[Federal Register Volume 87, Number 18 (Thursday, January 27, 2022)]
[Notices]
[Pages 4321-4322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-01612]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-224, OMB Control No. 3235-0217]


Submission for OMB Review; Comment Request, Extension: Rule 17e-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.) (``Paperwork Reduction Act''), 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 
described below.
    Rule 17e-1 (17 CFR 270.17e-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) (the ``Investment Company Act'') deems a 
remuneration as ``not exceeding the usual and customary broker's 
commission'' for purposes of Section 17(e)(2)(A) of the Act (15 U.S.C. 
80a-17(e)(2)(A)) if, among other things, a registered investment 
company's (``fund's'') board of directors has adopted procedures 
reasonably designed to provide that the remuneration to an affiliated 
broker is reasonable and fair compared to that received by other 
brokers in connection with comparable transactions involving similar 
securities being purchased or sold on a securities exchange during a 
comparable period of time and the board makes and approves such changes 
as it deems necessary. In addition, each quarter, the board must 
determine that all transactions effected under the rule during the 
preceding quarter complied with the established procedures (``review 
requirement''). Rule 17e-1 also requires the fund to (i) maintain 
permanently a written copy of the procedures adopted by the board for 
complying with the requirements of the rule; and (ii) maintain for a 
period of six years, the first two in an easily accessible place, a 
written record of each transaction subject to the rule, setting forth 
the amount and source of the commission, fee, or other remuneration 
received; the identity of the broker; the terms of the transaction; and 
the materials used to determine that the transactions were effected in 
compliance with the procedures adopted by the board (``recordkeeping 
requirement''). The review and

[[Page 4322]]

recordkeeping requirements under rule 17e-1 enable the Commission to 
ensure that affiliated brokers receive compensation that does not 
exceed the usual and customary broker's commission. Without the 
recordkeeping requirement, Commission inspectors would have difficulty 
ascertaining whether funds were complying with rule 17e-1.
    Based upon an analysis of fund filings on Form N-CEN, approximately 
1,640 funds report reliance on rule 17e-1. Based on staff experience 
and conversations with fund representatives, we estimate that the 
burden of compliance with rule 17e-1 is approximately 50 hours per fund 
per year. This time is spent, for example, reviewing the applicable 
transactions and maintaining records. Accordingly, we calculate the 
total estimated annual internal burden of complying with the review and 
recordkeeping requirements of rule 17e-1 to be approximately 82,000 
hours.\1\ We further estimate that, of these:
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    \1\ 1,604 funds x 50 hours per fund = 82,000 hours.
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     60 percent (49,200 hours) are spent by senior accountants, 
at an estimated hourly wage of $221,\2\ for a total of approximately 
$10,873,200 per year; \3\
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    \2\ The Commission's estimates concerning the allocation of 
burden hours and the relevant wage rates are based on consultations 
with industry representatives and on salary information for the 
securities industry compiled by the Securities Industry and 
Financial Markets Association. The estimated wage figures are also 
based on published rates for senior accountants and in-house 
attorneys, modified to account for an 1800-hour work-year and 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits, and overhead, yielding effective hourly rates of $221 and 
$425, respectively. See Securities Industry and Financial Markets 
Association, Report on Management & Professional Earnings in the 
Securities Industry 2013.
    \3\ 49,200 hours x $221 per hour = $10,873,200.
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     30 percent (24,600 hours) are spent by in-house attorneys 
at an estimated hourly wage of $425, for a total of approximately 
$10,455,000 per year; \4\ and
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    \4\ 24,600 hours x $425 per hour = $10,455,000.
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     10 percent (8,200) are spent by the funds' board of 
directors at an hourly cost of $4,770, for a total of approximately 
$39,114,000 per year.\5\
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    \5\ 8,200 hours x $4,770 per hour = $39,114,000. The estimate 
for the cost of board time as a whole is derived from estimates made 
by the staff regarding typical board size and compensation that is 
based on information received from fund representatives and publicly 
available sources.
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    Based on these estimated wage rates, the total cost to the industry 
of the hour burden for complying with the review and recordkeeping 
requirements of rule 17e-1 is approximately $60,442,200.\6\ The 
Commission staff estimates that there is no cost burden associated with 
the information collection requirement of rule 17e-1 other than this 
cost.
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    \6\ $10,873,200 + $10,455,000 + $39,114,000 = $60,442,200.
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    Estimates of the average burden hours are made solely for the 
purposes of the Paperwork Reduction Act and are not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules and forms. The collection of information under rule 
17e-1 is mandatory. The information provided under rule 17e-1 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) David Bottom, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o John R. 
Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to: 
[email protected]. Written comments and recommendations for the 
proposed information collection should be sent within 30 days of 
publication of this notice to www.reginfo.gov/public/do/PRAMain. Find 
this particular information collection by selecting ``Currently under 
30-day Review--Open for Public Comments'' or by using the search 
function.

    Dated: January 24, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-01612 Filed 1-26-22; 8:45 am]
BILLING CODE 8011-01-P


