Federal Register: October 23, 2009 (Volume 74, Number 204)
DOCID: fr23oc09-87 FR Doc E9-25487
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
NOTICE: NOTICES
DOCID: fr23oc09-87
SUBJECT CATEGORY:
Proposed Collection; Comment Request
DOCUMENT SUMMARY:
Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 205490213.
Extension:
Rule 31a2; SEC File No. 270174; OMB Control No. 32350179. [[Page 54863]]
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'') is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval.
Section 31(a)(1) of the Investment Company Act of 1940 (the
``Act'') \1\ requires registered investment companies (``funds'') and
certain principal underwriters, brokerdealers, investment advisers and
depositors of funds to maintain and preserve records as prescribed by
Commission rules. Rule 31a1 \2\ specifies the books and records that
each of these entities must maintain. Rule 31a2,\3\ which was adopted
on April 17, 1944, specifies the time periods that entities must retain
books and records required to be maintained under rule 31a1. \1\ 15 U.S.C. 80a30(a)(1).
\2\ 17 CFR 270.31a1.
\3\ 17 CFR 270.31a2.
Rule 31a2 requires the following:
1. Every fund must preserve permanently, and in an easily
accessible place for the first two years, all books and records required under rule 31a1(b)(1)(4).\4\
\4\ 17 CFR 270.31a1(b)(1)(4). These include, among other
records, journals detailing daily purchases and sales of securities
or contracts to purchase and sell securities, general and auxiliary
ledgers reflecting all asset, liability, reserve, capital, income
and expense accounts, separate ledgers reflecting, separately for
each portfolio security as of the trade date all ``long'' and
``short'' positions carried by the fund for its own account, and
corporate charters, certificates of incorporation and bylaws.
2. Every fund must preserve for at least six years, and in an easily accessible place for the first two years:
a. All books and records required under rule 31a1(b)(5)(12); \5\ \5\ 17 CFR 270.31a1(b)(5)(12). These include, among other records, records of each brokerage order given in connection with purchases and sales of securities by the fund, all other portfolio purchases, records of all puts, calls, spreads, straddles or other options in which the fund has an interest, has granted, or has guaranteed, records of proof of money balances in all ledger accounts, files of all advisory material received from the investment adviser, and memoranda identifying persons, committees or groups authorizing the purchase or sale of securities for the fund.
b. All vouchers, memoranda, correspondence, checkbooks, bank statements, canceled checks, cash reconciliations, canceled stock certificates and all schedules that support each computation of net asset value of fund shares;
c. Any advertisement, pamphlet, circular, form letter or other sales literature addressed or intended for distribution to prospective investors;
d. Any record of the initial determination that a director is not an interested person of the fund, and each subsequent determination that the director is not an interested person of the fund, including any questionnaire and any other document used to determine that a director is not an interested person of the company;
e. Any materials used by the disinterested directors of a fund to determine that a person who is acting as legal counsel to those directors is an independent legal counsel; and
f. Any documents or other written information considered by the directors of the fund pursuant to section 15(c) of the Act in approving the terms or renewal of a contract or agreement between the company and an investment advisor.
3. Every underwriter, broker or dealer that is a majorityowned subsidiary of a fund must preserve records required to be preserved by brokers and dealers under rules adopted under section 17 of the Securities Exchange Act of 1934 \6\ (``section 17'') for the periods established in those rules.
\6\ 15 U.S.C. 78q.
4. Every depositor of any fund, and every principal underwriter of any fund other than a closedend fund, must preserve for at least six years records required to be preserved by brokers and dealers under rules adopted under section 17 to the extent the records are necessary or appropriate to record the entity's transactions with the fund.
5. Every investment adviser that is a majorityowned subsidiary of a fund must preserve the records required to be maintained by investment advisers under rules adopted under section 204 of the Investment Advisers Act of 1940 \7\ (``section 204'') for the periods specified in those rules.
\7\ 15 U.S.C. 80b4.
6. Every investment adviser that is not a majorityowned subsidiary of a fund must preserve for at least six years records required to be maintained by registered investment advisers under rules adopted under section 204 to the extent the records are necessary or appropriate to reflect the adviser's transactions with the fund.
The records required to be maintained and preserved under this part
may be maintained and preserved for the required time by, or on behalf
of, a fund on (i) micrographic media, including microfilm, microfiche,
or any similar medium, or (ii) electronic storage media, including any
digital storage medium or system that meets the terms of this section.
The fund, or person that maintains and preserves records on its behalf,
must arrange and index the records in a way that permits easy location, access, and retrieval of any particular record.\8\
\8\ In addition, the fund, or whoever maintains the documents
for the fund must provide promptly any of the following that the
Commission (by its examiners or other representatives) or the
directors of the fund may request: (A) A legible, true, and complete
copy of the record in the medium and format in which it is stored;
(B) a legible, true, and complete printout of the record; and (C)
means to access, view, and print the records; and separately store,
for the time required for preservation of the original record, a
duplicate copy of the record on any medium allowed by this section.
In the case of records retained on electronic storage media, the
fund, or person that maintains and preserves records on its behalf,
must establish and maintain procedures: (i) To maintain and preserve
the records, so as to reasonably safeguard them from loss,
alteration, or destruction; (ii) to limit access to the records to
properly authorized personnel, the directors of the fund, and the
Commission (including its examiners and other representatives); and
(iii) to reasonably ensure that any reproduction of a nonelectronic
original record on electronic storage media is complete, true, and legible when retrieved.
The Commission periodically inspects the operations of all funds to ensure their compliance with the provisions of the Act and the rules under the Act. The Commission staff spends a significant portion of their time in these inspections reviewing the information contained in the books and records required to be kept by rule 31a1 and to be preserved by rule 31a2.
There are approximately 4,522 registered investment companies
(``funds'') as of September 30, 2009, all of which are required to
comply with rule 31a2. Based on conversations with representatives of
the fund industry and past estimates, our staff estimates that each
fund currently spends 220 hours per year complying with rule 31a2.
Based on these estimates, our staff estimates that the total annual
burden for a fund to comply with rule 31a2, is 220 hours, with a total annual burden for all funds of 994,840 hours.\9\
\9\ This estimate is based on the following calculation: 4,522
registered investment companies x 220 hours = 994,840 total hours.
The hour burden estimates for retaining records under rule 31a2
are based on our experience with registrants and our experience with
similar requirements under the Act and the rules under the Act. The
number of burden hours may vary depending on, among other things, the
complexity of the fund, the issues faced by the fund, and the number of
series and classes of the fund. The estimated average burden hours are
made solely for purposes of the Paperwork Reduction Act and are not
derived from quantitative, comprehensive, or even representative [[Page 54864]]
survey or study of the burdens associated with our rules and forms.
The Commission staff estimates the average cost of preserving books
and records required by rule 31a2, to be approximately $70,000
annually per fund. As discussed previously, there are approximately
4,522 funds currently operating, for a total cost of preserving records
as required by rule 31a2 of $316,540,000 per year.\10\ Our staff
understands, however, based on conversations with representatives of
the fund industry, that funds would already spend approximately half of
this amount ($158,270,000) to preserve these same books and records, as
they are also necessary to prepare financial statements, meet various
state reporting requirements, and prepare their annual federal and
state income tax returns. Therefore, we estimate that the total annual
cost burden for funds as a result of compliance with rule 31a2 is $158,270,000 per year.
\10\ This estimate is based on the following calculation: 4,522 funds x $70,000 = $316,540,000.
These estimates of average costs are 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. 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 OMB control number.
Written comments are invited on: (a) Whether the collections of information are 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 collections of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burdens of the collections 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 Charles Boucher, Director/
CIO, Securities and Exchange Commission, c/o Shirley Martinson, 6432
General Green Way, Alexandria, VA 22312; or send an email to: PRA Mailbox@sec.gov.
Dated: October 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E925487 Filed 102209; 8:45 am]
BILLING CODE 801101P
SUMMARY:
Agency Information Collection Activities; Proposals, Submissions, and Approvals
DOCUMENT BODY 2:
Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 205490213.
Extension:
Rule 31a2; SEC File No. 270174; OMB Control No. 32350179. [[Page 54863]]
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'') is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval.
Section 31(a)(1) of the Investment Company Act of 1940 (the
``Act'') \1\ requires registered investment companies (``funds'') and
certain principal underwriters, brokerdealers, investment advisers and
depositors of funds to maintain and preserve records as prescribed by
Commission rules. Rule 31a1 \2\ specifies the books and records that
each of these entities must maintain. Rule 31a2,\3\ which was adopted
on April 17, 1944, specifies the time periods that entities must retain
books and records required to be maintained under rule 31a1. \1\ 15 U.S.C. 80a30(a)(1).
\2\ 17 CFR 270.31a1.
\3\ 17 CFR 270.31a2.
Rule 31a2 requires the following:
1. Every fund must preserve permanently, and in an easily
accessible place for the first two years, all books and records required under rule 31a1(b)(1)(4).\4\
\4\ 17 CFR 270.31a1(b)(1)(4). These include, among other
records, journals detailing daily purchases and sales of securities
or contracts to purchase and sell securities, general and auxiliary
ledgers reflecting all asset, liability, reserve, capital, income
and expense accounts, separate ledgers reflecting, separately for
each portfolio security as of the trade date all ``long'' and
``short'' positions carried by the fund for its own account, and
corporate charters, certificates of incorporation and bylaws.
2. Every fund must preserve for at least six years, and in an easily accessible place for the first two years:
a. All books and records required under rule 31a1(b)(5)(12); \5\ \5\ 17 CFR 270.31a1(b)(5)(12). These include, among other records, records of each brokerage order given in connection with purchases and sales of securities by the fund, all other portfolio purchases, records of all puts, calls, spreads, straddles or other options in which the fund has an interest, has granted, or has guaranteed, records of proof of money balances in all ledger accounts, files of all advisory material received from the investment adviser, and memoranda identifying persons, committees or groups authorizing the purchase or sale of securities for the fund.
b. All vouchers, memoranda, correspondence, checkbooks, bank statements, canceled checks, cash reconciliations, canceled stock certificates and all schedules that support each computation of net asset value of fund shares;
c. Any advertisement, pamphlet, circular, form letter or other sales literature addressed or intended for distribution to prospective investors;
d. Any record of the initial determination that a director is not an interested person of the fund, and each subsequent determination that the director is not an interested person of the fund, including any questionnaire and any other document used to determine that a director is not an interested person of the company;
e. Any materials used by the disinterested directors of a fund to determine that a person who is acting as legal counsel to those directors is an independent legal counsel; and
f. Any documents or other written information considered by the directors of the fund pursuant to section 15(c) of the Act in approving the terms or renewal of a contract or agreement between the company and an investment advisor.
3. Every underwriter, broker or dealer that is a majorityowned subsidiary of a fund must preserve records required to be preserved by brokers and dealers under rules adopted under section 17 of the Securities Exchange Act of 1934 \6\ (``section 17'') for the periods established in those rules.
\6\ 15 U.S.C. 78q.
4. Every depositor of any fund, and every principal underwriter of any fund other than a closedend fund, must preserve for at least six years records required to be preserved by brokers and dealers under rules adopted under section 17 to the extent the records are necessary or appropriate to record the entity's transactions with the fund.
5. Every investment adviser that is a majorityowned subsidiary of a fund must preserve the records required to be maintained by investment advisers under rules adopted under section 204 of the Investment Advisers Act of 1940 \7\ (``section 204'') for the periods specified in those rules.
\7\ 15 U.S.C. 80b4.
6. Every investment adviser that is not a majorityowned subsidiary of a fund must preserve for at least six years records required to be maintained by registered investment advisers under rules adopted under section 204 to the extent the records are necessary or appropriate to reflect the adviser's transactions with the fund.
The records required to be maintained and preserved under this part
may be maintained and preserved for the required time by, or on behalf
of, a fund on (i) micrographic media, including microfilm, microfiche,
or any similar medium, or (ii) electronic storage media, including any
digital storage medium or system that meets the terms of this section.
The fund, or person that maintains and preserves records on its behalf,
must arrange and index the records in a way that permits easy location, access, and retrieval of any particular record.\8\
\8\ In addition, the fund, or whoever maintains the documents
for the fund must provide promptly any of the following that the
Commission (by its examiners or other representatives) or the
directors of the fund may request: (A) A legible, true, and complete
copy of the record in the medium and format in which it is stored;
(B) a legible, true, and complete printout of the record; and (C)
means to access, view, and print the records; and separately store,
for the time required for preservation of the original record, a
duplicate copy of the record on any medium allowed by this section.
In the case of records retained on electronic storage media, the
fund, or person that maintains and preserves records on its behalf,
must establish and maintain procedures: (i) To maintain and preserve
the records, so as to reasonably safeguard them from loss,
alteration, or destruction; (ii) to limit access to the records to
properly authorized personnel, the directors of the fund, and the
Commission (including its examiners and other representatives); and
(iii) to reasonably ensure that any reproduction of a nonelectronic
original record on electronic storage media is complete, true, and legible when retrieved.
The Commission periodically inspects the operations of all funds to ensure their compliance with the provisions of the Act and the rules under the Act. The Commission staff spends a significant portion of their time in these inspections reviewing the information contained in the books and records required to be kept by rule 31a1 and to be preserved by rule 31a2.
There are approximately 4,522 registered investment companies
(``funds'') as of September 30, 2009, all of which are required to
comply with rule 31a2. Based on conversations with representatives of
the fund industry and past estimates, our staff estimates that each
fund currently spends 220 hours per year complying with rule 31a2.
Based on these estimates, our staff estimates that the total annual
burden for a fund to comply with rule 31a2, is 220 hours, with a total annual burden for all funds of 994,840 hours.\9\
\9\ This estimate is based on the following calculation: 4,522
registered investment companies x 220 hours = 994,840 total hours.
The hour burden estimates for retaining records under rule 31a2
are based on our experience with registrants and our experience with
similar requirements under the Act and the rules under the Act. The
number of burden hours may vary depending on, among other things, the
complexity of the fund, the issues faced by the fund, and the number of
series and classes of the fund. The estimated average burden hours are
made solely for purposes of the Paperwork Reduction Act and are not
derived from quantitative, comprehensive, or even representative [[Page 54864]]
survey or study of the burdens associated with our rules and forms.
The Commission staff estimates the average cost of preserving books
and records required by rule 31a2, to be approximately $70,000
annually per fund. As discussed previously, there are approximately
4,522 funds currently operating, for a total cost of preserving records
as required by rule 31a2 of $316,540,000 per year.\10\ Our staff
understands, however, based on conversations with representatives of
the fund industry, that funds would already spend approximately half of
this amount ($158,270,000) to preserve these same books and records, as
they are also necessary to prepare financial statements, meet various
state reporting requirements, and prepare their annual federal and
state income tax returns. Therefore, we estimate that the total annual
cost burden for funds as a result of compliance with rule 31a2 is $158,270,000 per year.
\10\ This estimate is based on the following calculation: 4,522 funds x $70,000 = $316,540,000.
These estimates of average costs are 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. 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 OMB control number.
Written comments are invited on: (a) Whether the collections of information are 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 collections of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burdens of the collections 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 Charles Boucher, Director/
CIO, Securities and Exchange Commission, c/o Shirley Martinson, 6432
General Green Way, Alexandria, VA 22312; or send an email to: PRA Mailbox@sec.gov.
Dated: October 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E925487 Filed 102209; 8:45 am]
BILLING CODE 801101P