

[Federal Register: May 23, 2006 (Volume 71, Number 99)]
[Notices]               
[Page 29688-29689]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23my06-87]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Submission for OMB Review; Comment Request

Upon written request, copies available from: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, DC 
20549.

Extension:
    Rule 17f-1, SEC File No. 270-236, OMB Control No. 3235-0222; 
Form N-17f-1, SEC File No. 270-316, OMB Control No. 3235-0359

    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 (``Commission'') has submitted to the Office of Management 
and Budget requests for extension of the previously approved 
collections of information discussed below.
    Rule 17f-1 under the Investment Company Act of 1940 (17 CFR 
270.17f-1) is entitled: ``Custody of Securities with Members of 
National Securities Exchanges.'' Rule 17f-1 provides that any 
registered management investment company (``fund'') that wishes to 
place its assets in the custody of a national securities exchange 
member may do so only under a written contract that must be ratified 
initially and approved annually by a majority of the fund's board of 
directors. The written contract also must contain certain specified 
provisions. In addition, the rule requires an independent public 
accountant to examine the fund's assets in custody with the exchange 
member at least three times during the fund's fiscal year. The rule 
requires the written contract and the certificate of each examination 
to be transmitted to the Commission. The purpose of the rule is to 
ensure the safekeeping of fund assets.
    Commission staff estimates that each fund makes 1 response and 
spends an average of 3.5 hours annually in complying with the rule's 
requirements.\1\ Commission staff estimates that on an annual basis it 
takes: (i) 0.5 hours for the board of directors at a total cost of 
approximately $1000 to review and ratify the custodial contracts;\2\ 
and (ii) 3 hours for the fund's controller at a total cost of 
approximately $445 to assist the fund's independent public auditors in 
verifying the fund's assets.\3\ Approximately 60 funds rely on the rule 
annually.\4\ Thus, the total annual burden for rule 17f-1 is estimated 
to be approximately 210 hours.\5\ Based on the total costs per fund 
listed above, the total cost of the rule 17f-1's collection of 
information requirements is estimated to be $86,700.\6\
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    \1\ The 1 response is the board's approval of the contract.
    \2\ Estimates of the number of hours are based on conversations 
with individuals in the mutual fund industry. In preparing this 
submission, Commission staff randomly selected nine funds from the 
pool of Form N-17f-1 filers. The actual number of hours may vary 
significantly depending on individual fund assets. The hour burden 
for rule 17f-1 does not include preparing the custody contract 
because that would be part of customary and usual business practice.
    \3\ This estimate is based on the following calculation: 3 x 
$148.38 (fund controller hourly rate) = $445. The estimated costs 
for all fund professional and support staff time are based on the 
average annual salaries reported for employees in New York City in 
Securities Industry Association, Management and Professional 
Earnings in the Securities Industry (2003) and Securities Industry 
Association, Office Salaries in the Securities Industry (2003), 
which are adjusted to reflect additional overhead costs and employee 
benefits.
    \4\ Based on a review of Form N-17f-1 filings in 2004, the 
Commission staff estimates that 60 funds relied on rule 17f-1 in 
2005.
    \5\ This estimate is based on the following calculation: 60 
(respondents) x 3.5 (total annual hourly burden per respondent) = 
210 hours. The annual burden for rule 17f-1 does not include time 
spent preparing Form N-17f-1. The burden for Form N-17f-1 is 
included in a separate collection of information.
    \6\ This estimate is based on the following calculation: 60 
funds x $1445 (total annual cost per fund) = $86,700.
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    Form N-17f-1 is entitled: ``Certificate of Accounting of Securities 
and Similar Investments of a Management Investment Company in the 
Custody of Members of National Securities Exchanges.'' Form N-17f-1 (17 
CFR 274.219) is the cover sheet for accountant examination certificates 
filed under rule 17f-1 of the Act. Rule 17f-1 requires the accountant's 
certificate of each examination be attached to Form N-17f-1 and 
transmitted to the Commission promptly after each examination. The form 
facilitates the filing of the accountant's certificate, and increases 
the accessibility of the certificate to both Commission's staff and 
interested investors.
    Commission staff estimates that on an annual basis it takes: (i) On 
average 1 hour of clerical time at a total cost of $28 to prepare and 
file the Form N-17f-1; and (ii) 1 hour for the fund's chief compliance 
officer at a total cost of $137 to review the Form N-17f-1 prior to 
filing with the Commission. As noted above, approximately 60 funds 
currently file Form N-17f-1 with the Commission, and each fund is 
required to make three filings annually for a total annual burden per 
fund of approximately 6 hours. The total annual hour burden for Form N-
17f-1 is

[[Page 29689]]

therefore estimated to be approximately 360 hours. Based on the total 
costs per fund listed above, the total cost of Form N-17f-1's 
collection of information requirements is estimated to be approximately 
$59,400.\7\
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    \7\ This estimate is based on the following calculation: 360 
hours x $165 (total annual cost per fund) = $59,400.
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules. Compliance with the collections of information 
required by rule 17f-1 and Form N-17f-1 is mandatory for funds that 
place their assets in the custody of a national securities exchange 
member. Responses 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.
    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 20504, or e-mail to: 
David_Rostker@omb.eop.gov; and R. Corey Booth, Director/Chief Information 

Officer, Office of Information Technology, Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549. Comments must be 
submitted to OMB within 30 days of this notice.

    Dated: May 15, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. E6-7803 Filed 5-22-06; 8:45 am]

BILLING CODE 8010-01-P
