
[Federal Register Volume 81, Number 223 (Friday, November 18, 2016)]
[Notices]
[Page 81825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27749]


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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 12d3-1, SEC File No. 270-504, OMB Control No. 3235-0561

    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 
collections of information summarized below. The Commission plans to 
submit these existing collections of information to the Office of 
Management and Budget (``OMB'') for extension and approval.
    Section 12(d)(3) of the Investment Company Act of 1940 (15 U.S.C. 
80a) generally prohibits registered investment companies (``funds''), 
and companies controlled by funds, from purchasing securities issued by 
a registered investment adviser, broker, dealer, or underwriter 
(``securities-related businesses''). Rule 12d3-1 (``Exemption of 
acquisitions of securities issued by persons engaged in securities 
related businesses'' (17 CFR 270.12d3-1)) permits a fund to invest up 
to five percent of its assets in securities of an issuer deriving more 
than fifteen percent of its gross revenues from securities-related 
businesses, but a fund may not rely on rule 12d3-1 to acquire 
securities of its own investment adviser or any affiliated person of 
its own investment adviser.
    A fund may, however, rely on an exemption in rule 12d3-1 to acquire 
securities issued by its subadvisers in circumstances in which the 
subadviser would have little ability to take advantage of the fund, 
because it is not in a position to direct the fund's securities 
purchases. The exemption in rule 12d3-1(c)(3) is available if (i) the 
subadviser is not, and is not an affiliated person of, an investment 
adviser that provides advice with respect to the portion of the fund 
that is acquiring the securities, and (ii) the advisory contracts of 
the subadviser, and any subadviser that is advising the purchasing 
portion of the fund, prohibit them from consulting with each other 
concerning securities transactions of the fund, and limit their 
responsibility in providing advice to providing advice with respect to 
discrete portions of the fund's portfolio.
    Based on an analysis of third-party information, the staff 
estimates that approximately 319 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 12d3-1. Because these additional clauses 
are identical to the clauses that a fund would need to insert in their 
subadvisory contracts to rely on rules 10f-3, 17a-10, and 17e-1 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 
12d3-1 for this contract change would be 0.75 hours.\2\ Assuming that 
all 319 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 239.25 
burden hours annually.\3\
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    \1\ Based on information available from Morningstar and the ICI 
Fact Book, we estimate that 37 percent of funds are advised by 
subadvisers.
    \2\ This estimate is based on the following calculation (3 hours 
/ 4 rules = .75 hours).
    \3\ This estimate is based on the following calculation: (0.75 
hours x 319 portfolios = 239.25 burden hours).
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    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 Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Remi 
Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email 
to: PRA_Mailbox@sec.gov.

    Dated: November 14, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016-27749 Filed 11-17-16; 8:45 am]
 BILLING CODE 8011-01-P


