
[Federal Register: October 30, 2009 (Volume 74, Number 209)]
[Notices]               
[Page 56246-56247]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30oc09-99]                         

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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 and Advocacy, Washington, DC 
20549-0213.

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


[[Page 56247]]


    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 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 Rule 12b-1 plan. The 
requirement of quarterly reporting to the board is designed to ensure 
that the Rule 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 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 Rule 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 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.
    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 26, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-26175 Filed 10-29-09; 8:45 am]

BILLING CODE 8011-01-P
