[Federal Register Volume 83, Number 154 (Thursday, August 9, 2018)]
[Notices]
[Pages 39480-39481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16998]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

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

Extension:
    Rule 12b-1, SEC File No. 270-188, OMB Control No. 3235-0212

    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 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

[[Page 39481]]

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 7,858 fund 
portfolios that have at least one share class subject to a rule 12b-1 
plan and approximately 323 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 137,275 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 
$34,849. Thus, the total annual cost burden of rule 12b-1 to the fund 
industry is $104,547.
    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 the background documentation for this 
information collection at the following website, www.reginfo.gov. 
Comments should be directed to: (i) Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503, or by sending an email to: 
[email protected]; and (ii) Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o Candace 
Kenner, 100 F Street NE, Washington, DC 20549 or send an email to: 
[email protected]. Comments must be submitted to OMB within 30 days 
of this notice.

    Dated: August 3, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16998 Filed 8-8-18; 8:45 am]
 BILLING CODE 8011-01-P


