Supporting Statement - 2014 (Final)form NE6I1

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 6e-2 and Form N-6EI-1

A.

JUSTIFICATION
1.

Necessity for the Information Collection

Rule 6e-2 (17 CFR 270.6e-2) under the Investment Company Act of 1940 (“Act”) is an
exemptive rule that provides separate accounts formed by life insurance companies to fund
certain variable life insurance products, exemptions from certain provisions of the Act, subject to
conditions set forth in the rule. The rule sets forth several information collection requirements.
Rule 6e-2 provides a separate account with an exemption from the registration provisions
of section 8 of the Act if the account files with the Securities and Exchange Commission
(“Commission” or “SEC”) Form N-6EI-1 (17 CFR 274.301) a notification of claim of
exemption.
The rule also exempts a separate account from a number of other sections of the Act
provided that the separate account makes certain disclosure in its registration statements (in the
case of those separate accounts that elect to register), reports to contractholders, or proxy
solicitations, as prescribed by the rule, and/or makes certain disclosure to state regulatory
authorities. The requirements for registration statements, reports to contractholders, and proxy
solicitations are separately approved under the Paperwork Reduction Act.
Subpart (b)(9) of rule 6e-2, which exempts a management separate account from section
17(f) of the Act, requires information collection in addition to that required in connection with
registration statements, reports to contractholders, proxy solicitations, or disclosure to state
regulatory authorities. Section 17(f) provides, in pertinent part, that every registered
management company shall place and maintain its securities and similar investments in the

custody of: (a) a bank or banks having the qualifications prescribed section 26(a)(1) of the Act
for trustees of unit investment trusts; or (b) a company which is a member of a national securities
exchange as defined in the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.], subject to
such rules as the Commission may from time to time prescribe for the protection of investors; or
(c) such registered company, but only in accordance with such rules and regulations or orders as
the Commission may from time to time prescribe for the protection of investors.
Rule 6e-2 exempts management separate accounts from section 17(f) provided several
conditions are met. First, each person, when depositing such securities or similar investments in
or withdrawing them from a depository, or when ordering their delivery to and withdrawal from
the custody of the life insurer or affiliated insurance company, must sign a notation in respect of
such deposit, withdrawal or order which shows: (a) the time and date of the deposit, withdrawal
or order; (b) the title and amount of the securities withdrawn, and an identification thereof by
certificate number or otherwise; (c) the manner of acquisition of the securities or similar
investments deposited or the purpose for which they have been withdrawn, or ordered to be
withdrawn; and (d) if withdrawn and delivered to another person, the name of such person.
Second, the aforementioned notation must be transmitted promptly to an officer or director of the
separate account or the life insurer designated by the board of directors of the separate account.
Third, the securities and similar investments deposited with the insurer or affiliate under rule 6e2 must be verified by complete examination by an independent public accountant retained by the
separate account at least three times during each fiscal year. Finally, a certificate by such
accountant stating that he or she has made an examination of such securities and investments and
describing the nature and extent of the examination shall be transmitted to the Commission by

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the accountant promptly after each examination. The accountant’s examination certificates are
not reviewed by the Commission’s staff.
2.

Purpose of the Information Collection

Without this rule, management separate accounts and sponsoring life insurers would bear
the expense of filing individual exemptive applications, in addition to registration statements, in
order to obtain the relief needed to administer the separate accounts. Accordingly, the
Commission staff would be required to process such applications. Because the exemptive
applications would seek relief from a number of sections of the Act, such applications would be
quite lengthy and burdensome on both the life insurers and the staff. In addition, information
gathered under rule 6e-2, including information collected on Form N-6EI-1, is aimed at
minimizing the possibility that the rule will be abused.
3.

Role of Improved Information Technology

The Commission’s electronic filing system, the Electronic Data Gathering, Analysis and
Retrieval system (“EDGAR”), is designed to automate the filing, processing and dissemination
of all disclosure filings. All registrants must file their disclosure documents via EDGAR, which
has increased the speed, ease, accuracy and availability of information. At present, none of the
information collections required by rule 6e-2 are filed on EDGAR, but they may be considered
for electronic filing in the future.
4.

Duplication

The rule does not call for duplicative information. The information requirement
conforms to other rules under the Act to which separate accounts are subject, so as to coordinate
them with existing information collection and reporting procedures.

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5.

Effect on Small Entities

The insurance companies affected by the rule are not considered “small entities.”
6.

Consequences of Less Frequent Collection

The assets of a separate account held in custody by the insurer must be continuously
monitored and periodically audited to assure their safety. Other information collections are
required by the rule only when certain events occur.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Not applicable.
8.

Consultation Outside the Agency

The Commission requested public comment on the collection of information
requirements in rule 6e-2 before it submitted this request for extension and approval to the
Office of Management and Budget. The Commission received one public comment in response
to its request. The comment did not address rule 6e-2 or Form N-6EI-1; the comment proposed
treating separate account stable value products similar to general account stable value products.
The Commission and the staff of the Division of Investment Management also participate
in an ongoing dialogue with representatives of the investment company industry through public
conferences, meetings and informal exchanges. These various forums provide the Commission
and the staff with a means of ascertaining and acting upon paperwork burdens confronting the
industry.
9.

Payment or Gift to Respondents

Not applicable.
10.

Assurance of Confidentiality

Not applicable.

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11.

Sensitive Questions

No questions of a sensitive nature are asked. The information collection does not collect
any Personally Identifiable Information (PII).
12.

Burden of Information Collection

Since 2008, there have been no filings under paragraph (b)(9) of rule 6e-2 by
management accounts. Therefore, since 2008, there has been no cost or burden to the industry
regarding the information collection requirements of paragraph (b)(9) of rule 6e-2. In addition,
there have been no filings of Form N-6EI-1 by separate accounts since 2008. Therefore, there
has been no cost or burden to the industry since that time.
The staff of the Division of Investment Management estimates that the completion and
submission of the form takes one hour. However, it is expected that most, if not all, separate
accounts will not elect the exemption from registration that triggers the form requirement under
the rule. Therefore, the form is not expected to present any additional burden. With respect to
information required in registration statements, reports to contractholders, proxy solicitations,
and submissions to state agencies, issuers would be filing with the Commission and those state
agencies as a matter of course to fulfill other requirements. Consequently, rule 6e-2 does not
result in any additional cost or burden to the industry. The Commission requests authorization to
maintain an inventory of one burden hour for administrative purposes.
13.

Estimate of Total Annual Cost Burden

Not applicable.
14.

Estimate of Cost to the Federal Government

It is expected that most, if not all, separate accounts will not elect the exemption from
registration that triggers the requirement to file Form N-6EI-1 under the rule. Therefore, the

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form is not expected to present any additional burden. The information collection requirements
of rule 6e-2 relating to custodianship impose no burden on the government because no
information is reviewed by the government. With respect to information required in registration
statements, reports to contractholders, proxy solicitations, and submissions to state agencies,
issuers would be filing with the Commission and those state agencies as a matter of course to
fulfill other requirements. Consequently, it is expected that rule 6e-2 and Form N-6EI-1 will not
result in any additional cost to the government.
15.

Explanation of Changes in Burden

Not applicable.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

We request authorization to omit the expiration date on the electronic version of the
form. Including the expiration date on the electronic version of the form will result in increased
costs, because the need to make changes to the form may not follow the application’s scheduled
version release dates. The OMB control number will be displayed.
18.

Exceptions to Certification Statement

Not applicable.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
Not applicable

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