
[Federal Register Volume 78, Number 83 (Tuesday, April 30, 2013)]
[Notices]
[Pages 25322-25323]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10151]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension:
    Rule 17e-1, OMB Control No. 3235-0217, SEC File No. 270-224.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.) (``Paperwork Reduction Act''), 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 (``OMB'') for extension and 
approval.
    Rule 17e-1 (17 CFR 270.17e-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) (the ``Investment Company Act'') deems a 
remuneration as ``not exceeding the usual and customary broker's 
commission'' for purposes of Section 17(e)(2)(A) if, among other 
things, a registered investment company's (``fund's'') board of 
directors has adopted procedures reasonably designed to provide that 
the remuneration to an affiliated broker is a reasonable and fair 
amount compared to that received by other brokers in connection with 
comparable transactions involving similar securities being purchased or 
sold on a securities exchange during a comparable period of time and 
the board makes and approves such changes as it deems necessary. In 
addition, each quarter, the board must determine that all transactions 
effected under the rule during the preceding quarter complied with the 
established procedures. Rule 17e-1 also requires the

[[Page 25323]]

fund to (i) maintain permanently a written copy of the procedures 
adopted by the board for complying with the requirements of the rule; 
and (ii) maintain for a period of six years, the first two in an easily 
accessible place, a written record of each transaction subject to the 
rule, setting forth the amount and source of the commission, fee, or 
other remuneration received; the identity of the broker; the terms of 
the transaction; and the materials used to determine that the 
transactions were effected in compliance with the procedures adopted by 
the board. The recordkeeping requirements under rule 17e-1 enable the 
Commission to ensure that affiliated brokers receive compensation that 
does not exceed the usual and customary broker's commission. Without 
the recordkeeping requirements, Commission inspectors would have 
difficulty ascertaining whether funds were complying with rule 17e-1.
    Based on an analysis of fund filings, the staff estimates that 
approximately 775 fund portfolios enter into subadvisory agreements 
each year.\1\ Based on discussions with industry representatives, the 
staff estimates that it will require approximately 3 attorney hours to 
draft and execute additional clauses in new subadvisory contracts in 
order for funds and subadvisers to be able to rely on the exemptions in 
rule 17e-1. Because these additional clauses are identical to the 
clauses that a fund would need to insert in their subadvisory contracts 
to rely on rules 12d3-1, 10f-3, and 17a-10, and because we believe that 
funds that use one such rule generally use all of these rules, we 
apportion this 3 hour time burden equally to all four rules. Therefore, 
we estimate that the burden allocated to rule 17e-1 for this contract 
change would be 0.75 hours.\2\ Assuming that all 775 funds that enter 
into new subadvisory contracts each year make the modification to their 
contract required by the rule, we estimate that the rule's contract 
modification requirement will result in 581 burden hours annually.
---------------------------------------------------------------------------

    \1\ Based on information in Commission filings, we estimate that 
44.4 percent of funds are advised by subadvisers.
    \2\ 3 hours / 4 rules = 0.75 hours.
---------------------------------------------------------------------------

    Based on an analysis of fund filings, the staff estimates that 
approximately 1,768 funds use at least one affiliated broker. Based on 
conversations with fund representatives, the staff estimates 
approximately 40 percent of transactions that occur under rule 17e-1 
would be exempt from its recordkeeping and review requirements. This 
would leave approximately 1,061 funds \3\ still subject to the rule's 
recordkeeping and review requirements. Based on conversations with fund 
representatives, we estimate that the burden of compliance with the 
review and recordkeeping requirements of rule 17e-1 is approximately 40 
hours per fund per year. This time is spent, for example, reviewing the 
applicable transactions and maintaining records. Accordingly, we 
calculate the total estimated annual internal burden of complying with 
the review and recordkeeping requirements of rule 17e-1 to be 
approximately 42,440 hours,\4\ and the total annual burden of the 
rule's paperwork requirements is 43,021 hours.\5\
---------------------------------------------------------------------------

    \3\ 1,768 funds x 0.6 = 1,061 funds.
    \4\ 1,061 funds x 40 hours per fund = 42,440 hours.
    \5\ 581 hours + 42,440 hours = 43,021 hours.
---------------------------------------------------------------------------

    Estimates of average burden hours are made solely for the purposes 
of the Paperwork Reduction Act and are not derived from a comprehensive 
or even a representative survey or study of the costs of Commission 
rules and forms. The collection of information under rule 17e-1 is 
mandatory. The information provided under rule 17e-1 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 OMB 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 Commission'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, 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: April 25, 2013.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10151 Filed 4-29-13; 8:45 am]
BILLING CODE 8011-01-P


