Final Form S-6 Supporting Statement_Fast Act

SUPPORTING STATEMENT
Form S-6
A. JUSTIFICATION
1. Necessity for the Information Collection
Form S-6 1 is a form used for registration under the Securities Act of 1933
(“Securities Act”) 2 of securities of any unit investment trust (“UIT”) registered under
the Investment Company Act of 1940 (“Investment Company Act”) 3 on Form
N-8B-2. 4 Section 5 of the Securities Act requires the filing of a registration statement
prior to the offer of securities to the public and that the statement be effective before
any securities are sold. 5 Section 5(b) of the Securities Act requires that investors be
provided with a prospectus containing the information required in a registration
statement prior to the sale or at the time of confirmation or delivery of the securities.
Section 10(a)(3) of the Securities Act provides that when a prospectus is used
more than nine months after the effective date of the registration statement, the
information therein shall be as of a date not more than sixteen months prior to such
use. 6 As a result, most UITs update their registration statements under the Securities
Act on an annual basis in order that their sponsors may continue to maintain a
secondary market in the units. UITs that are registered under the Investment
Company Act on Form N-8B-2 file post-effective amendments to their registration
statements on Form S-6 in order to update their prospectuses.
On October 11, 2017, the Commission issued a release proposing amendments to
certain of the Commission’s forms that are used by investment companies, including
Form S-6. 7 The Commission proposed amendments to Rule 102 of Regulation S-T
to apply hyperlinking and HyperText Markup Language (“HTML”) format
1

17 CFR 239.16.

2

15 U.S.C. 77a et seq.

3

15 U.S.C. 80a-1 et seq.

4

17 CFR 274.12. Form N-8B-2 is the form used by UITs other than separate accounts
that are currently issuing securities, including UITs that are issuers of periodic
payment plan certificates and UITs of which a management investment company is
the sponsor or depositor to register under the Investment Company Act pursuant to
Section 8 thereof.

5

15 U.S.C. 77e.

6

15 U.S.C. 77j(a)(3).

7

Investment Company Act Release No. 32858 (Oct. 11, 2017) (the “Proposing
Release”).

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requirements to registrants filing Form S-6 to facilitate access to the Form’s exhibits
for investors and other users of the information. Under the proposed amendments,
affected registrants would be required to include a hyperlink to each exhibit
identified in a filing’s exhibit index, unless the exhibit is filed in paper pursuant to a
temporary or continuing hardship exemption under Rule 201 or Rule 202 of
Regulation S-T, or pursuant to Rule 311 of Regulation S-T. This requirement would
apply to registration statements on Form S-6. Consistent with our rules for operating
companies, we are not proposing to require registrants to refile electronically any
exhibits filed only in paper. Under the proposed amendments, an electronic filer
would also be required to correct an inaccurate or nonfunctioning link or hyperlink
to an exhibit. 8
In connection with the proposed exhibit hyperlinking requirements, the
Commission is also proposing amendments to Rule 105 of Regulation S-T to require
investment company registrants to make Form S-6 filings that include exhibits in
HTML format. Currently, investment company registrants must submit electronic
filings to the Commission using the EDGAR system in either American Standard
Code for Information Interchange (“ASCII”) format or HTML format. Because the
ASCII format does not support hyperlink functionality, the exhibit hyperlinking
requirement would be feasible only if registrants are required to file in HTML.
Under the proposed requirement, registrants would be required to file Form S-6 in
HTML format. While the affected Form S-6 filings would be required to be filed in
HTML pursuant to the proposed amendments to Rule 105, registrants would
continue to be permitted to file in ASCII any schedules or forms that are not subject
to the exhibit filing requirements, such as proxy statements, or other documents
included with a filing, such as an exhibit.
The proposed amendments are intended to facilitate access to these exhibits for
investors and other users of the information.
2. Purpose and Use of the Information Collection
The purpose of Form S-6 is to meet the filing and disclosure requirements of the
Securities Act and to enable filers to provide investors with information necessary to
evaluate an investment in the security. This information collection differs
significantly from many other federal information collections, which are primarily
for the use and benefit of the collecting agency. The information required to be filed
with the Commission permits verification of compliance with securities law
requirements and assures the public availability and dissemination of the
information.

8

See Proposing Release at footnotes 315-18.

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3. Consideration Given to Information Technology
The Commission’s Electronic Data Gathering, Analysis and Retrieval
(“EDGAR”) automates the filing, processing, and dissemination of full disclosure
filings. This automation has increased the speed, accuracy, and availability of
information, generating benefits to investors and financial markets. Form S-6 is
required to be filed with the Commission electronically on EDGAR. 9 The public
may access filings on EDGAR through the Commission’s website
(http://www.sec.gov) or at EDGAR terminals located at the Commission’s public
reference rooms. Prospectuses may be sent to investors by electronic means so long
as certain requirements are met. 10
4. Efforts to Identify Duplication
The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or a
change in a rule. Form S-6 requires a prospectus that includes much of the
information requested in Form N-8B-2. Form N-8B-2, however, is filed only once to
register the UIT under the Investment Company Act. 11
5. Effect on Small Entities
The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, 12 to identify methods to minimize recordkeeping or reporting
9

See rule 101(a)(1)(i) of Regulation S-T [17 CFR 232.101(a)(1)(i)].

10

See Investment Company Act Release No. 21399 (Oct. 6, 1995) [60 FR 53458 (Oct.
13, 1995)].

11

To eliminate the duplicative information presented in the registration forms used by
UITs, the Commission has proposed and reproposed, but has not yet adopted, Form
N-7, an integrated disclosure form under the Securities Act and the Investment
Company Act. See Investment Company Act Release No. 14513 (May 14, 1985)
[50 FR 21282 (May 23, 1985)]; Investment Company Act Release No. 15612 (Mar.
9, 1987) [52 FR 8268 (March 17, 1987)].
Duplication has been lessened for insurance company separate accounts organized as
UITs that offer variable annuity or variable life insurance contracts, because each
such entity registers offerings of securities under the Securities Act and registers as an
investment company under the Investment Company Act using a single form, Form
N-4 (for insurance company separate accounts organized as UITs that offer variable
annuity contracts) or Form N-6 (for insurance company separate accounts organized
as UITs that offer variable life insurance contracts).

12

5 U.S.C. 601 et seq.

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requirements affecting small businesses. The current disclosure requirements for
registration statements on Form S-6 do not distinguish between small entities and
other investment companies. The burden on smaller investment companies of
preparing and filing registration statements may be proportionately greater than for
larger investment companies. This burden includes the cost of producing, printing,
filing, and disseminating prospectuses. The Commission believes, however, that
imposing different requirements on smaller investment companies would not be
consistent with investor protection and the purposes of the registration statements.
6. Consequences of Not Conducting Collection
The purpose of Form S-6 is to meet the filing and disclosure requirements of
the Securities Act and to enable filers to provide investors with information necessary
to evaluate an investment in the security. Less frequent filing would be inconsistent
with the filing and disclosure requirements of the Securities Act. In addition, if the
form were to be filed less frequently, investors may not be provided with the
information necessary to evaluate an investment in the security.
7. Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
This collection is not inconsistent with 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
Before adopting the proposed amendments to Form N-6, the Commission will
receive and evaluate public comments on the proposal and its collection of
information requirements. Moreover, the Commission and the staff of the Division
of Investment Management 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 staff with a
means of ascertaining and acting upon paperwork burdens confronting the industry.
9. Payment or Gift
No payment or gift to respondents was provided.
10. Assurance of Confidentiality
No assurance of confidentiality was provided.

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11. Sensitive Questions
No questions of a sensitive nature are involved. The information collection does
not include personally identifiable information. The system of records notice for this
form may be found here: https://www.sec.gov/about/privacy/sorn/secsorn1.pdf.
12. Estimate of Hour and Cost Burden of Information Collection
The following estimates of average burden hours and costs are made solely for
purposes of the Paperwork Reduction Act of 1995 13 and are not derived from a
comprehensive or even representative survey or study of the cost of Commission
rules and forms. Compliance with Form S-6 is mandatory. Responses to the
collection of information will not be kept confidential.
The estimated number of annual initial registration statements filed on Form S-6
and the estimated number of annual post-effective amendments to previously
effective registration statements filed on Form S-6 are based on filings with the
Commission in 2014. The hour burden estimates for preparing and filing Form S-6
are based on the Commission’s experience with the contents of the form. The
number of burden hours may vary depending on, among other things, the complexity
of the filing and whether preparation of the forms is performed by internal staff or
outside counsel.
Form S-6 imposes two types of reporting burdens on UITs that are registered
under the Investment Company Act on Form N-8B-2: (1) the burden of preparing
and filing the initial registration statement; and (2) the burden of preparing and filing
post-effective amendments to a previously effective registration statement.
In our most recent Paperwork Reduction Act submission for Form S-6,
Commission staff estimated the annual compliance burden to comply with the
collection of information requirement of Form S-6 is 106,620 hours, with an internal
cost burden of approximately $34,000,000, and an external cost burden estimate of
$67,359,556. 14 The proposed amendments to Form S-6 are expected to increase the
burdens and costs for registrants to prepare and file registration statements and
reports on the affected forms, but we believe the burdens associated with
hyperlinking exhibits would be small. 15 We assume that the average burden hours of
requiring exhibit hyperlinks would vary based on the number of exhibits that are
included with a filing. For purposes of the PRA, based on an estimated average and
13

44 U.S.C. 3501 et seq.

14

This estimate is based on the last time the rule’s information collection was
submitted for PRA renewal in 2014.

15

See Proposing Release at Section IV.B.2.c.

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median number of exhibits filed with Form S-6 and the staff’s experience, we
estimate that the average burden for a registrant to hyperlink to exhibits would be
one hour per response for each of the affected forms. As discussed in the Proposing
Release, we are not making any adjustments to the paperwork burden of affected
forms due to the proposed amendments to simplify and modernize the rules and
forms governing incorporation by reference. 16
The table below shows the total annual compliance burden, in hours and in
costs, of the collection of information on Form S-6 resulting from the proposed
amendments. 17 The burden estimates were calculated by multiplying the estimated
number of responses by the estimated average amount of time it would take an issuer
to prepare and review the exhibit hyperlinks. The portion of the burden carried by
outside professionals is reflected as a cost, while the portion of the burden carried by
the issuer internally is reflected in hours. For purposes of the PRA, we estimate that
25% of the burden of preparation is carried by the registrant internally and that 75%
of the burden of preparation is carried by outside professionals retained by the
company at an average cost of $400 per hour. 18
Form

Form S-6

Proposed
number of
affected
responses
(A)
2,498

Incremental
burden
hours/form

Total
incremental
burden hours

(B)

(C) = (A) ×
(B)
2,498

1

25% internal
burden

75% outside
professional

Professional
costs

(D) = (C) ×
0.25

(E) = (C) ×
0.75

(F) = E × $400

625

1,874

$749,600

The figures above reflect our estimated increase of approximately 0.25
internal burden hours per fund. Given an estimated time cost of $329 per fund
(based on updated data concerning funds and fund personnel salaries), 19 we estimate
16

See Proposing Release at Section IV.B.3.b.

17

For convenience, the estimated hour and cost burdens in the table have been
rounded to the nearest whole number.

18

We recognize that the costs of retaining outside professionals may vary depending on
the nature of the professional services, but for purposes of this PRA analysis, we
estimate that such costs would be an average of $400 per hour. These estimates are
based on our estimates for the parallel requirement for operating companies.

19

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’s Office
Salaries in the Securities Industry 2013. The estimated wage figures are modified by Commission
staff to account for an 1800-hour work-year and multiplied by 2.93 to account for bonuses, firm
size, employee benefits, overhead, and adjusted to account for the effects of inflation, yielding
effective hourly rates of $345 and $313, respectively. See Securities Industry and Financial
Markets Association, Report on Management & Professional Earnings in the Securities Industry
2013. We estimate that compliance attorneys and senior programmers would divide their time

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that in the aggregate, funds will annually incur an additional internal burden of 625
hours 20 and time cost of $205,625 21 to comply with the proposed amendments to
Form S-6.
We estimate that with the additional hour burdens and time costs associated
with the proposed amendments the total annual internal burden to comply would be
107,245 burden hours, 22 and time costs of $34,205,625, 23 for Form S-6.
13. Costs to Federal Government
The annual cost of reviewing and processing disclosure documents, including
new registration statements, post-effective amendments, proxy statements,
shareholder reports, and other filings of investment companies amounted to
approximately $22.9 million in fiscal year 2016, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.
14. Changes in Burden
The estimated hourly burden associated with Form S-6 has increased from
106,620 to 107,245 (an increase of 625). In addition, the cost burden associated with
Form S-6 has increased from $67,359,556 to $68,109,156 (an increase of $749,600).
The changes in burden hours and external cost burdens are due to the staff’s
estimates of the time costs and external costs that would result from our proposed
amendments to Form S-6 regarding hyperlinking.
15. Information Collection Planned for Statistical Purposes
The results of any information collected will not be published.
16. Approval to Omit OMB Expiration Date
The Commission is not seeking approval to not display the expiration date for
OMB approval.
equally, yielding an estimated hourly wage rate of $329. ($345 per hour for compliance attorneys
+ $313 per hour for senior programmers) ÷ 2 = $329 per hour.
20

This estimate is based on the following calculation: 0.25 internal burden hours x
2,498 responses = 625 hours.

21

This estimate is based on the following calculation: 625 hours x $329 (blended rate for a
compliance attorney ($345) and a senior programmer ($313)) = $205,625.

22

This estimate is based on the following calculation: 106,620 + 625 = 107,245 hours.

23

This estimate is based on the following calculation: $34,000,000 + $205,625=
$34,205,625.

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17. Exceptions to Certification for Paperwork Reduction Act Submission
The Commission is not seeking an exception to the certification statement.
B. COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
The collection of information will not employ statistical methods.

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