[Federal Register Volume 87, Number 98 (Friday, May 20, 2022)]
[Notices]
[Pages 31019-31020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10816]


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SECURITIES AND EXCHANGE COMMISSION

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


Submission for OMB Review; Comment Request; Extension: Rule 12b-1

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

    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'') has submitted to the Office of 
Management and Budget (``OMB'') a request for extension of the 
previously approved collection of information discussed below.
    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

[[Page 31020]]

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 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.
    The public may view background documentation for this information 
collection at the following website: www.reginfo.gov. Find this 
particular information collection by selecting ``Currently under 30-day 
Review--Open for Public Comments'' or by using the search function. 
Written comments and recommendations for the proposed information 
collection should be sent within 30 days of publication of this notice 
by June 21, 2022 to (i) [email protected] and 
(ii) David Bottom, Director/Chief Information Officer, Securities and 
Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 
20549, or by sending an email to: [email protected].

    Dated: May 16, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-10816 Filed 5-19-22; 8:45 am]
BILLING CODE 8011-01-P


