Proposed Collection; Comment Request; Extension: Rule 17e-1
| Published date | 13 January 2022 |
| Citation | 87 FR 2190 |
| Record Number | 2022-00582 |
| Section | Notices |
| Court | Securities And Exchange Commission |
Federal Register, Volume 87 Issue 9 (Thursday, January 13, 2022)
[Federal Register Volume 87, Number 9 (Thursday, January 13, 2022)]
[Notices]
[Pages 2190-2191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00582]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-224, OMB Control No. 3235-0217]
Proposed Collection; 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'') 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.
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 Investment
Company 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 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
[[Page 2191]]
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 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.
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 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 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 John R.
Pezzullo, 100 F Street NE, Washington, DC 20549; or send an email to:
[email protected].
Dated: January 10, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-00582 Filed 1-12-22; 8:45 am]
BILLING CODE 8011-01-P
