
[Federal Register: February 17, 2009 (Volume 74, Number 30)]
[Notices]
[Page 7499-7500]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17fe09-161]

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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 Investor Education Advocacy, Washington, DC
20549-0213.

Extension:
    Rule 17f-2; SEC File No. 270-233; OMB Control No. 3235-0223.

    Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995(44 U.S.C. 350l 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 17f-2 (17 CFR 270.17f-2) under the Investment Company Act of
1940 (the ``Act'') (15 U.S.C. 80a-1) is entitled: ``Custody of
Investments by Registered Management Investment Company.'' Rule 17f-2
establishes safeguards for arrangements in which a registered
management investment company (``fund'') is deemed to maintain custody
of its own assets, such as when the fund maintains its assets in a
facility that provides safekeeping but not custodial services. The rule
includes several recordkeeping or reporting requirements. The fund's
directors must prepare a resolution designating not more than five fund
officers or responsible employees who may have access to the fund's
assets. The designated access persons (two or more of whom must act
jointly when handling fund assets) must prepare a written notation
providing certain information about each deposit or withdrawal of fund
assets, and must transmit the notation to another officer or director
designated by the directors. Independent public accountants must verify
the fund's assets at least three times a year and two of the
examinations must be unscheduled.
    The requirement that directors designate access persons is intended
to ensure that directors evaluate the trustworthiness of insiders who
handle fund assets. The requirements that access persons act jointly in
handling fund assets, prepare a written notation of each transaction,
and transmit the notation to another designated person are intended to
reduce the risk of misappropriation of fund assets by access persons,
and to ensure that adequate records are prepared, reviewed by a
responsible third person, and available for examination by the
Commission's examination staff. The requirement that auditors verify
fund assets without notice twice each year is intended to provide an
additional deterrent to the misappropriation of fund assets and to
detect any irregularities.
    The Commission staff estimates that each fund makes 941 responses
and spends an average of 271 hours annually in complying with the
rule's requirements.\1\ Commission staff estimates that on an annual
basis it takes: (i) 0.5 hours of fund accounting personnel at a total
cost of $75.50 to draft director resolutions; \2\ (ii) 0.5 hours of the
fund's board of directors at a total cost of $1000 to adopt the
resolution; (iii) 263 hours for the fund's accounting personnel at a
total cost of $60,864 to prepare written notations of transactions; \3\
and (iv) 7 hours for the fund's accounting personnel at a total cost of
$1057 to assist the independent public accountants when they perform
verifications of fund assets.\4\ Approximately 300 funds rely upon rule
17f-2 annually.\5\ Thus, the total annual hour burden for rule 17f-2 is
estimated to be 81,300 hours.\6\ Based on the total costs per fund
listed above, the total cost of the Rule 17f-2's collection of
information requirements is estimated to be $18.9 million.\7\
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    \1\ The 941 responses are: 1 (one) response to draft and adopt
the resolution and 940 notations. Estimates of the number of hours
are based on conversations with individuals in the mutual fund
industry. The actual number of hours may vary significantly
depending on individual fund assets.
    \2\ This estimate is based on the following calculation: 0.5
(burden hours per fund) x $151 (fund senior accountant's hourly
rate) = $75.50.
    \3\ Respondents estimated that each fund makes 941 responses on
an annual basis and spent a total of 0.28 hours per response. The
fund personnel involved are Fund Payable Manager ($156 hourly rate),
Fund Operations Manager ($252 hourly rate) and Fund Accounting
Manager ($285 hourly rate). The weighted hourly rate of these
personnel is $231. The estimated cost of preparing notations is
based on the following calculation: 941 x 0.28 x $231 = $60,863.88.
    \4\ This estimate is based on the following calculation: 7 x
$151 (fund senior accountant hourly rate) = $1057.
    \5\ Based on a review of Form N-17f-2 filings in 2007, the
Commission staff estimates that 300 funds relied on rule 17f-2 in
2007.
    \6\ This estimate is based on the following calculation: 300
(funds) x 271 (total annual hourly burden per fund) = 81,300 hours
for rule. The annual burden for rule 17f-2 does not include time
spent preparing Form N-17f-2. The burden for Form N-17f-2 is
included in a separate collection of information.
    \7\ This estimate is based on the following calculation:
$62,996.50 (total annual cost per fund) x 300 funds = $18,898,950.
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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 and forms. Complying with the collections of
information required by rule 17f-2 is mandatory for those funds that
maintain custody of their own assets. 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.
    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

[[Page 7500]]

or send an email to: 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
email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB
within 30 days of this notice.

    Dated: February 4, 2009.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-3345 Filed 2-13-09; 8:45 am]

BILLING CODE 8011-01-P
