
[Federal Register Volume 77, Number 203 (Friday, October 19, 2012)]
[Notices]
[Pages 64367-64368]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25738]


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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 38a-1, OMB Control No. 3235-0586, SEC File No. 270-522.

    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'') is soliciting comments on the 
collection of information summarized below. The Commission plans to 
submit this existing collection of information to the Office of 
Management and Budget for extension and approval.
    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 directors' 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 of outlines and model programs available 
from a variety of industry representatives, commentators, and 
organizations.
    There are approximately 4,237 funds subject to Rule 38a-1. Among 
these funds, 146 were newly registered in the past year. These 146 
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 105 hours. Thus, we estimate 
that the aggregate annual burden hours associated with the adoption and 
documentation requirement is 15,330 hours.
    In 2010, Commission staff began to estimate the hour burden 
associated with money market funds' adoption of certain policies and 
procedures aimed at ensuring that these funds meet reasonably 
foreseeable shareholder redemptions (the ``general liquidity 
requirement''). Commission staff estimates that each newly-registered 
money market fund will incur a one-time additional average burden of 9 
hours to document and adopt policies and procedures that will assist in 
complying with the general liquidity requirement. Approximately 10 
money market funds were newly registered in the past year. Thus, we 
estimate that the additional aggregate annual burden hours associated 
with general liquidity requirement policies and procedures is 90 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

[[Page 64368]]

the date of the last report. The staff estimates that each fund spends 
49 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 207,613 hours.
    Finally, the staff estimates that each fund spends 6 hours 
annually, on average, maintaining the records required by proposed Rule 
38a-1. Thus, the aggregate annual burden hours associated with the 
recordkeeping requirement is 25,422 hours.
    In total, the staff estimates that the aggregate annual information 
collection burden of Rule 38a-1 is 248,455 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.
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the collection of information; (c) ways to enhance the 
quality, utility, and clarity of the information collected; and (d) 
ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Consideration will 
be given to comments and suggestions submitted in writing within 60 
days of this publication.
    Please direct your written comments to 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.

    Dated: October 15, 2012.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25738 Filed 10-18-12; 8:45 am]
BILLING CODE 8011-01-P


