Federal Register: October 30, 2009 (Volume 74, Number 209)
DOCID: fr30oc09-99 FR Doc E9-26175
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
NOTICE: NOTICES
DOCID: fr30oc09-99
SUBJECT CATEGORY:
Submission for OMB Review; 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 12b1; SEC File No. 270188; OMB Control No. 32350212. [[Page 56247]]
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 (the ``Commission'') has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below.
Rule 12b1 (17 CFR 270.12b1) permits a registered openend investment company (``mutual fund'') to distribute its own shares and pay the expenses of distribution out of the mutual fund's assets provided, among other things, that the mutual fund adopts a written plan (``Rule 12b1 plan'') and has in writing any agreements relating to the implementation of the Rule 12b1 plan. The rule in part requires that (i) the adoption or material amendment of a Rule 12b1 plan be approved by the mutual fund's directors and shareholders; (ii) the board review quarterly reports of amounts spent under the Rule 12b1 plan; and (iii) the board consider continuation of the Rule 12b1 plan at least annually. Rule 12b1 also requires funds relying on the rule to preserve for six years, the first two years in an easily accessible place, copies of the Rule 12b1 plan, related agreements and reports, as well as minutes of board meetings that describe the factors considered and the basis for adopting or continuing a Rule 12b1 plan.
The board and shareholder approval requirements of Rule 12b1 are designed to ensure that fund shareholders and directors receive adequate information to evaluate and approve a Rule 12b1 plan. The requirement of quarterly reporting to the board is designed to ensure that the Rule 12b1 plan continues to benefit the fund and its shareholders. The recordkeeping requirements of the rule are necessary to enable Commission staff to oversee compliance with the rule.
Based on information filed with the Commission by funds, Commission
staff estimates that there are approximately 6,871 mutual fund
portfolios have at least one share class subject to a Rule 12b1
plan.\1\ However, many of these portfolios are part of an affiliated
group of funds known as a ``mutual fund family'' that is overseen by a
common board of directors. Although the board must review and approve
the Rule 12b1 plan for each fund separately, we have allocated the
costs and hourly burden related to Rule 12b1 based on the number of
fund families that have at least one fund that charges 12b1 fees,
rather than on the total number of mutual fund portfolios that
individually have a 12b1 plan.\2\ Based on information filed with the
Commission, the staff estimates that there are approximately 371 fund
families with common boards of directors that have at least one fund with a 12b1 plan.
\1\ This estimate is based on information from the Commission's NSAR database.
\2\ This allocation is based on conversations with fund
representatives on how fund boards comply with the requirements of
Rule 12b1. Despite this allocation of hourly burdens and costs, the
number of annual responses each year will continue to depend on the
number of fund portfolios with 12b1 plans rather than the number of
fund families with 12b1 plans. The staff estimates that the number
of annual responses per fund portfolio will be four per year
(quarterly, with the annual reviews taking place at one of the
quarterly intervals). Thus, we estimate that funds will make 27,484
responses (6871 fund portfolios x 4 responses per fund portfolio= 27,484 responses) each year.
Based on conversations with fund representatives, Commission staff
estimates that for each of the 371 mutual fund families with a
portfolio that has a Rule 12b1 plan, the average annual burden of
complying with the rule is 425 hours. This estimate takes into account
the time needed to prepare quarterly reports to the board of directors,
the board's consideration of those reports, and the board's annual
consideration of whether to continue the plan.\3\ We therefore estimate
that the total hourly burden per year for all funds to comply with
current information collection requirements under Rule 12b1, is
157,675 hours (371 fund families x 425 hours per fund family = 157,675
hours) over the three year period for which we are requesting approval of the information collection burden).
\3\ We do not estimate any costs or time burden related to the
recordkeeping requirement, as funds are already required to maintain
these records pursuant to other rules, and would keep these records in any case as a matter of business practice.
If a currently operating fund seeks to (i) adopt a new Rule 12b1 plan or (ii) materially increase the amount it spends for distribution under its Rule 12b1 plan, Rule 12b1 requires that the fund obtain shareholder approval. As a consequence, the fund will incur the cost of a proxy. Based on conversations with fund industry representatives, Commission staff estimates that approximately three funds per year prepare a proxy in connection with the adoption or material amendment of a Rule 12b1 plan. The staff further estimates that the cost of each fund's proxy is $30,000. Thus the total annual cost burden of Rule 12b 1 to the fund industry is $90,000 (3 funds requiring a proxy x $30,000 per proxy).
The collections of information required by Rule 12b1 are necessary to obtain the benefits of the rule. Notices to the Commission 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.
Please direct general comments regarding the above information to
the following persons: (i) Desk Officer for the Securities and Exchange
Commission, Office of Management and Budget, Room 10102, New Executive
Office Building, Washington, DC 20503 or send an email to Shagufta
Ahmed at Shagufta_Ahmed@omb.eop.gov; and (ii) Charles Boucher,
Director/CIO, Securities and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e
mail to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice.
Dated: October 26, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E926175 Filed 102909; 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 12b1; SEC File No. 270188; OMB Control No. 32350212. [[Page 56247]]
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 (the ``Commission'') has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below.
Rule 12b1 (17 CFR 270.12b1) permits a registered openend investment company (``mutual fund'') to distribute its own shares and pay the expenses of distribution out of the mutual fund's assets provided, among other things, that the mutual fund adopts a written plan (``Rule 12b1 plan'') and has in writing any agreements relating to the implementation of the Rule 12b1 plan. The rule in part requires that (i) the adoption or material amendment of a Rule 12b1 plan be approved by the mutual fund's directors and shareholders; (ii) the board review quarterly reports of amounts spent under the Rule 12b1 plan; and (iii) the board consider continuation of the Rule 12b1 plan at least annually. Rule 12b1 also requires funds relying on the rule to preserve for six years, the first two years in an easily accessible place, copies of the Rule 12b1 plan, related agreements and reports, as well as minutes of board meetings that describe the factors considered and the basis for adopting or continuing a Rule 12b1 plan.
The board and shareholder approval requirements of Rule 12b1 are designed to ensure that fund shareholders and directors receive adequate information to evaluate and approve a Rule 12b1 plan. The requirement of quarterly reporting to the board is designed to ensure that the Rule 12b1 plan continues to benefit the fund and its shareholders. The recordkeeping requirements of the rule are necessary to enable Commission staff to oversee compliance with the rule.
Based on information filed with the Commission by funds, Commission
staff estimates that there are approximately 6,871 mutual fund
portfolios have at least one share class subject to a Rule 12b1
plan.\1\ However, many of these portfolios are part of an affiliated
group of funds known as a ``mutual fund family'' that is overseen by a
common board of directors. Although the board must review and approve
the Rule 12b1 plan for each fund separately, we have allocated the
costs and hourly burden related to Rule 12b1 based on the number of
fund families that have at least one fund that charges 12b1 fees,
rather than on the total number of mutual fund portfolios that
individually have a 12b1 plan.\2\ Based on information filed with the
Commission, the staff estimates that there are approximately 371 fund
families with common boards of directors that have at least one fund with a 12b1 plan.
\1\ This estimate is based on information from the Commission's NSAR database.
\2\ This allocation is based on conversations with fund
representatives on how fund boards comply with the requirements of
Rule 12b1. Despite this allocation of hourly burdens and costs, the
number of annual responses each year will continue to depend on the
number of fund portfolios with 12b1 plans rather than the number of
fund families with 12b1 plans. The staff estimates that the number
of annual responses per fund portfolio will be four per year
(quarterly, with the annual reviews taking place at one of the
quarterly intervals). Thus, we estimate that funds will make 27,484
responses (6871 fund portfolios x 4 responses per fund portfolio= 27,484 responses) each year.
Based on conversations with fund representatives, Commission staff
estimates that for each of the 371 mutual fund families with a
portfolio that has a Rule 12b1 plan, the average annual burden of
complying with the rule is 425 hours. This estimate takes into account
the time needed to prepare quarterly reports to the board of directors,
the board's consideration of those reports, and the board's annual
consideration of whether to continue the plan.\3\ We therefore estimate
that the total hourly burden per year for all funds to comply with
current information collection requirements under Rule 12b1, is
157,675 hours (371 fund families x 425 hours per fund family = 157,675
hours) over the three year period for which we are requesting approval of the information collection burden).
\3\ We do not estimate any costs or time burden related to the
recordkeeping requirement, as funds are already required to maintain
these records pursuant to other rules, and would keep these records in any case as a matter of business practice.
If a currently operating fund seeks to (i) adopt a new Rule 12b1 plan or (ii) materially increase the amount it spends for distribution under its Rule 12b1 plan, Rule 12b1 requires that the fund obtain shareholder approval. As a consequence, the fund will incur the cost of a proxy. Based on conversations with fund industry representatives, Commission staff estimates that approximately three funds per year prepare a proxy in connection with the adoption or material amendment of a Rule 12b1 plan. The staff further estimates that the cost of each fund's proxy is $30,000. Thus the total annual cost burden of Rule 12b 1 to the fund industry is $90,000 (3 funds requiring a proxy x $30,000 per proxy).
The collections of information required by Rule 12b1 are necessary to obtain the benefits of the rule. Notices to the Commission 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.
Please direct general comments regarding the above information to
the following persons: (i) Desk Officer for the Securities and Exchange
Commission, Office of Management and Budget, Room 10102, New Executive
Office Building, Washington, DC 20503 or send an email to Shagufta
Ahmed at Shagufta_Ahmed@omb.eop.gov; and (ii) Charles Boucher,
Director/CIO, Securities and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e
mail to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice.
Dated: October 26, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E926175 Filed 102909; 8:45 am]
BILLING CODE 801101P