60 Day Notice

3235-0530 60 Day Notice.pdf

Rule 32a-4 (17 CFR Sec. 270.32a-4) under the Investment Company Act of 1940, "Independent Audit Committees"

60 Day Notice

OMB: 3235-0530

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12632

Federal Register / Vol. 85, No. 42 / Tuesday, March 3, 2020 / Notices

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–501, OMB Control No.
3235–0559]

Submission for OMB Review;
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 203A–2(e)

Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (‘‘PRA’’), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collections of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 203A–2(e),1 which is entitled
‘‘Internet Investment Advisers,’’
exempts from the prohibition on
Commission registration an internet
investment adviser who provides
investment advice to all of its clients
exclusively through computer softwarebased models or applications, termed
under the rule as ‘‘interactive
websites.’’ 2 These advisers generally
would not meet the statutory thresholds
currently set out in section 203A of the
Advisers Act 3—they do not manage $25
million or more in assets and do not
advise registered investment companies,
or they manage between $25 million
and $100 million in assets, do not
advise registered investment companies
or business development companies,
and are required to be registered as
investment advisers with the states in
which they maintain their principal
offices and places of business and are
subject to examination as an adviser by
such states.4 Eligibility under rule
203A–2(e) is conditioned on an adviser
maintaining in an easily accessible
place, for a period of not less than five
1 17

CFR 275.203A–2(e).
in rule 203A–2(e) is a limited
exception to the interactive website requirement
which allows these advisers to provide investment
advice to fewer than 15 clients through other means
on an annual basis. 17 CFR 275.203A–2(e)(1)(i). The
rule also precludes advisers in a control
relationship with an SEC-registered internet adviser
from registering with the Commission under the
common control exemption provided by rule 203A–
2(b) (17 CFR 275.203A–2(b)). 17 CFR 275.203A–
2(e)(1)(iii).
3 15 U.S.C. 80b–3a(a).
4 Id.

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2 Included

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years from the filing of Form ADV,5 a
record demonstrating that the adviser’s
advisory business has been conducted
through an interactive website in
accordance with the rule.6
This record maintenance requirement
is a ‘‘collection of information’’ for PRA
purposes. The Commission believes that
approximately 181 advisers are
registered with the Commission under
rule 203A–2(e), which involves a
recordkeeping requirement of
approximately four burden hours per
year per adviser and results in an
estimated 724 of total burden hours (4
× 181) for all advisers.
This collection of information is
mandatory, as it is used by Commission
staff in its examination and oversight
program in order to determine
continued Commission registration
eligibility for advisers registered under
this rule. Responses generally are kept
confidential pursuant to section 210(b)
of the Advisers Act.7 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. An agency may not conduct
or sponsor a collection of information
unless it displays a currently valid OMB
control number. No person shall be
subject to any penalty for failing to
comply with a collection of information
subject to the PRA that does not display
a valid OMB control number.
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
[email protected].
5 The five-year record retention period is a similar
recordkeeping retention period as imposed on all
advisers under rule 204–2 of the Advisers Act. See
rule 204–2 (17 CFR 275.204–2).
6 17 CFR 275.203A–2(e)(1)(ii).
7 15 U.S.C. 80b–10(a).

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Dated: February 27, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–04352 Filed 3–2–20; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–473, OMB Control No.
3235–0530]

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 32a–4

Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collections of information
summarized below. The Commission
plans to submit these existing
collections of information to the Office
of Management and Budget (‘‘OMB’’) for
extension and approval.
Section 32(a)(2) of the Investment
Company Act of 1940 (15 U.S.C. 80a
31(a)(2)) (‘‘Act’’) requires that the
selection of a registered management
investment company’s or registered
face-amount certificate company’s
(collectively, ‘‘funds’’) independent
public accountant be submitted to
shareholders for ratification or rejection.
Rule 32a–4 under the Investment
Company Act (17 CFR 270.32a–4)
exempts a fund from this requirement if,
among other things, the fund has an
audit committee consisting entirely of
independent directors. The rule permits
continuing oversight of a fund’s
accounting and auditing processes by an
independent audit committee in place
of a shareholder vote.
Among other things, in order to rely
on rule 32a–4, a fund’s board of
directors must adopt an audit committee
charter and must preserve that charter,
and any modifications to the charter,
permanently in an easily accessible
place. The purpose of these conditions
is to ensure that Commission staff will
be able to monitor the duties and
responsibilities of an audit committee of
a fund relying on the rule.
Commission staff estimates that on
average the board of directors takes 15
minutes to adopt the audit committee
charter. Commission staff has estimated
that with an average of 8 directors on

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Federal Register / Vol. 85, No. 42 / Tuesday, March 3, 2020 / Notices

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the board,1 total director time to adopt
the charter is 2 hours. Combined with
an estimated 1⁄2 hour of paralegal time
to prepare the charter for board review,
the staff estimates a total one-time
collection of information burden of 21⁄2
hours for each fund. Once a board
adopts an audit committee charter, the
charter is preserved as part of the fund’s
records. Commission staff estimates that
there is no annual hourly burden
associated with preserving the charter in
accordance with this rule.2
Because virtually all existing funds
have now adopted audit committee
charters, the annual one-time collection
of information burden associated with
adopting audit committee charters is
limited to the burden incurred by newly
established funds. Commission staff
estimates that fund sponsors establish
approximately 90 new funds each year,3
and that all of these funds will adopt an
audit committee charter in order to rely
on rule 32a–4. Thus, Commission staff
estimates that the annual one-time hour
burden associated with adopting an
audit committee charter under rule 32a–
4 is approximately225 hours.4
When funds adopt an audit committee
charter in order to rely on rule 32a–4,
they also may incur one-time costs
related to hiring outside counsel to
prepare the charter. Commission staff
estimates that those costs average
approximately $1,500 per fund. 5 As
noted above, Commission staff estimates
that approximately 90 new funds each
year will adopt an audit committee
charter in order to rely on rule 32a–4.
Thus, Commission staff estimates that
the ongoing annual cost burden
associated with rule 32a-4 in the future
will be approximately $135,000.6
These estimates of average costs are
made solely for the purposes of the
Paperwork Reduction Act. The
1 This estimate is based on staff experience and
on discussions with a representative of an entity
that surveys funds and calculates fund board
statistics based on responses to its surveys.
2 This estimate is based on staff experience and
discussions with funds regarding the hour burden
related to maintenance of the charter.
3 This estimate is based on the average number of
notifications of registration on Form N–8A filed
from2017 2019.
4 This estimate is based on the following
calculation: (2.5 burden hours for establishing
charter × 90 new funds = 225 burden hours).
5 Costs may vary based on the individual needs
of each fund. However, based on the staff’s
experience and conversations with outside counsel
that prepare these charters, legal fees related to the
preparation and adoption of an audit committee
charter usually average $1500 or less. The
Commission also understands that model audit
committee charters are available, which reduces the
costs associated with drafting a charter.
6 This estimate is based on the following
calculations: ($1500 cost of adopting charter × 90
newly established funds = $135,000).

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estimates are not derived from a
comprehensive or even a representative
survey or study of the costs of
Commission rules. The collections of
information required by rule 32a–4 are
necessary to obtain the benefits of the
rule. The Commission is seeking OMB
approval, because 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 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 estimates of the burdens
of the collections of information; (c)
ways to enhance the quality, utility, and
clarity of the information collected; and
(d) ways to minimize the burdens of the
collections 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 Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
[email protected].
Dated: February 27, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–04351 Filed 3–2–20; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
FEDERAL REGISTER CITATION OF PREVIOUS
ANNOUNCEMENT: To be published.
PREVIOUSLY ANNOUNCED TIME AND DATE OF
THE MEETING: Wednesday, March 4, 2020

at 10:00 a.m.
The Open
Meeting scheduled for Wednesday,
March 4, 2020 at 10:00 a.m. has been
changed to Wednesday, March 4, 2020
at 11:00 a.m.

CHANGES IN THE MEETING:

CONTACT PERSON FOR MORE INFORMATION:

For further information and to ascertain
what, if any, matters have been added,
deleted or postponed, please contact the
Office of the Secretary at (202) 551–
5400.

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12633

Dated: February 28, 2020.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020–04433 Filed 2–28–20; 4:15 pm]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–231, OMB Control No.
3235–0229]

Submission for OMB Review;
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:
Form N–17D–1

Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l–3520), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Section 17(d) (15 U.S.C. 80a–17(d)) of
the Investment Company Act of 1940
(‘‘Act’’) authorizes the Commission to
adopt rules that protect funds and their
security holders from overreaching by
affiliated persons when the fund and the
affiliated person participate in any joint
enterprise or other joint arrangement or
profit-sharing plan. Rule 17d–1 under
the Act (17 CFR 270.17d–1) prohibits
funds and their affiliated persons from
participating in a joint enterprise, unless
an application regarding the transaction
has been filed with and approved by the
Commission. Paragraph (d)(3) of the rule
provides an exemption from this
requirement for any loan or advance of
credit to, or acquisition of securities or
other property of, a small business
concern, or any agreement to do any of
the foregoing (‘‘investments’’) made by a
small business investment company
(‘‘SBIC’’) and an affiliated bank,
provided that reports about the
investments are made on forms the
Commission may prescribe. Rule 17d–2
(17 CFR 270.17d–2) designates Form N–
17D–1 (17 CFR 274.200) (‘‘form’’) as the
form for reports required by rule 17d–
1.
SBICs and their affiliated banks use
form N–17D–1 to report any
contemporaneous investments in a
small business concern. The form
provides shareholders and persons
seeking to make an informed decision
about investing in an SBIC an

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