[Federal Register Volume 85, Number 85 (Friday, May 1, 2020)]
[Notices]
[Pages 25499-25500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09300]


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

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-508, OMB Control No. 3235-0565]


60 Day Notice--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 482

    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.
    Like most issuers of securities, when an investment company 
(``fund'') \1\ offers its shares to the public, its promotional efforts 
become subject to the advertising restrictions of the Securities Act of 
1933 (15 U.S.C. 77) (the ``Securities Act''). In recognition of the 
particular problems faced by funds that continually offer securities 
and wish to advertise their securities, the Commission has adopted 
advertising safe harbor rules. The most important of these is rule 482 
(17 CFR 230.482) under the Securities Act, which, under certain 
circumstances, permits funds to advertise investment performance data, 
as well as other information. Rule 482 advertisements are deemed to be 
``prospectuses'' under Section 10(b) of the Securities Act (15 U.S.C. 
77j(b)).
---------------------------------------------------------------------------

    \1\ ``Investment company'' refers to both investment companies 
registered under the Investment Company Act of 1940 (``Investment 
Company Act'') (15 U.S.C. 80a-1 et seq.) and business development 
companies.
---------------------------------------------------------------------------

    Rule 482 contains certain requirements regarding the disclosure 
that funds are required to provide in qualifying advertisements. These 
requirements are intended to encourage the provision to investors of 
information that is balanced and informative, particularly in the area 
of investment performance. For example, a fund is required to include 
disclosure advising investors to consider the fund's investment 
objectives, risks, charges and expenses, and other information 
described in the fund's prospectus, and highlighting the availability 
of the fund's prospectus and, if applicable, its summary prospectus. In 
addition, rule 482 advertisements that include performance data of 
open-end funds or insurance company separate accounts offering variable 
annuity contracts are required to include certain standardized 
performance information, information about any sales loads or other 
nonrecurring fees, and a legend warning that past performance does not 
guarantee future results. Such funds including performance information 
in rule 482 advertisements are also required to make available to 
investors month-end performance figures via website disclosure or by a 
toll-free telephone number, and to disclose the availability of the 
month-end performance data in the advertisement. The rule also sets 
forth requirements regarding the prominence of certain disclosures, 
requirements regarding advertisements that make tax representations, 
requirements regarding advertisements used prior to the effectiveness 
of the fund's registration statement, requirements regarding the 
timeliness of performance data, and certain required disclosures by 
money market funds.
    Rule 482 advertisements must be filed with the Commission or, in 
the alternative, with the Financial Industry Regulatory Authority 
(``FINRA'').\2\ This information collection differs from many other 
federal information collections that are primarily for the use and 
benefit of the collecting agency.
---------------------------------------------------------------------------

    \2\ See note to rule 482(h) under the Securities Act, which 
states that ``these advertisements, unless filed with [FINRA], are 
required to be filed in accordance with the requirements of Sec.  
230.497.'' See also rule 24b-3 under the Investment Company Act (17 
CFR 270.24b-3), which provides that any sales material, including 
rule 482 advertisements, shall be deemed filed with the Commission 
for purposes of Section 24(b) of the Investment Company Act upon 
filing with FINRA.
---------------------------------------------------------------------------

    Rule 482 contains requirements that are intended to encourage the 
provision to investors of information that is balanced and informative, 
particularly

[[Page 25500]]

in the area of investment performance. The Commission is concerned that 
in the absence of such provisions fund investors may be misled by 
deceptive rule 482 advertisements and may rely on less-than-adequate 
information when determining in which funds they should invest money. 
As a result, the Commission believes it is beneficial for funds to 
provide investors with balanced information in fund advertisements in 
order to allow investors to make better-informed decisions.
    The Commission estimates that 41,265 \3\ responses to rule 482 are 
filed annually by 2,877 investment companies offering approximately 
12,476 portfolios, or approximately 3.3 responses per portfolio 
annually.\4\ The burden associated with rule 482 is presently estimated 
to be 5.16 hours per response. The annual hourly burden is therefore 
approximately 212,927 hours.\5\
---------------------------------------------------------------------------

    \3\ This estimated number of responses to rule 482 is composed 
of 41,003 responses filed with FINRA and 262 responses filed with 
the Commission in 2019.
    \4\ 41,265 responses / 12,476 portfolios = 3.3 responses per 
portfolio.
    \5\ 41,265 responses x 5.16 hours per response = 212,927 hours.
---------------------------------------------------------------------------

    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules and forms. The provision of information under rule 482 
is necessary to obtain the benefits of the safe harbor offered by the 
rule. The information provided under rule 482 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 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 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: 
PRA_Mailbox@sec.gov.

    Dated: April 28, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09300 Filed 4-30-20; 8:45 am]
BILLING CODE 8011-01-P


