[Federal Register Volume 87, Number 179 (Friday, September 16, 2022)]
[Notices]
[Pages 57001-57002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20019]


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SECURITIES AND EXCHANGE COMMISSION

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


Submission for OMB Review; 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


[[Page 57002]]


    Notice is hereby given that the Securities and Exchange Commission 
(the ``Commission'') has, in accordance with the Paperwork Reduction 
Act of 1995 (Pub. L. 104-13, 44 U.S.C. 3501 et seq.) (``PRA''), has 
submitted to the Office of Management and Budget a request for 
extension of the previously approved collection of information, ``Rule 
139b Disclosure of Standardized Performance,'' in connection 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 
November 30, 2018, as discussed below.\1\
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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 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\ 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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    \2\ See Adopting Release, supra note 1, n. 413 and accompanying 
paragraph.
    \3\ Based on 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 as either Rule 482 or Rule 34b-1 
filings. Furthermore, the Commission estimates that for the period 
January 1, 2021 through December 31, 2021, 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.
    \5\ 12.3 annual burden hours * 1,169 broker-dealers.
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    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 control number.
    The public may view background documentation for this information 
collection at the following website: www.reginfo.gov. Find this 
particular information collection by selecting ``Currently under 30-day 
Review--Open for Public Comments'' or by using the search function. 
Written comments and recommendations for the proposed information 
collection should be sent within 30 days of publication of this notice 
by October 17, 2022 to (i) [email protected] 
and (ii) David Bottom, Director/Chief Information Officer, Securities 
and Exchange Commission, c/o John Pezzullo, 100 F Street NE, 
Washington, DC 20549, or by sending an email to: [email protected].

    Dated: September 12, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20019 Filed 9-15-22; 8:45 am]
BILLING CODE 8011-01-P


