
[Federal Register: October 13, 2010 (Volume 75, Number 197)]
[Notices]               
[Page 62897-62898]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13oc10-109]                         

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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 7d-2; SEC File No. 270-464; OMB Control No. 3235-0527.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 350-3520), the Securities and Exchange 
Commission (the ``Commission'') has submitted to the Office of 
Management and Budget a request for extension and approval of the 
collection of information discussed below.
    In Canada, as in the United States, individuals can invest a 
portion of their earnings in tax-deferred retirement savings accounts 
(``Canadian retirement accounts''). These accounts, which operate in a 
manner similar to individual retirement accounts in the United States, 
encourage retirement savings by permitting savings on a tax-deferred 
basis. Individuals who

[[Page 62898]]

establish Canadian retirement accounts while living and working in 
Canada and who later move to the United States (``Canadian-U.S. 
Participants'' or ``participants'') often continue to hold their 
retirement assets in their Canadian retirement accounts rather than 
prematurely withdrawing (or ``cashing out'') those assets, which would 
result in immediate taxation in Canada.
    Once in the United States, however, these participants historically 
have been unable to manage their Canadian retirement account 
investments. Most investment companies (``funds'') that are ``qualified 
companies'' for Canadian retirement accounts are not registered under 
the U.S. securities laws. Securities of those unregistered funds, 
therefore, generally cannot be publicly offered and sold in the United 
States without violating the registration requirement of the Investment 
Company Act of 1940 (``Investment Company Act'').\1\ As a result of 
this registration requirement, Canadian-U.S. Participants previously 
were not able to purchase or exchange securities for their Canadian 
retirement accounts as needed to meet their changing investment goals 
or income needs.
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    \1\ 15 U.S.C. 80a. In addition, the offering and selling of 
securities that are not registered pursuant to the Securities Act of 
1933 (``Securities Act'') is generally prohibited by U.S. securities 
laws. 15 U.S.C. 77.
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    The Commission issued a rulemaking in 2000 that enabled Canadian-
U.S. Participants to manage the assets in their Canadian retirement 
accounts by providing relief from the U.S. registration requirements 
for offers of securities of foreign issuers to Canadian-U.S. 
Participants and sales to Canadian retirement accounts.\2\ Rule 7d-2 
under the Investment Company Act \3\ permits foreign funds to offer 
securities to Canadian-U.S. Participants and sell securities to 
Canadian retirement accounts without registering as investment 
companies under the Investment Company Act.
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    \2\ See Offer and Sale of Securities to Canadian Tax-Deferred 
Retirement Savings Accounts, Release Nos. 33-7860, 34-42905, IC-
24491 (June 7, 2000) [65 FR 37672 (June 15, 2000)]. This rulemaking 
also included new rule 237 under the Securities Act, permitting 
securities of foreign issuers to be offered to Canadian-U.S. 
Participants and sold to Canadian retirement accounts without being 
registered under the Securities Act. 17 CFR 230.237.
    \3\ 17 CFR 270.7d-2.
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    Rule 7d-2 contains a ``collection of information'' requirement 
within the meaning of the Paperwork Reduction Act of 1995.\4\ Rule 7d-2 
requires written offering materials for securities offered or sold in 
reliance on that rule to disclose prominently that those securities and 
the fund issuing those securities are not registered with the 
Commission, and that those securities and the fund issuing those 
securities are exempt from registration under U.S. securities laws. 
Rule 7d-2 does not require any documents to be filed with the 
Commission.
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    \4\ 44 U.S.C. 3501-3502.
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    Rule 7d-2 requires written offering documents for securities 
offered or sold in reliance on the rule to disclose prominently that 
the securities are not registered with the Commission and may not be 
offered or sold in the United States unless registered or exempt from 
registration under the U.S. securities laws, and also to disclose 
prominently that the fund that issued the securities is not registered 
with the Commission. The burden under the rule associated with adding 
this disclosure to written offering documents is minimal and is non-
recurring. The foreign issuer, underwriter, or broker-dealer can 
redraft an existing prospectus or other written offering material to 
add this disclosure statement, or may draft a sticker or supplement 
containing this disclosure to be added to existing offering materials. 
In either case, based on discussions with representatives of the 
Canadian fund industry, the staff estimates that it would take an 
average of 10 minutes per document to draft the requisite disclosure 
statement.
    The staff estimates that there are 2075 publicly offered Canadian 
funds that potentially would rely on the rule to offer securities to 
participants and sell securities to their Canadian retirement accounts 
without registering under the Investment Company Act.\5\ Most of these 
funds have already relied upon the rule and have made the one-time 
change to their offering documents required to rely on the rule. The 
staff estimates that 104 (5 percent) additional Canadian funds may 
newly rely on the rule each year to offer securities to Canadian-U.S. 
Participants and sell securities to their Canadian retirement accounts, 
thus incurring the paperwork burden required under the rule. The staff 
estimates that each of those funds, on average, distributes 3 different 
written offering documents concerning those securities, for a total of 
312 offering documents. The staff therefore estimates that 104 
respondents would make 312 responses by adding the new disclosure 
statement to approximately 312 written offering documents. The staff 
therefore estimates that the annual burden associated with the rule 7d-
2 disclosure requirement would be 52 hours (312 offering documents x 10 
minutes per document). The total annual cost of these burden hours is 
estimated to be $16,432 (52 hours [tim,es] $316 per hour of attorney 
time).\6\
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    \5\ Investment Company Institute, 2010 Investment Company Fact 
Book (2010) at 183, tbl. 60.
    \6\ The Commission's estimate concerning the wage rate for 
attorney time is based on salary information for the securities 
industry compiled by the Securities Industry and Financial Markets 
Association (``SIFMA''). The $316 per hour figure for an attorney is 
from SIFMA's Management & Professional Earnings in the Securities 
Industry 2009, modified by Commission staff to account for an 1800-
hour work-year and multiplied by 5.35 to account for bonuses, firm 
size, employee benefits, and overhead.
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    These burden hour estimates are based upon the Commission staff's 
experience and discussions with the fund industry. The estimates of 
average burden hours are made solely for the purposes of the Paperwork 
Reduction Act. These estimates are not derived from a comprehensive or 
even a representative survey or study of the costs of Commission rules.
    Compliance with the collection of information requirements of the 
rule is mandatory and is necessary to comply with the requirements of 
the rule in general. 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) Jeffrey Heslop, Acting, 
Director/CIO, Securities and Exchange Commission, C/O Remi Pavlik-
Simon, 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 6, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25737 Filed 10-12-10; 8:45 am]
BILLING CODE P

