[Federal Register Volume 86, Number 201 (Thursday, October 21, 2021)]
[Notices]
[Pages 58341-58342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22898]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-438, OMB Control No. 3235-0495]


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 154

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange 
Commission (``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 for extension and approval.
    The federal securities laws generally prohibit an issuer, 
underwriter, or dealer from delivering a security for sale unless a 
prospectus meeting certain requirements accompanies or precedes the 
security. Rule 154 (17 CFR 230.154) under the Securities Act of 1933 
(15 U.S.C. 77a) (the ``Securities Act'') permits, under certain 
circumstances, delivery of a single prospectus to investors who 
purchase securities from the same issuer and share the same address 
(``householding'') to satisfy the applicable prospectus delivery 
requirements.\1\ The purpose of rule 154 is to reduce the amount of 
duplicative prospectuses delivered to investors sharing the same 
address.
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    \1\ The Securities Act requires the delivery of prospectuses to 
investors who buy securities from an issuer or from underwriters or 
dealers who participate in a registered distribution of securities. 
See Securities Act sections 2(a)(10), 4(1), 4(3), 5(b) [15 U.S.C. 
77b(a)(10), 77d(1), 77d(3), 77e(b); see also rule 174 under the 
Securities Act (17 CFR 230.174) (regarding the prospectus delivery 
obligation of dealers); rule 15c2-8 under the Securities Exchange 
Act of 1934 (17 CFR 240.15c2-8) (prospectus delivery obligations of 
brokers and dealers).
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    Under rule 154, a prospectus is considered delivered to all 
investors at a shared address, for purposes of the federal securities 
laws, if the person relying on the rule delivers the prospectus to the 
shared address, addresses the prospectus to the investors as a group or 
to each of the investors individually, and the investors consent to the 
delivery of a single prospectus. The rule applies to prospectuses and 
prospectus supplements. Currently, the rule

[[Page 58342]]

permits householding of all prospectuses by an issuer, underwriter, or 
dealer relying on the rule if, in addition to the other conditions set 
forth in the rule, the issuer, underwriter, or dealer has obtained from 
each investor written or implied consent to householding.\2\ The rule 
requires issuers, underwriters, or dealers that wish to household 
prospectuses with implied consent to send a notice to each investor 
stating that the investors in the household will receive one prospectus 
in the future unless the investors provide contrary instructions. In 
addition, at least once a year, issuers, underwriters, or dealers 
relying on rule 154 for the householding of prospectuses relating to 
open-end management investment companies that are registered under the 
Investment Company Act of 1940 (``mutual funds'') and each series 
thereof must explain to investors who have provided written or implied 
consent how they can revoke their consent.\3\ Preparing and sending the 
notice and the annual explanation of the right to revoke are 
collections of information.
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    \2\ Rule 154 permits the householding of prospectuses that are 
delivered electronically to investors only if delivery is made to a 
shared electronic address and the investors give written consent to 
householding. Implied consent is not permitted in such a situation. 
See rule 154(b)(4).
    \3\ See Rule 154(c).
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    The rule allows issuers, underwriters, or dealers to household 
prospectuses if certain conditions are met. Among the conditions with 
which a person relying on the rule must comply are providing notice to 
each investor that only one prospectus will be sent to the household 
and, in the case of issuers that are mutual funds and any series 
thereof, providing to each investor who consents to householding an 
annual explanation of the right to revoke consent to the delivery of a 
single prospectus to multiple investors sharing an address. The purpose 
of the notice and annual explanation requirements of the rule is to 
ensure that investors who wish to receive individual copies of 
prospectuses are able to do so.
    Although rule 154 is not limited to mutual funds, the Commission 
believes that it is used mainly by mutual funds and by broker-dealers 
that deliver prospectuses for mutual funds. The Commission is unable to 
estimate the number of issuers other than mutual funds that rely on the 
rule.
    The Commission estimates that, as of June 30, 2021, there are 
approximately 13,182 mutual fund series registered on Form N-1A, 
approximately 1,279 of which are directly sold and therefore deliver 
their own prospectuses. Of these, the Commission estimates that 
approximately half (640 mutual fund series): (i) Do not send the 
implied consent notice requirement because they obtain affirmative 
written consent to household prospectuses in the fund's account opening 
documentation; or (ii) do not take advantage of the householding 
provision because of electronic delivery options which lessen the 
economic and operational benefits of rule 154 when compared with the 
costs of compliance. Therefore, the Commission estimates that each of 
the 640 directly sold mutual fund series will spend an average of 20 
hours per year complying with the notice requirement of the rule, for a 
total of 12,800 burden hours. In addition, of the approximately 1,279 
mutual fund series that are directly sold, the Commission estimates 
that approximately 75% (or 960) will each spend 1 hour complying with 
the annual explanation of the right to revoke requirement of the rule, 
for a total of 960 hours.
    The Commission estimates that, as of December 31, 2020, there were 
approximately 462 broker-dealers that have customer accounts with 
mutual funds, and therefore may be required to deliver mutual fund 
prospectuses. The Commission estimates that each affected broker-dealer 
will spend, on average, 20 hours complying with the notice requirement 
of the rule, for a total of 9,240 hours. In addition, each broker-
dealer will also spend one hour complying with the annual explanation 
of the right to revoke requirement, for a total of 462 hours. 
Therefore, the total number of respondents for rule 154 is 1,422 (960 
\4\ mutual fund series plus 462 broker-dealers), and the estimated 
total hour burden is approximately 23,462 hours (13,760 hours for 
mutual fund series, plus 9,702 hours for broker-dealers).
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    \4\ The Commission estimates that 640 mutual funds prepare both 
the implied consent notice and the annual explanation of the right 
to revoke consent + 320 mutual funds that prepare only the annual 
explanation of the right to revoke.
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    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. 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 collections of 
information are 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 collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collections 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].

    Dated: October 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22898 Filed 10-20-21; 8:45 am]
BILLING CODE 8011-01-P


