[Federal Register Volume 86, Number 203 (Monday, October 25, 2021)]
[Notices]
[Pages 58963-58964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-23160]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-188, OMB Control No. 3235-0212]


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

Extension:
    Rule 12b-1

    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 (``OMB'') for extension and approval.
    Rule 12b-1 under the Investment Company Act of 1940 (17 CFR 
270.12b-1) permits a registered open-end investment company (``fund'') 
to bear expenses associated with the distribution of its shares, 
provided that the fund complies with certain requirements, including, 
among other things, that it adopt a written plan (``rule 12b-1 plan'') 
and that it preserves in writing any agreements relating to the rule 
12b-1 plan. The rule in part requires that (i) the adoption or material 
amendment of a rule 12b-1 plan be approved by the fund's directors, 
including its independent directors, and, in certain circumstances, its 
shareholders; (ii) the board review quarterly reports of amounts spent 
under the rule 12b-1 plan; and (iii) the board, including the 
independent directors, consider continuation of the rule 12b-1 plan and 
any related agreements at least annually. Rule 12b-1 also requires 
funds relying on the rule to preserve for six years, the first two 
years in an easily accessible place, copies of the rule 12b-1 plan and 
any related agreements and reports, as well as minutes of board 
meetings that describe the factors considered and the basis for 
adopting or continuing a rule 12b-1 plan.
    Rule 12b-1 also prohibits funds from paying for distribution of 
fund shares with brokerage commissions on their portfolio transactions. 
The rule requires funds that use broker-dealers that sell their shares 
to also execute their portfolio securities transactions, to implement 
policies and procedures reasonably designed to prevent: (i) The persons 
responsible for selecting broker-dealers to effect transactions in fund 
portfolio securities from taking into account broker-dealers' 
promotional or sales efforts when making those decisions; and (ii) a 
fund, its adviser, or its principal underwriter, from entering into any 
agreement under which the fund directs brokerage transactions or 
revenue generated by those transactions to a broker-dealer to pay for 
distribution of the fund's (or any other fund's) shares.
    The board and shareholder approval requirements of rule 12b-1 are 
designed to ensure that fund shareholders and directors receive 
adequate information to evaluate and approve a rule 12b-1 plan and, 
thus, are necessary for investor protection. The requirement of 
quarterly reporting to the board is designed to ensure that the rule 
12b-1 plan continues to benefit the fund and its shareholders. The 
recordkeeping requirements of the rule are necessary to enable 
Commission staff to oversee compliance with the rule. The requirement 
that funds or their advisers implement, and fund boards approve, 
policies and procedures in order to prevent persons charged with 
allocating

[[Page 58964]]

fund brokerage from taking distribution efforts into account is 
designed to ensure that funds' selection of brokers to effect portfolio 
securities transactions is not influenced by considerations about the 
sale of fund shares.
    Commission staff estimates that there are approximately 6,358 funds 
(for purposes of this estimate, registered open-end investment 
companies or series thereof) that have at least one share class subject 
to a rule 12b-1 plan and approximately 454 fund families with common 
boards of directors that have at least one fund with a 12b-1 plan. The 
Commission further estimates that the annual hour burden for complying 
with the rule is 425 hours for each fund family with a portfolio that 
has a rule 12b-1 plan. We therefore estimate that the total hourly 
burden per year for all funds to comply with current information 
collection requirements under rule 12b-1 is 192,950 hours. Commission 
staff estimates that approximately three funds per year prepare a proxy 
in connection with the adoption or material amendment of a rule 12b-1 
plan. The staff further estimates that the cost of each fund's proxy is 
$30,000. Thus, the total annual cost burden of rule 12b-1 to the fund 
industry is $90,000.
    Estimates of average burden hours and costs are made solely for 
purposes of the Paperwork Reduction Act and are not derived from a 
comprehensive or even representative survey or study of the costs of 
Commission rules and forms. The collections of information required by 
rule 12b-1 are necessary to obtain the benefits of the rule. Notices to 
the Commission 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 collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information has 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 David Bottom, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Cynthia 
Roscoe, 100 F Street NE, Washington, DC 20549; or send an email to: 
[email protected].
    All submissions should refer to File Number 270-188. This file 
number should be included on the subject line if email is used. The 
Commission will post all comments on the Commission's internet website 
(http://www.sec.gov). All comments received will be posted without 
change; we do not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly.

    Dated: October 19, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-23160 Filed 10-22-21; 8:45 am]
BILLING CODE 8011-01-P


