
[Federal Register: October 21, 2009 (Volume 74, Number 202)]
[Notices]               
[Page 54110-54111]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21oc09-108]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Rule 38a-1; SEC File No. 270-522; OMB Control No. 3235-0586]

 
Submission for OMB Review; Comment Request

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

    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 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 by the fund, including 
procedures for oversight of compliance by each investment adviser, 
principal underwriter, administrator, and transfer agent of the fund; 
(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 4638 funds subject to Rule 38a-1. Among 
these funds, 105 were newly registered in the past year. These 105 
funds, therefore, were required to adopt and document the policies and 
procedures that make up their compliance programs. Commission staff 
estimates that the average annual hour burden for a fund to adopt and 
document these policies and procedures is 80 hours. Thus, we estimate 
that the aggregate annual burden hours associated with the

[[Page 54111]]

adoption and documentation requirement is 8,400 hours.
    All funds 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 42 hours per 
year, on average, conducting the annual review and preparing the annual 
report to the board of directors. Thus, we estimate that the annual 
aggregate burden hours associated with the annual review and annual 
report requirement is 194,796 hours.
    Finally, the staff estimates that each fund spends 11 hours 
annually, on average, maintaining the records required by proposed Rule 
38a-1. Thus, the annual aggregate burden hours associated with the 
recordkeeping requirement is 51,018 hours.
    In total, the staff estimates that the aggregate annual information 
collection burden of Rule 38a-1 is 254,214 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.
    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 e-mail 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 14, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-25208 Filed 10-20-09; 8:45 am]

BILLING CODE 8011-01-P
