
[Federal Register Volume 77, Number 165 (Friday, August 24, 2012)]
[Notices]
[Pages 51588-51589]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20826]



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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, addresses the prospectus to the investors as a group or 
to each of the investors individually, 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.\3\ 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).
    \3\ See rule 154(c).
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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 March 2012, there are 
approximately 1,700 mutual funds, approximately 400 of which engage in 
direct marketing and therefore deliver their own prospectuses. Of the 
approximately 400 mutual funds that engage in direct marketing, the 
Commission estimates that approximately half of these mutual funds 
(200) (i) do not send the implied consent notice requirement because 
they obtain affirmative written consent to household prospectuses in 
the fund's account opening documentation; or (ii) do not take advantage 
of the householding provision because of electronic delivery options 
which lessen the economic and operational benefits of rule 154 when 
compared with the costs of compliance. Therefore, the Commission 
estimates that each direct-marketed fund will spend an average of 20 
hours per year complying with the notice requirement of the rule, for a 
total of 4,000 hours. Of the 400 mutual funds that engage in direct 
marketing, the Commission estimates that approximately seventy-five 
percent (300) of these funds will each spend 1 hour complying with the 
annual explanation of the right to revoke requirement of the rule, for 
a total of 300 hours. The Commission estimates that there are 
approximately 280 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 5,600 hours. Each broker-dealer will also 
spend 1 hour complying with the annual explanation of the right to 
revoke requirement, for a total of 280 hours. Therefore, the total 
number of respondents for rule 154 is 580 (300 mutual funds plus 280 
broker-dealers), and the estimated total hour burden is approximately 
10,180 hours (4,300 hours for mutual funds plus 5,880 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 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.
    The public may view the background documentation for this 
information collection at the following Web site, www.reginfo.gov. 
Comments should be directed to: (i) Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503,

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or by sending an email to: Shagufta_Ahmed@omb.eop.gov; and (ii) Thomas 
Bayer, Director/Chief Information Officer, Securities and Exchange 
Commission, c/o Remi Pavlik-Simon, 6432 General Green Way, Alexandria, 
VA 22312 or send an email to: PRA_Mailbox@sec.gov. Comments must be 
submitted to OMB within 30 days of this notice.

    Dated: August 20, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-20826 Filed 8-23-12; 8:45 am]
BILLING CODE 8011-01-P


