60 Day Notice

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Federal Register / Vol. 84, No. 156 / Tuesday, August 13, 2019 / Notices

each of these entities must maintain.
Rule 31a–2 (17 CFR 270.31a–2) under
the Act specifies the time periods that
entities must retain certain books and
records, including those required to be
maintained under rule 31a–1.
The retention of records, as required
by the rule, is necessary to ensure access
to material business and financial
information about funds and certain
related entities. We periodically inspect
the operations of funds to ensure they
are in compliance with the Act and
regulations under the Act. Due to the
limits on our resources, however, each
fund may only be inspected at intervals
of several years. In addition, the
prosecution of persons who have
engaged in certain violations of the
federal securities laws may not be
limited by timing restrictions. For these
reasons, we often need information
relating to events or transactions that
occurred years ago. Without the
requirement to preserve books, records,
and other documents, our staff would
have difficulty determining whether the
fund was in compliance with the law in
such areas as valuation of its portfolio
securities, computation of the prices
investors paid, and, when purchasing
and selling fund shares, types and
amounts of expenses the fund incurred,
kinds of investments the fund
purchased, actions of affiliated persons,
or whether the fund had engaged in any
illegal or fraudulent activities. As part of
our examinations of funds, our staff also
reviews the materials that directors
consider in approving the advisory
contract.
There are 3,160 funds currently
operating as of December 31, 2018, all
of which are required to comply with
rule 31a–2. The Commission staff
estimates that, on average, a fund
spends 220.4 hours annually to comply
with the rule. The Commission therefore
estimates the total annual hour burden
of the rule’s and form’s paperwork
requirements to be 696,464 hours. In
addition to the burden hours, the
Commission staff estimates that the
average yearly cost to each fund that is
subject to rule 31a–2 is about
$36,510.28. The Commission estimates
total annual cost is therefore about
$115.4 million.
Estimates of average burden hours
and costs are made solely for purposes
of the Paperwork Reduction Act and are
not derived from a comprehensive or
even representative survey or study of
the costs of Commission rules and
forms. Compliance with the collection
of information requirements of the rule
is mandatory. Responses to the
disclosure requirements will not be kept
confidential. An agency may not

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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 collection of information is
necessary for the proper performance of
the functions of the Commission,
including whether the information has
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 Charles Riddle, Acting Director and
Chief Information Officer, Securities
and Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
[email protected].
All submissions should refer to File
Number 270–174. This file number
should be included on the subject line
if email is used. The Commission will
post all comments on the Commission’s
internet website (http://www.sec.gov).
All comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
Dated: August 7, 2019.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17298 Filed 8–12–19; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–026, OMB Control No.
3235–0033]

Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 17a–3

Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.) the
Securities and Exchange Commission

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(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17a–3 (17 CFR
240.17a–3), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17a–3 under the Securities
Exchange Act of 1934 establishes
minimum standards with respect to
business records that broker-dealers
registered with the Commission must
make and keep current. These records
are maintained by the broker-dealer (in
accordance with a separate rule), so they
can be used by the broker-dealer and
reviewed by Commission examiners, as
well as other regulatory authority
examiners, during inspections of the
broker-dealer.
The collections of information
included in Rule 17a–3 are necessary to
provide Commission, self-regulatory
organization (‘‘SRO’’) and state
examiners to conduct effective and
efficient examinations to determine
whether broker-dealers are complying
with relevant laws, rules, and
regulations. If broker-dealers were not
required to create these baseline,
standardized records, Commission, SRO
and state examiners could be unable to
determine whether broker-dealers are in
compliance with the Commission’s
antifraud and anti-manipulation rules,
financial responsibility program, and
other Commission, SRO, and State laws,
rules, and regulations.
As of December 31, 2018 there were
3,764 broker-dealers registered with the
Commission. The Commission estimates
that these broker-dealer respondents
incur a total burden of 2,893,773 hours
per year to comply with Rule 17a–3.1
In addition, Rule 17a–3 contains
ongoing operation and maintenance
costs for broker-dealers, including the
cost of postage to provide customers
1 On June 5, 2019, the Commission adopted Rule
151–1 under the Securities Exchange Act of 1934
establishing a standard of conduct for brokerdealers and natural persons who are associated
persons of a broker-dealer when making a
recommendation of any securities. See Securities
Exchange Act Release No. 86031 (Jun. 5, 2019), 84
FR 33318 (Jul. 12, 2019). At the same time, the
Commission adopted Exchange Act Rule 17a–14
(CFR 240.17a–14) and Form CRS (17 CFR 249.640)
under the Exchange Act. See Form CRS
Relationship Summary; Amendments to Form ADV
Exchange Act Release No. 86032, Advisers Act
Release No. 5247, File No. S7–08–18 (June 5, 2019),
84 FR 33492 (July 12, 2019). As part of new Rule
17a–14 and Form CRS, and Regulation Best Interest,
the Commission amended Rule 17a–3 by adding
new paragraphs (a)(24) and (a)(35). The collections
of information and the related burdens associated
with these amendments have been separately
noticed for comment and are currently under
review.

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Federal Register / Vol. 84, No. 156 / Tuesday, August 13, 2019 / Notices
with account information, and costs for
equipment and systems development.
The Commission estimates that under
Rule 17a–3(a)(17), approximately
45,633,482 customers will need to be
provided with information regarding
their account on a yearly basis. The
Commission estimates that the postage
costs associated with providing those
customers with copies of their account
record information would be
approximately $16,321,719 per year
(45,633,482 × $0.35).2 The staff
estimates that broker-dealers
establishing liquidity, credit, and
market risk management controls
pursuant to Rule 17a–3(a)(23) incur onetime startup costs of $912,000, or
$304,000 amortized over a three-year
approval period, to hire outside counsel
to review the controls. The staff further
estimates that the ongoing equipment
and systems development costs relating
to Rule 17a–3 for the industry would be
about $37,446,686 per year.
Consequently, the total cost burden
associated with Rule 17a–3 would be
approximately $54,072,405 per year.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimate of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information to be 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.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
[email protected].
2 Estimates of postage costs are derived from past
conversations with industry representatives and
have been adjusted to account for inflation and
increases in postage costs.

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Dated: August 7, 2019.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17236 Filed 8–12–19; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–465, OMB Control No.
3235–0528]

Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 237, 60-Day Notice (2019)

Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520), 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.
In Canada, as in the United States,
individuals can invest a portion of their
earnings in tax-deferred retirement
savings accounts (‘‘Canadian retirement
accounts’’). These accounts, which
operate in a manner similar to
individual retirement accounts in the
United States, encourage retirement
savings by permitting savings on a taxdeferred basis. Individuals who
establish Canadian retirement accounts
while living and working in Canada and
who later move to the United States
(‘‘Canadian-U.S. Participants’’ or
‘‘participants’’) often continue to hold
their retirement assets in their Canadian
retirement accounts rather than
prematurely withdrawing (or ‘‘cashing
out’’) those assets, which would result
in immediate taxation in Canada.
Once in the United States, however,
these participants historically have been
unable to manage their Canadian
retirement account investments. Most
securities that are ‘‘qualified
investments’’ for Canadian retirement
accounts are not registered under the
U.S. securities laws. Those securities,
therefore, generally cannot be publicly
offered and sold in the United States
without violating the registration
requirement of the Securities Act of
1933 (‘‘Securities Act’’).1 As a result of
1 15 U.S.C. 77. In addition, the offering and
selling of securities of investment companies

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this registration requirement, CanadianU.S. Participants previously were not
able to purchase or exchange securities
for their Canadian retirement accounts
as needed to meet their changing
investment goals or income needs.
The Commission issued a rulemaking
in 2000 that enabled Canadian-U.S.
Participants to manage the assets in
their Canadian retirement accounts by
providing relief from the U.S.
registration requirements for offers of
securities of foreign issuers to CanadianU.S. Participants and sales to Canadian
retirement accounts.2 Rule 237 under
the Securities Act 3 permits securities of
foreign issuers, including securities of
foreign funds, to be offered to CanadianU.S. Participants and sold to their
Canadian retirement accounts without
being registered under the Securities
Act.
Rule 237 requires written offering
documents for securities offered and
sold in reliance on the rule to disclose
prominently that the securities are not
registered with the Commission and are
exempt from registration under the U.S.
securities laws. The burden under the
rule associated with adding this
disclosure to written offering documents
is minimal and is non-recurring. The
foreign issuer, underwriter, or brokerdealer can redraft an existing prospectus
or other written offering material to add
this disclosure statement, or may draft
a sticker or supplement containing this
disclosure to be added to existing
offering materials. In either case, based
on discussions with representatives of
the Canadian fund industry, the staff
estimates that it would take an average
of 10 minutes per document to draft the
requisite disclosure statement.
The Commission understands that
there are approximately 2,412 Canadian
issuers other than funds that may rely
on rule 237 to make an initial public
offering of their securities to CanadianU.S. Participants.4 The staff estimates
(‘‘funds’’) that are not registered pursuant to the
Investment Company Act of 1940 (‘‘Investment
Company Act’’) is generally prohibited by U.S.
securities laws. 15 U.S.C. 80a.
2 See Offer and Sale of Securities to Canadian
Tax-Deferred Retirement Savings Accounts, Release
Nos. 33–7860, 34–42905, IC–24491 (June 7, 2000)
[65 FR 37672 (June 15, 2000)]. This rulemaking also
included new rule 7d–2 under the Investment
Company Act, permitting foreign funds to offer
securities to Canadian-U.S. Participants and sell
securities to Canadian retirement accounts without
registering as investment companies under the
Investment Company Act. 17 CFR 270.7d–2.
3 17 CFR 230.237.
4 This estimate is based on the following
calculation: 2,322 equity issuers + 90 bond issuers
= 2,412 total issuers (as of Dec. 2018). See The MiG
Report, Toronto Stock Exchange and TSX Venture
Exchange (Dec. 2018) (providing number of equity
and bond issuers on the Toronto Exchange).

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