

[Federal Register: August 16, 2006 (Volume 71, Number 158)]
[Notices]               
[Page 47261]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16au06-138]                         


[[Page 47261]]

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SECURITIES AND EXCHANGE COMMISSION

 
Proposed Collection; Comment Request

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

Extension:
    Rule 38a-1, SEC File No. 270-522, OMB Control No. 3235-0586.

    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'') is soliciting comments on the 
collections of information summarized below. The Commission plans to 
submit these existing collections of information to the Office of 
Management and Budget (``OMB'') for extension and approval.
    Rule 38a-1 (17 CFR 270.38a-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (``Investment Company Act'') is intended to 
protect investors by fostering better fund compliance with securities 
laws. The rule requires every registered investment company and 
business development company (``fund'') to: (i) Adopt and implement 
written policies and procedures reasonably designed to prevent 
violations of the federal securities laws, (ii) obtain the fund board 
of director's approval of those policies and procedures, (iii) annually 
review the adequacy of those policies and procedures and the policies 
and procedures of each investment adviser, principal underwriter, 
administrator, and transfer agent of the fund and the effectiveness of 
their implementation, (iv) designate a chief compliance officer to 
administer the fund's policies and procedures and prepare an annual 
report to the board that addresses certain specified items relating to 
the policies and procedures, and (v) maintain for five years the 
compliance policies and procedures and the chief compliance officer's 
annual report to the board.
    The rule contains certain information collection requirements that 
are designed to ensure that funds establish and maintain comprehensive, 
written internal compliance programs. The information collections also 
assist the Commission's examination staff in assessing the adequacy of 
funds' compliance programs.
    While Rule 38a-1 requires each fund to maintain written policies 
and procedures, most funds are located within a fund complex. The 
experience of the Commission's examination and oversight staff suggests 
that each fund in a complex is able to draw extensively from the fund 
complex's ``master'' compliance program to assemble appropriate 
compliance policies and procedures. Many fund complexes already have 
written policies and procedures documenting their compliance programs. 
Further, a fund needing to develop or revise policies and procedures on 
one or more topics in order to achieve a comprehensive compliance 
program can draw on a number or outlines and model programs available 
from a variety of industry representatives, commentators, and 
organizations.
    There are approximately 4966 funds subject to Rule 38a-1. Among 
these funds, 149 were newly registered in the past year. These 149 
funds, therefore, were required to adopt and document the policies and 
procedures that make up their compliance program. Commission staff 
estimates that the average annual hour burden for a fund to adopt and 
document these policies and procedures is 69 hours. Thus, we estimate 
that the aggregate annual burden hours associated with the adoption and 
documentation requirement is 10,281 hours.
    The remaining 4817 funds would have adopted Rule 38a-1 compliance 
policies and procedures in previous years, and are required to conduct 
an annual review of the adequacy of their existing policies and 
procedures and the policies and procedures of each investment adviser, 
principal underwriter, administrator, and transfer agent of the fund, 
and the effectiveness of their implementation. In addition, each fund 
chief compliance officer is required to prepare an annual report that 
addresses the operation of the policies and procedures of the fund and 
the policies and procedures of each investment adviser, principal 
underwriter, administrator, and transfer agent of the fund, any 
material changes made to those policies and procedures since the date 
of the last report, any material changes to the policies and procedures 
recommended as a result of the annual review, and certain compliance 
matters that occurred since the date of the last report. The staff 
estimates that each fund spends 60 hours per year, on average, 
conducting the annual review and preparing the annual report to the 
board of directors. Thus, we estimate that the aggregate annual burden 
hours associated with the annual review and annual report requirement 
is 289,020 hours.
    Finally, the staff estimates that each fund spends 8 hours 
annually, on average, maintaining the records required by proposed Rule 
38a-1. Thus, the aggregate annual burden hours associated with the 
recordkeeping requirement is 39,728 hours.
    In total, the staff estimates that the aggregate annual information 
collection burden of Rule 38a-1 is 339,029 hours. The estimate of 
burden hours is 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. 
Complying with this collection of information requirement is mandatory. 
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.
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the collection of information; (c) ways to enhance the 
quality, utility, and clarity of the information collected; and (d) 
ways to minimize the burden 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 R. Corey Booth, Director/
Chief Information Officer, Securities and Exchange Commission, C/O 
Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 22312, 
or send an e-mail to: PRA_Mailbox@sec.gov.

    Dated: August 1, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. E6-13418 Filed 8-15-06; 8:45 am]

BILLING CODE 8010-01-P
