[Federal Register Volume 87, Number 132 (Tuesday, July 12, 2022)]
[Notices]
[Pages 41370-41371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-14745]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-815, OMB Control No. 3235-0769]


Proposed Collection; Comment Request; Extension: Rule 139b

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 the Securities and Exchange Commission 
(the ``Commission'') has, in accordance with the Paperwork Reduction 
Act of 1995 (Public Law 104-13, 44 U.S.C. 3501 et seq.) (``PRA''), is 
soliciting comments on the collection of information associated with 
the Rule 139b (17 CFR 230.139b) under the Securities Act of 1933 (15 
U.S.C. 77a et seq.) (``Securities Act'') that was adopted by the 
Commission on

[[Page 41371]]

November 30, 2018.\1\ The Commission plans to submit this existing 
collection of information to the Office of Management and Budget 
(``OMB'') for extension and approval.
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    \1\ See Release No. 33-10580 (Nov. 30, 2018) [83 FR 64180 (Dec. 
13, 2018)] (``Adopting Release''). Rule 139b became effective on 
January 14, 2019.
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    As directed by the Fair Access to Investment Research Act of 2017 
(Pub. L. 115-66, 131 Stat. 1196 (2017) (the ``FAIR Act''), the 
Commission adopted rule 139b under the Securities Act to extend the 
safe harbor under rule 139 to a ``covered investment fund research 
report.'' Specifically, rule 139b provides a safe harbor to a broker-
dealer who publishes or distributes in the regular course of its 
business research reports concerning one or more ``covered investment 
fund(s)'' while participating in the distribution of a covered 
investment fund's securities.
    In the Adopting Release, the Commission adopted the provision that 
rule 139b include a standardized performance disclosure requirement. 
The Commission believes that standardized performance presentation is 
an appropriate requirement because investors tend to consider fund 
performance a significant factor in evaluating or comparing investment 
companies, and the requirement addresses potential investor confusion 
if a communication were not easily recognizable as research as opposed 
to an advertising prospectus or supplemental sales literature. Rule 
139b requires that research reports about open-end funds that include 
performance information must present it in accordance with paragraphs 
(d), (e), and (g) of rule 482. Rule 139b also requires that research 
reports about closed-end funds that include performance information 
must present it in accordance with instructions to item 4.1(g) of Form 
N-2. Performance measures calculated by broker-dealers are not required 
to be kept confidential and there is no mandatory retention period. The 
Commission anticipates that compliance with these performance measures 
for each fund discussed in a research report, and for which the 
performance measures apply, would increase compliance costs for broker-
dealers seeking to publish or distribute a covered investment fund 
research report.
    It is difficult to provide estimates of the burdens and costs for 
those broker-dealers that will include performance information in a 
rule 139b research report. As discussed in the Adopting Release, this 
is difficult to estimate because current data collected does not 
reflect the affiliate exclusion, does not include the entire universe 
of covered investment funds, and it is uncertain what percentage of 
communications currently filed as rule 482 advertising prospectuses (or 
rule 34b-1 supplemental sales materials) will instead be published in 
reliance of rule 139b, as covered investment fund research reports.\2\ 
For purposes of the PRA, we estimate that 10% of the rule 482 and rule 
34b-1 communications currently filed by broker-dealers with FINRA 
(approximately 48,341) could be considered as rule 139b covered 
investment fund research reports. We estimate that broker-dealers will 
publish annually 4,834 (10% of 48,341) covered investment fund research 
reports. Moreover, we assume for purposes of the PRA that all estimated 
rule 139b research reports will include fund performance information. 
We further estimate that 1,169 broker-dealers would likely be 
respondents to the collection of information with a frequency of 4.1 
responses per year.\3\ Additionally, we estimate that each research 
report will require 3 hours of ongoing internal burden hours by a 
broker-dealers' personnel to comply with the rule 139b collection of 
information requirements, which for each broker-dealer is estimated to 
be 12.3 internal burden hours.\4\ Accordingly, we estimate that the 
standardized performance presentation requirements will result in an 
average 12.3 annual hour burden per broker-dealer.
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    \2\ See Adopting Release, supra note 1, n. 413 and accompanying 
paragraph.
    \3\ From information provided by FINRA, for the period January 
1, 2021 through December 31, 2021, there were an aggregate of 48,341 
filings that were coded either as Rule 482 or Rule 34b1 filings. 
Furthermore, for the period January 1, 2021 through December 31, 
2021, the Commission estimates that there were 4,834 covered 
investment fund research reports/1,169 broker-dealers = 4.1 annual 
responses per broker-dealer.
    \4\ 4.1 annual responses per broker-dealer x 3 internal burden 
hours = 12.3 annual internal burden hours per broker-dealer.
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    In sum, we estimate that rule 139b's requirements will impose a 
total annual internal hour burden of 14,379 hours on broker-dealers.\5\ 
We do not think there is an external cost burden associated with this 
collection of information.
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    \5\ 12.3 annual internal burden hours * 1,169 broker-dealers.
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    This information collection is subject to the PRA and responses to 
this collection of information requirement would not be mandatory for 
broker-dealers seeking to rely upon rule 139b, but would be necessary 
for those broker-dealers that would like to provide performance 
information in their covered investment fund research reports. 
Responses to the information collections 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 Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission'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 by September 12, 2022.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: David Bottom, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an 
email to: [email protected].

    Dated: July 6, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-14745 Filed 7-11-22; 8:45 am]
BILLING CODE 8011-01-P


