Federal Register: July 12, 2004 (Volume 69, Number 132)
DOCID: FR Doc 04-15682
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
NOTICE: NOTICES
SUBJECT CATEGORY:
Submission for OMB Review; Comment Request
DOCUMENT SUMMARY:
Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549.
Extension:
Rule 17j1; SEC File No. 270239; OMB Control No. 32350224.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 35013520), the Securities and Exchange Commission (the ``Commission'') has submitted to the Office of Management and Budget (``OMB'') a request for extension and approval of the collection of information discussed below.
Rule 17j1 under the Investment Company Act of 1940 (15 U.S.C. 80a)
(the ``Investment Company Act''), which the Commission adopted in 1980
\1\ and amended in 1999,\2\ implements section 17(j) of the Act.
Section 17(j) makes it unlawful for persons affiliated with a
registered investment company or with the investment company's
investment adviser or principal underwriter (each, a ``17j1
organization''), in connection with the purchase or sale of securities
held or to be acquired by the investment company, to engage in any
fraudulent, deceptive, or manipulative act or practice in contravention
of the Commission's rules and regulations. Section 17(j) authorizes the
Commission to promulgate rules requiring the adoption of codes of ethics.
\1\ Prevention of Certain Unlawful Activities With Respect To
Registered Investment Companies, Investment Company Act Release No. 11421 (Oct. 31, 1980) [45 FR 73915 (Nov. 7, 1980)].
\2\ Personal Investment Activities of Investment Company
Personnel, Investment Company Act Release No. 23958 (Aug. 20, 1999) [64 FR 4682101 (Aug. 27,1999)].
In order to implement section 17(j), rule 17j1 imposes certain
requirements on 17j1 organizations and ``Access Persons'' \3\ of those
organizations. The rule prohibits fraudulent, deceptive or manipulative
acts by persons affiliated with a rule 17j1 organization in connection
with their personal securities transactions in securities held or to be
acquired by the fund. The rule requires each 17j1 organization \4\ to:
(i) Adopt a written codes of ethics, (ii) submit the code and any
material changes to the code, along with a certification that it has
adopted procedures reasonably necessary to prevent Access Persons from
violating the code of ethics, to the fund board for approval, (iii) use
reasonable diligence and institute procedures reasonably necessary to
prevent violations of the code, (iv) submit a written report at least
annually to the fund describing any issues arising under the code and
procedures and certifying that the 17j1 entity has adopted procedures
reasonably necessary to prevent Access Persons form violating the code,
(v) identify Access Persons and notify them of their reporting
obligations, and (vi) maintain and make available to the Commission for
review certain records related to the code of ethics and transaction reporting by Access Persons.
\3\ Rule 17j1(a)(1) defines an ``access person'' as ``any
director, officer, general partner, or advisory person of a fund or
of a fund's investment adviser'' and as ``any director, officer, or
general partner of a principal underwriter who, in the ordinary
course of business, makes, participates in or obtains information
regarding, the purchase or sale of Covered Securities by the Fund
for which the principal underwriter acts, or whose functions or
duties in the ordinary course of business relate to the making of
any recommendation to the Fund regarding the purchase or sale of Covered Securities.''
\4\ Money market funds and funds that do not invest in ``Covered
Securities,'' as defined in paragraph (a)(4) of the rule, are excepted.
The rule requires each Access Person of a fund (other than a money
market fund or a fund that does not invest in Covered Securities) and
of an investment adviser or principal underwriter of the fund, who is
not subject to an exception,\5\ to file: (i) Within ten days of
becoming an Access Person, a dated initial holdings report that sets
forth certain information with respect to the access person's
securities and accounts, (ii) within ten days of the end of each
calendar quarter, a dated quarterly transaction report providing
certain information with respect to any securities transactions during
the quarter and any account established by the Access Person in which
any securities were held during the quarter, and (iii) dated annual
holding reports providing information with respect to each covered
security the Access Person beneficially owns and accounts in which
securities are held for his or her benefit. In addition, rule 17j1
requires investment personnel of a fund or its investment adviser,
before acquiring beneficial ownership in securities through an initial
public offering (IPO) or in a private placement, to obtain approval from the fund or the fund's investment adviser.
\5\ Rule 17j1(d)(2) exempts Access Persons from reporting in
five instances in which reporting would be duplicative or would not serve the purposes of the rule.
The requirements that the management of a rule 17j1 organization provide the fund's board with new and amended codes of ethics and an annual issues and certification report are intended to enhance board oversight of personal investment policies applicable to the fund and the personal investment activities of Access Persons. The requirements that Access Persons provide initial holdings reports, quarterly transaction reports, and annual holdings reports and request approval for purchases of securities through IPOs and private placements are intended to help fund compliance personnel and the Commission's examinations staff monitor potential conflicts of interest and detect potentially abusive activities. The requirement that each rule 17j1 organization maintain certain records is intended to assist the organization and the Commission's examinations staff in determining if there have been violations of rule 17j1.
The Commission estimates that each year a total of 73,976 Access
Persons and 17j1 organizations are subject to the rule's reporting
requirements. Respondents provide approximately 102,230 responses each year. The total
[[Page 41862]]
annual burden of the rule's paperwork requirements is estimated to be
approximately 243,884 hours. Of the total, 38,722 hours are associated
with reporting requirements for access persons, and the remaining
205,162 hours are associated with the requirements applicable to rule 17j1 entities.
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.
Compliance with the collection of information requirements of the
rule is mandatory and is necessary to comply with the requirements of
the rule in general. 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. Rule 17j1 requires that
records be maintained for at least five years in an easily accessible place.\6\
\6\ If information collected pursuant to the rule is reviewed by
the Commission's examination staff, it will be accorded the same
level of confidentiality accorded to other responses provided to the
Commission in the context of its examination and oversight program.
See section 31(c) of the Investment Company Act [15 U.S.C. 80a 30(c)].
General comments regarding the above information should be directed
to the following persons: (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 email to:
David_Rostker@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief
Information Officer, Office of Information Technology, Securities and
Exchange Commission, 450 5th Street, NW., Washington, DC 20549.
Comments must be submitted to OMB within 30 days of this notice.
Dated: July 2, 2004.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0415682 Filed 7904; 8:45 am]
BILLING CODE 801001P
SUMMARY:
Agency information collection activities; proposals, submissions, and approvals,
DOCUMENT BODY 2:
Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549.
Extension:
Rule 17j1; SEC File No. 270239; OMB Control No. 32350224.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 35013520), the Securities and Exchange Commission (the ``Commission'') has submitted to the Office of Management and Budget (``OMB'') a request for extension and approval of the collection of information discussed below.
Rule 17j1 under the Investment Company Act of 1940 (15 U.S.C. 80a)
(the ``Investment Company Act''), which the Commission adopted in 1980
\1\ and amended in 1999,\2\ implements section 17(j) of the Act.
Section 17(j) makes it unlawful for persons affiliated with a
registered investment company or with the investment company's
investment adviser or principal underwriter (each, a ``17j1
organization''), in connection with the purchase or sale of securities
held or to be acquired by the investment company, to engage in any
fraudulent, deceptive, or manipulative act or practice in contravention
of the Commission's rules and regulations. Section 17(j) authorizes the
Commission to promulgate rules requiring the adoption of codes of ethics.
\1\ Prevention of Certain Unlawful Activities With Respect To
Registered Investment Companies, Investment Company Act Release No. 11421 (Oct. 31, 1980) [45 FR 73915 (Nov. 7, 1980)].
\2\ Personal Investment Activities of Investment Company
Personnel, Investment Company Act Release No. 23958 (Aug. 20, 1999) [64 FR 4682101 (Aug. 27,1999)].
In order to implement section 17(j), rule 17j1 imposes certain
requirements on 17j1 organizations and ``Access Persons'' \3\ of those
organizations. The rule prohibits fraudulent, deceptive or manipulative
acts by persons affiliated with a rule 17j1 organization in connection
with their personal securities transactions in securities held or to be
acquired by the fund. The rule requires each 17j1 organization \4\ to:
(i) Adopt a written codes of ethics, (ii) submit the code and any
material changes to the code, along with a certification that it has
adopted procedures reasonably necessary to prevent Access Persons from
violating the code of ethics, to the fund board for approval, (iii) use
reasonable diligence and institute procedures reasonably necessary to
prevent violations of the code, (iv) submit a written report at least
annually to the fund describing any issues arising under the code and
procedures and certifying that the 17j1 entity has adopted procedures
reasonably necessary to prevent Access Persons form violating the code,
(v) identify Access Persons and notify them of their reporting
obligations, and (vi) maintain and make available to the Commission for
review certain records related to the code of ethics and transaction reporting by Access Persons.
\3\ Rule 17j1(a)(1) defines an ``access person'' as ``any
director, officer, general partner, or advisory person of a fund or
of a fund's investment adviser'' and as ``any director, officer, or
general partner of a principal underwriter who, in the ordinary
course of business, makes, participates in or obtains information
regarding, the purchase or sale of Covered Securities by the Fund
for which the principal underwriter acts, or whose functions or
duties in the ordinary course of business relate to the making of
any recommendation to the Fund regarding the purchase or sale of Covered Securities.''
\4\ Money market funds and funds that do not invest in ``Covered
Securities,'' as defined in paragraph (a)(4) of the rule, are excepted.
The rule requires each Access Person of a fund (other than a money
market fund or a fund that does not invest in Covered Securities) and
of an investment adviser or principal underwriter of the fund, who is
not subject to an exception,\5\ to file: (i) Within ten days of
becoming an Access Person, a dated initial holdings report that sets
forth certain information with respect to the access person's
securities and accounts, (ii) within ten days of the end of each
calendar quarter, a dated quarterly transaction report providing
certain information with respect to any securities transactions during
the quarter and any account established by the Access Person in which
any securities were held during the quarter, and (iii) dated annual
holding reports providing information with respect to each covered
security the Access Person beneficially owns and accounts in which
securities are held for his or her benefit. In addition, rule 17j1
requires investment personnel of a fund or its investment adviser,
before acquiring beneficial ownership in securities through an initial
public offering (IPO) or in a private placement, to obtain approval from the fund or the fund's investment adviser.
\5\ Rule 17j1(d)(2) exempts Access Persons from reporting in
five instances in which reporting would be duplicative or would not serve the purposes of the rule.
The requirements that the management of a rule 17j1 organization provide the fund's board with new and amended codes of ethics and an annual issues and certification report are intended to enhance board oversight of personal investment policies applicable to the fund and the personal investment activities of Access Persons. The requirements that Access Persons provide initial holdings reports, quarterly transaction reports, and annual holdings reports and request approval for purchases of securities through IPOs and private placements are intended to help fund compliance personnel and the Commission's examinations staff monitor potential conflicts of interest and detect potentially abusive activities. The requirement that each rule 17j1 organization maintain certain records is intended to assist the organization and the Commission's examinations staff in determining if there have been violations of rule 17j1.
The Commission estimates that each year a total of 73,976 Access
Persons and 17j1 organizations are subject to the rule's reporting
requirements. Respondents provide approximately 102,230 responses each year. The total
[[Page 41862]]
annual burden of the rule's paperwork requirements is estimated to be
approximately 243,884 hours. Of the total, 38,722 hours are associated
with reporting requirements for access persons, and the remaining
205,162 hours are associated with the requirements applicable to rule 17j1 entities.
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.
Compliance with the collection of information requirements of the
rule is mandatory and is necessary to comply with the requirements of
the rule in general. 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. Rule 17j1 requires that
records be maintained for at least five years in an easily accessible place.\6\
\6\ If information collected pursuant to the rule is reviewed by
the Commission's examination staff, it will be accorded the same
level of confidentiality accorded to other responses provided to the
Commission in the context of its examination and oversight program.
See section 31(c) of the Investment Company Act [15 U.S.C. 80a 30(c)].
General comments regarding the above information should be directed
to the following persons: (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 email to:
David_Rostker@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief
Information Officer, Office of Information Technology, Securities and
Exchange Commission, 450 5th Street, NW., Washington, DC 20549.
Comments must be submitted to OMB within 30 days of this notice.
Dated: July 2, 2004.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0415682 Filed 7904; 8:45 am]
BILLING CODE 801001P