
[Federal Register: November 4, 2009 (Volume 74, Number 212)]
[Notices]               
[Page 57207-57208]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04no09-110]                         

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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 154, SEC File No. 270-438, OMB Control No. 3235-0495.

    Notice is hereby given that, under the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501-3520), 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.
    The federal securities laws generally prohibit an issuer, 
underwriter, or dealer from delivering a security for sale unless a 
prospectus meeting certain requirements accompanies or precedes the 
security. Rule 154 (17 CFR 230.154) under the Securities Act of 1933 
(15 U.S.C. 77a) (the ``Securities Act'') permits, under certain 
circumstances, delivery of a single prospectus to investors who 
purchase securities from the same issuer and share the same address 
(``householding'') to satisfy the applicable prospectus delivery 
requirements.\1\ The purpose of rule 154 is to reduce the amount of 
duplicative prospectuses delivered to investors sharing the same 
address.
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    \1\ The Securities Act requires the delivery of prospectuses to 
investors who buy securities from an issuer or from underwriters or 
dealers who participate in a registered distribution of securities. 
See Securities Act sections 2(a)(10), 4(1), 4(3), 5(b) (15 U.S.C. 
77b(a)(10), 77d(1), 77d(3), 77e(b)); see also rule 174 under the 
Securities Act (17 CFR 230.174) (regarding the prospectus delivery 
obligation of dealers); rule 15c2-8 under the Securities Exchange 
Act of 1934 (17 CFR 240.15c2-8) (prospectus delivery obligations of 
brokers and dealers).
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    Under rule 154, a prospectus is considered delivered to all 
investors at a shared address, for purposes of the Federal securities 
laws, if the person relying on the rule delivers the prospectus to the 
shared address and the investors consent to the delivery of a single 
prospectus. The rule applies to prospectuses and prospectus 
supplements. Currently, the rule permits householding of all 
prospectuses by an issuer, underwriter, or dealer relying on the rule 
if, in addition to the other conditions set forth in the rule, the 
issuer, underwriter, or dealer has obtained from each investor written 
or implied consent to householding.\2\ The rule requires issuers, 
underwriters, or dealers that wish to household prospectuses with 
implied consent to send a notice to each investor stating that the 
investors in the household will receive one prospectus in the future 
unless the investors provide contrary instructions. In addition, at 
least once a year, issuers, underwriters, or dealers, relying on rule 
154 for the householding of prospectuses relating to open-end 
management investment companies that are registered under the 
Investment Company Act of 1940 (``mutual funds'') must explain to 
investors who have provided written or implied consent how they can 
revoke their consent. Preparing and sending the notice and the annual 
explanation of the right to revoke are collections of information.
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    \2\ Rule 154 permits the householding of prospectuses that are 
delivered electronically to investors only if delivery is made to a 
shared electronic address and the investors give written consent to 
householding. Implied consent is not permitted in such a situation. 
See rule 154(b)(4).
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    The rule allows issuers, underwriters, or dealers to household 
prospectuses if certain conditions are met. Among the conditions with 
which a person relying on the rule must comply are providing notice to 
each investor that only one prospectus will be sent to the household 
and, in the case of issuers that are mutual funds, providing to each 
investor who consents to householding an annual explanation of the 
right to revoke consent to the delivery of a single prospectus to 
multiple investors sharing an address. The purpose of the notice and 
annual explanation requirements of the rule is to ensure that investors 
who wish to receive individual copies of prospectuses are able to do 
so.
    Although rule 154 is not limited to mutual funds, the Commission 
believes that it is used mainly by mutual funds and by broker-dealers 
that deliver mutual fund prospectuses. The Commission is unable to 
estimate the number of issuers other than mutual funds that rely on the 
rule.
    The Commission estimates that, as of December 2008, there are 
approximately 1,960 mutual funds, approximately 150 of which engage in 
direct marketing and therefore deliver their own prospectuses. The 
Commission estimates that each direct-marketed mutual fund will spend 
an average of 20 hours per year complying with the notice requirement 
of the rule, for a total of 3,000 hours. The Commission estimates that 
each direct-marketed fund will also spend 1 hour complying with the 
explanation of the right to revoke requirement of the rule, for a total 
of 150 hours. The Commission estimates that there are approximately 320 
broker-dealers that carry customer accounts and, therefore, may be 
required to deliver mutual fund prospectuses. The Commission estimates 
that each affected broker-dealer will spend, on average, approximately 
20 hours complying with the notice requirement of the rule, for a total 
of 6,400 hours. Each broker-dealer will also spend 1 hour complying 
with the annual explanation of the right to revoke requirement, for a 
total of 320 hours. Therefore, the total number of respondents for rule 
154 is 470 (150 mutual funds plus 320 broker-dealers), and the 
estimated total hour burden is 9,870 hours (3,150 hours for mutual 
funds plus 6,720 hours for broker-dealers).
    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.
    Compliance with the collection of information requirements of the 
rule is

[[Page 57208]]

necessary to obtain the benefit of relying on the rule. Responses to 
the collections of information will not be kept confidential. The rule 
does not require these records be retained for any specific period of 
time. 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/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. Comments must be 
submitted to OMB within 30 days of this notice.

    Dated: October 28, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-26514 Filed 11-3-09; 8:45 am]

BILLING CODE 8011-01-P
