Rule 206(4)-2 under the Investment Advisers Act of 1940--Custody of Funds or Securities of Clients by Investment Advisers

Forms and Documents

Forms and supporting documents for this ICR

Document	Type	Status	Availability
COmment Letter (SIFMA).pdf	Supplementary Document	Uploaded 2010-01-13	Available
Comment Letter (IAA).pdf	Supplementary Document	Uploaded 2010-01-13	Available
Comment Letter (FPA).pdf	Supplementary Document	Uploaded 2010-01-13	Available
Comment Letter (Chamber of Commerce).pdf	Supplementary Document	Uploaded 2010-01-13	Available
Comment Letter (CFPBS).pdf	Supplementary Document	Uploaded 2010-01-13	Available
Comment Letter (MFA).pdf	Supplementary Document	Uploaded 2010-01-13	Available
Supporting Statement.doc	Supporting Statement A	Uploaded 2010-01-13	Available

IC Document Collections

Information collection document groups

IC ID	Collection	Type	Status	Form
34671	Rule 206(4)-2 under the Investment Advisers Act of 1940--Custody of Funds or Securities of Clients by Investment Advisers		Modified

ICR Details

OMB Control No: 3235-0241	ICR Reference No: 201001-3235-004
Status: Historical Active	Previous ICR Reference No: 200703-3235-004
Agency/Subagency: SEC	Agency Tracking No: IM-270-217
Title: Rule 206(4)-2 under the Investment Advisers Act of 1940--Custody of Funds or Securities of Clients by Investment Advisers
Type of Information Collection: Revision of a currently approved collection	Common Form ICR:  No
Type of Review Request: Regular
OIRA Conclusion Action: Approved without change	Conclusion Date: 03/11/2010
	Date Received in OIRA: 01/13/2010
Terms of Clearance:

table that charts list comparision

	Inventory as of this Action	Requested	Previously Approved
Expiration Date	03/31/2013	36 Months From Approved	12/31/2010
Responses	545,714	0	830,605
Time Burden (Hours)	67,243	0	415,303
Cost Burden (Dollars)	124,160,000	0	281,000

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Abstract: Rule 206(4)-2 under the Investment Advisers Act of 1940 requires advisers to protect the assets that their advisory clients have entrusted to their custody.

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Authorizing Statute(s): US Code: 15 USC 80b-6(4) Name of Law: Investment Advisers Act of 1940
   US Code: 15 USC 80b-11(a) Name of Law: Investment Advisers Act of 1940
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
3235-AK32	Final or interim final rulemaking	75 FR 1456	01/11/2010

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Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? Yes

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Number of Information Collection (IC) in this ICR: 1

table that charts list of burden

IC Title	Form No.	Form Name
Rule 206(4)-2 under the Investment Advisers Act of 1940--Custody of Funds or Securities of Clients by Investment Advisers

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ICR Summary of Burden

table that charts list of burden

	Total Approved	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	545,714	830,605	0	0	-284,891	0
Annual Time Burden (Hours)	67,243	415,303	0	0	-348,060	0
Annual Cost Burden (Dollars)	124,160,000	281,000	0	0	123,879,000	0

Burden increases because of Program Change due to Agency Discretion: No

Burden Increase Due to:

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: The current annual burden approved by OMB for rule 206(4)-2 is 415,303 hours. We now request that the total information collection hours be decreased to 67,243 hours. The cause of such decrease is mainly due to the adjustment in our estimates of annual burden relating to the required distribution of audited financial statements. We previously estimated that an adviser would spend 0.5 hour per investor sending investors audited financial statements with an aggregated annual burden of 393,500 hours. This estimate incorrectly included time for preparation of the audited financial statements, which after the audit should have been readily available to the adviser for distribution. We are now revising it to an estimated 1 minute per investor for mailing audited financial statements and the aggregate annual hour burden would therefore be 4,861 hours. This adjustment results in a decrease of 388,639 hours in total estimated hours for distribution of audited financial statements. But for this change in estimated annual hour burden relating to distribution of audited financial statements, the proposed amendments would have increased the information collection burden by 40,579 hours. The currently approved annual burden under rule 206(4)-2 includes an aggregate cost estimate of $281,000. We now estimate that the annual cost burden under the rule would increase to $124,160,000. Two changes cause such increase: (1) the increase of the number of advisers that are subject to the surprise examination from previously estimated 204 advisers to now estimated 1,859 advisers; and (2) the requirement of advisers that do not custody their client assets with independent custodians obtain or receive an internal control report from an independent public accountant registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Is the Supporting Statement intended to be a Privacy Impact Assessment required by the E-Government Act of 2002? No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? Uncollected

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? Uncollected

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? Uncollected

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Common Form ICR:  No

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On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 01/13/2010

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