for the rules and regulations it has adopted representation. Rule 0–1 also requires
Securities and Exchange Commission, pursuant to the Act. The rule also that a record for the basis of this
Office of Information and Regulatory contains a number of rules of determination is made in the minutes of
Affairs, Office of Management and construction for terms that are defined the directors’ meeting. In addition, the
Budget, Room 10102, New Executive either in the Act itself or elsewhere in independent directors must have
Office Building, Washington, DC 20503, the Commission’s rules and regulations. obtained an undertaking from the
or by sending an email to: Shagufta_ Finally, rule 0–1 defines terms that counsel to provide them with the
Ahmed@omb.eop.gov; and (ii) Pamela serve as conditions to the availability of information necessary to make their
Dyson, Director/Chief Information certain of the Commission’s exemptive determination and to update promptly
Officer, Securities and Exchange rules. More specifically, the term that information when the person begins
Commission, c/o Remi Pavlik-Simon, ‘‘independent legal counsel,’’ as defined to represent a management organization
100 F Street NE., Washington, DC in rule 0–1, sets out conditions that or control person, or when he or she
20549, or by sending an email to: PRA_ funds must meet in order to rely on any materially increases his or her
Mailbox@sec.gov. Comments must be of ten exemptive rules (‘‘exemptive representation. Generally, the
submitted to OMB within 30 days of rules’’) under the Act.4 independent directors must re-evaluate
The Commission amended rule 0–1 to
this notice. their determination no less frequently
include the definition of the term
Dated: September 5, 2017. than annually.
‘‘independent legal counsel’’ in 2001.5 Any fund that relies on one of the
Eduardo A. Aleman, This amendment was designed to exemptive rules must comply with the
Assistant Secretary. enhance the effectiveness of fund boards requirements in the definition of
[FR Doc. 2017–19071 Filed 9–7–17; 8:45 am] of directors and to better enable ‘‘independent legal counsel’’ under rule
BILLING CODE 8011–01–P investors to assess the independence of 0–1. We assume that approximately
those directors. The Commission also 3,108 funds rely on at least one of the
amended the exemptive rules to require
exemptive rules annually.7 We further
SECURITIES AND EXCHANGE that any person who serves as legal
assume that the independent directors
COMMISSION counsel to the independent directors of
of approximately one-third (1,036) of
those funds would need to make the
Proposed Collection; Comment 1 15 U.S.C. 80a.
required determination in order for their
Request 2 For example, fund directors must approve
investment advisory and distribution contracts. See counsel to meet the definition of
Upon Written Request, Copies Available 15 U.S.C. 80a–15(a), (b), and (c).
3 Investment Company Act Release No. 4 (Oct. 29,
From: Securities and Exchange 6 A ‘‘control person’’ is any person—other than a
1940) (5 FR 4316 (Oct. 31, 1940)). Note that rule 0– fund—directly or indirectly controlling, controlled
Commission, Office of FOIA Services, 1 was originally adopted as rule N–1. by, or under common control, with any of the
100 F Street NE., Washington, DC 4 The relevant exemptive rules are: Rule 10f–3 (17 fund’s management organizations. See 17 CFR
20549–2736. CFR 270.10f–3), rule 12b–1 (17 CFR 270.12b–1), 270.01(a)(6)(iv)(B).
sradovich on DSK3GMQ082PROD with NOTICES

rule 15a–4(b)(2) (17 CFR 270.15a–4(b)(2)), rule 17a– 7 Based on statistics compiled by Commission
Extension:
7 (17 CFR 270.17a–7), rule 17a–8 (17 CFR 270.17a– staff, we estimate that there are approximately 3,453
Rule 0–1, SEC File No. 270–472, OMB 8), rule 17d–1(d)(7) (17 CFR 270.17d–1(d)(7)), rule funds that could rely on one or more of the
Control No. 3235–0531 17e–1(c) (17 CFR 270.17e–1(c)), rule 17g–1 (17 CFR exemptive rules (this figure reflects the three-year
Notice is hereby given that, pursuant 270.17g–1), rule 18f–3 (17 CFR 270.18f–3), and rule average of open-end and closed-end funds (3,349)
23c–3 (17 CFR 270.23c–3). and business development companies (104)). Of
to the Paperwork Reduction Act of 1995 5 See Role of Independent Directors of Investment those funds, we assume that approximately 90
(44 U.S.C. 350l et seq.), the Securities Companies, Investment Company Act Release No. percent (3,108) actually rely on at least one
and Exchange Commission 24816 (Jan. 2, 2001) (66 FR 3735 (Jan. 16, 2001)). exemptive rules annually.

VerDate Sep<11>2014 17:18 Sep 07, 2017 Jkt 241001 PO 00000 Frm 00027 Fmt 4703 Sfmt 4703 E:\FR\FM\08SEN1.SGM 08SEN1
Federal Register / Vol. 82, No. 173 / Friday, September 8, 2017 / Notices 42567

independent legal counsel.8 We writing within 60 days of this Percent
estimate that each of these 1,036 funds publication.
would be required to spend, on average, Please direct your written comments Businesses and Small Agricultural
0.75 hours annually to comply with the to Pamela Dyson, Director/Chief Cooperatives without Credit
recordkeeping requirement associated Information Officer, Securities and Available Elsewhere .................. 3.215
with this determination, for a total Exchange Commission, C/O Remi Non-Profit Organizations without
Credit Available Elsewhere ....... 2.500
annual burden of approximately 777 Pavlik-Simon, 100 F Street NE.,
hours. Based on this estimate, the total Washington, DC 20549; or send an email
The number assigned to this disaster
annual cost for all funds’ compliance to: PRA_Mailbox@sec.gov.
for economic injury is 152760.
with this rule is approximately Dated: September 5, 2017. The State which received an EIDL
$168,350. To calculate this total annual Eduardo A. Aleman, Declaration # is California.
cost, the Commission staff assumed that
Assistant Secretary. (Catalog of Federal Domestic Assistance
approximately two-thirds of the total
[FR Doc. 2017–19072 Filed 9–7–17; 8:45 am] Number 59008)
annual hour burden (518 hours) would
be incurred by a compliance manager BILLING CODE 8011–01–P Dated: August 30, 2017.
with an average hourly wage rate of Linda E. McMahon,
$292 per hour,9 and one-third of the Administrator.
annual hour burden (259 hours) would SMALL BUSINESS ADMINISTRATION [FR Doc. 2017–19079 Filed 9–7–17; 8:45 am]
be incurred by compliance clerk with an BILLING CODE 8025–01–P
average hourly wage rate of $66 per [Disaster Declaration #15276; California
Disaster Number CA–00276 Declaration of
hour.10
Economic Injury]
These burden hour estimates are SMALL BUSINESS ADMINISTRATION
based upon the Commission staff’s Administrative Declaration of an
[Disaster Declaration #15274 and #15275;
experience and discussions with the Economic Injury Disaster for the State Texas Disaster Number TX–00487]
fund industry. The estimates of average of California
burden hours are made solely for the Presidential Declaration Amendment of
purposes of the Paperwork Reduction AGENCY: U.S. Small Business
Administration. a Major Disaster for the State of Texas
Act. These estimates are not derived
from a comprehensive or even a ACTION: Notice. AGENCY: U.S. Small Business
representative survey or study of the Administration.
costs of Commission rules. SUMMARY: This is a notice of an ACTION: Amendment 2.
Economic Injury Disaster Loan (EIDL)
Written comments are invited on: (a)
declaration for the State of California, SUMMARY: This is an amendment of the
Whether the collection of information is
dated 08/30/2017. Presidential declaration of a major
necessary for the proper performance of
Incident: Flooding Due to Extreme disaster for the State of Texas (FEMA–
the functions of the Commission,
Snow Melt. 4332–DR), dated 08/25/2017.
including whether the information has
Incident Period: 06/17/2017 through Incident: Hurricane Harvey.
practical utility; (b) the accuracy of the
06/29/2017. Incident Period: 08/23/2017 and
Commission’s estimate of the burdens of
the collection of information; (c) ways to DATES: Issued on 08/30/2017. continuing.
enhance the quality, utility, and clarity Economic Injury (EIDL) Loan DATES: Issued on 08/30/2017.
of the information collected; and (d) Application Deadline Date: 05/30/2018. Physical Loan Application Deadline
ways to minimize the burdens of the ADDRESSES: Submit completed loan Date: 10/24/2017.
collection of information on applications to: U.S. Small Business Economic Injury (EIDL) Loan
respondents, including through the use Administration, Processing and Application Deadline Date: 05/25/2018.
of automated collection techniques or Disbursement Center, 14925 Kingsport ADDRESSES: Submit completed loan
other forms of information technology. Road, Fort Worth, TX 76155. applications to: U.S. Small Business
Consideration will be given to FOR FURTHER INFORMATION CONTACT: A. Administration, Processing and
comments and suggestions submitted in Escobar, Office of Disaster Assistance, Disbursement Center, 14925 Kingsport
U.S. Small Business Administration, Road, Fort Worth, TX 76155.
8 We assume that the independent directors of the 409 3rd Street SW., Suite 6050, FOR FURTHER INFORMATION CONTACT: A.
remaining two-thirds of those funds will choose not Washington, DC 20416, (202) 205–6734.
to have counsel, or will rely on counsel who has Escobar, Office of Disaster Assistance,
not recently represented the fund’s management SUPPLEMENTARY INFORMATION: Notice is U.S. Small Business Administration,
organizations or control persons. In both hereby given that as a result of the 409 3rd Street SW., Suite 6050,
circumstances, it would not be necessary for the Administrator’s EIDL declaration,
fund’s independent directors to make a
Washington, DC 20416, (202) 205–6734.
determination about their counsel’s independence.
applications for economic injury SUPPLEMENTARY INFORMATION: The notice
9 The estimated hourly wages used in this PRA disaster loans may be filed at the of the President’s major disaster
analysis were derived from the Securities Industry address listed above or other locally declaration for the State of Texas, dated
and Financial Markets Association’s Reports on announced locations. 08/25/2017, is hereby amended to
Management and Professional Earnings in the The following areas have been
Securities Industry (2013) (modified to account for include the following areas as adversely
an 1800-hour work year and multiplied by 5.35 to determined to be adversely affected by affected by the disaster:
sradovich on DSK3GMQ082PROD with NOTICES

account for bonuses, firm size, employee benefits the disaster:
and overhead) (adjusted for inflation), and Office Primary Counties (Physical Damage and
Primary Counties: Fresno, Tulare Economic Injury Loans):
Salaries in the Securities Industry (2013) (modified
to account for an 1800-hour work year and Contiguous Counties: Colorado, Fayette, Hardin, Jasper,
multiplied by 2.93 to account for bonuses, firm size, California: Inyo, Kern, Kings, Madera, Jefferson, Montgomery, Newton,
employee benefits and overhead) (adjusted for Merced, Mono, Monterey, San Orange, Sabine, San Jacinto, Waller
inflation). Benito
10 (518 × $292/hour) + (259 × $66/hour) = Contiguous Counties (Economic Injury
$168,350. The Interest Rates are: Loans Only):

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Document Created: 2018-10-24 14:08:43
Document Modified: 2018-10-24 14:08:43
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 42566