
[Federal Register: August 26, 2009 (Volume 74, Number 164)]
[Notices]               
[Page 43172-43173]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26au09-119]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Proposed Collection; Comment Request

Upon written request, copies available from: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension: Rule 12b-1, SEC File No. 270-188, OMB Control No. 3235-
0212.

    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 
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.
    Rule 12b-1 (17 CFR 270.12b-1) permits a registered open-end 
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 12b-1 plan'') and has in writing any agreements relating 
to the implementation of the Rule 12b-1 plan. The rule in part requires 
that (i) the adoption or material amendment of a Rule 12b-1 plan be 
approved by the mutual fund's directors and shareholders; (ii) the 
board review quarterly reports of amounts spent under the Rule 12b-1 
plan; and (iii) the board consider continuation of the Rule 12b-1 plan 
at least annually. Rule 12b-1 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 12b-1 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 12b-1 plan.
    The board and shareholder approval requirements of Rule 12b-1 are 
designed to ensure that fund shareholders and directors receive 
adequate information to evaluate and approve a 12b-1 plan. The 
requirement of quarterly reporting to the board is designed to ensure 
that the 12b-1 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 that have at least one share class subject to a rule 12b-1 
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 12b-1 plan for each fund separately, we have allocated the costs 
and hourly burden related to rule 12b-1 based on the number of fund 
families that have at least one fund that charges 12b-1 fees, rather 
than on the total number of mutual fund portfolios that individually 
have a 12b-1 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 12b-1 
plan.
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    \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 12b-1. 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 12b-1 plans rather than the number of 
fund families with 12b-1 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.
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    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 12b-1 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

[[Page 43173]]

total hourly burden per year for all funds to comply with current 
information collection requirements under rule 12b-1, 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).
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    \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.
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    If a currently operating fund seeks to (i) adopt a new Rule 12b-1 
plan or (ii) materially increase the amount it spends for distribution 
under its Rule 12b-1 plan, Rule 12b-1 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 12b-1 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 12b-1 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.
    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 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.

    Dated: August 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20529 Filed 8-25-09; 8:45 am]

BILLING CODE 8010-01-P
