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pdfOMB CONTROL NUMBER: 3235-0307
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form N-1A
A. JUSTIFICATION
1.
Necessity for the Information Collection
Form N-1A (17 CFR 239.15A and 274.11A) is the form used by open-end
management investment companies (“funds”) to register under the Investment
Company Act of 1940 (15 U.S.C. 80a-1 et seq.) (“Investment Company Act”)
and/or to register their securities under the Securities Act of 1933 (15 U.S.C. 77a, et
seq.) (“Securities Act”). Section 5 of the Securities Act (15 U.S.C. 77e) 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, and Section 8 of the
Investment Company Act (15 U.S.C. 80a-8) requires a fund to register as an
investment company. Form N-1A also permits funds to provide investors with a
prospectus and a statement of additional information (“SAI”) covering essential
information about the fund when it makes an initial or additional offering of its
securities. 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.
On December 15, 2021, the Commission proposed amendments to certain rules
that govern money market funds under the Investment Company Act. 1 The proposed
amendments to Form N-1A would include a requirement for any money market
fund that is not a government money market fund or a retail money market fund to
1
Money Market Fund Reforms, Investment Company Act Release No. 34441 (Dec. 15, 2021),
available at https://www.sec.gov/rules/proposed/2021/ic-34441.pdf.
provide swing pricing disclosures to investors, including an explanation of the fund’s
use of swing pricing and a general description of the effects of swing pricing on the
fund’s average annual total returns for the applicable period(s). The proposed
amendments would additionally include a proposal to remove the current disclosures
related to the imposition of liquidity fees and any suspension of redemptions.
2.
Purpose and Use of the Information Collection
The title for the collection of information is: Form N-1A under the Investment
Company Act of 1940 and Securities Act of 1933, Registration Statement of OpenEnd Management Investment Companies. The purpose of Form N-1A is to meet the
filing and disclosure requirements of the Securities Act and the Investment Company
Act and to enable funds to provide investors with information necessary to evaluate
an investment in the fund. Unlike many other federal information collections, which
are primarily for the use and benefit of the collecting agency, this information
collection is primarily for the use and benefit of investors. The information filed with
the Commission also permits the verification of compliance with securities law
requirements and assures the public availability and dissemination of the
information.
3.
Consideration Given to Information Technology
The Commission’s electronic filing system (Electronic Data Gathering, Analysis
and Retrieval or “EDGAR”) is designed to automate the filing, processing and
dissemination of full disclosure filings. The system permits publicly held companies
to transmit their filings to the Commission electronically. EDGAR has increased the
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speed, accuracy and availability of information, generating benefits to investors and
financial markets. All funds have been required to use EDGAR for their disclosure
filings since November 6, 1995. Form N-1A is required to be filed with the
Commission electronically on EDGAR. 2 The public may access filings on EDGAR
through the Commission’s internet website (http://www.sec.gov). Prospectuses and
SAIs may be sent to investors by electronic means so long as the fund meets certain
requirements. 3
4.
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. The requirements of Form N-1A are not generally duplicated
elsewhere.
5.
Effect on Small Entities
The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, 4 to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. The current disclosure requirements for
registration statements on Form N-1A do not distinguish between small entities and
other investment companies. The burden on smaller investment companies of
2
17 CFR 232.101(a)(1)(i) and (iv).
3
See Use of Electronic Media for Delivery Purposes, Securities Act Release No. 7233,
Exchange Act Release No. 36345, Investment Company Act Release No. 21399
(Oct. 6, 1995) (60 FR 53458 (Oct. 13, 1995)).
4
5 U.S.C. 601 et seq.
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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 N-1A is to meet the filing and disclosure requirements of
the Securities Act and the Investment Company 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 and the Investment Company 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).
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8.
Consultation Outside the Agency
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. In addition, the
Commission has requested public comment on the proposed amendments to Form
N-1A, including the collection of information requirements resulting from the
proposed amendments. Before adopting these amendments, the Commission will
receive and evaluate public comments on the proposed amendments and their
associated collection of information requirements.
9.
Payment or Gift
No payment or gift to respondents was provided.
10.
Confidentiality
No assurance of confidentiality was provided.
11.
Sensitive Questions
No information of a sensitive nature, including social security numbers, will be
required under this collection of information. The information collection collects
basic Personally Identifiable Information (PII) that may include names, job titles and
work addresses. However, the agency has determined that the information collection
does not constitute a system of record for purposes of the Privacy Act. Information
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is not retrieved by a personal identifier. In accordance with Section 208 of the EGovernment Act of 2002, the agency has conducted a Privacy Impact Assessment
(PIA) of the EDGAR system, in connection with this collection of information. The
EDGAR PIA, published on February 5, 2020, is provided as a supplemental
document and is also available at https://www.sec.gov/about/privacy/pia/pia-edgar.pdf.
12.
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 5 and are not derived from a
comprehensive or even representative survey or study of the cost of Commission
rules and forms. Compliance with the disclosure requirements of Form N-1A is
mandatory. Responses to the disclosure requirements will not be kept confidential.
In our most recent Paperwork Reduction Act submission for Form N-1A, we
estimated the annual aggregate burden to comply with the collection of information
requirement of Form N-1A is 1,672,077 burden hours with an internal cost burden of
$474,392,078, and an external cost burden estimate of $132,940,008.
Table 1 below summarizes our PRA initial and ongoing annual burden estimates
associated with the proposed amendments to Form N-1A.
Table 1: Proposed Burden Estimates for Form N-1A
Internal initial
burden hours
Internal annual
burden hours1
Wage rate2
Internal time costs
$3564
$595
PROPOSED ESTIMATES
Swing pricing-related disclosure
2 hours
Number of funds for swing pricingrelated disclosure
5
1.67 hours3
× 535
× 535
44 U.S.C. 3501 et seq.
6
Estimated burden for swing pricingrelated disclosure (I)
89 hours
Removal of liquidity fee and
redemption gate-related disclosure
-0.5 hours6
Number of funds for removal of
liquidity fee and redemption gaterelated disclosure
× 1297
× 129
Estimated annual burden reduction
for removal of fee and gate-related
disclosure (II)
-64.5 hours
-$22,962
Total estimated burden (I-II)
24.5
$8,573
Current Burden Estimates
1,672,077
$474,392,078
Revised Burden Estimates
1,672,101.5
$474,400,651
$31,535
$3564
-$178
Notes:
1. This estimate includes the initial burden estimates amortized over a three-year period.
2. The Commission’s estimates of the relevant wage rates are based 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 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, overhead,
and adjusted to account for the effects of inflation. These PRA estimates assume that the same types of professionals would be involved in the
proposed disclosure requirements that we believe otherwise would be involved in preparing and filing registration statements on Form N-1A.
3. This estimate assumes that, after the initial 2 hours to comply with the proposed swing pricing disclosure requirements, relevant funds would
have an ongoing burden of 1 hour each year to review and update the required disclosures.
4. This represents a blended rate for a compliance attorney ($373) and a senior programmer ($339).
5. The number of funds estimate is based on analysis of the number of prime institutional public, prime institutional nonpublic, and tax-exempt
institutional money market funds reporting to the Commission on Form N-MFP as of July 2021.
6. Although no money market funds have imposed liquidity fees or redemption gates and, therefore, funds have not needed to disclose
information in their SAIs about the historical occasions in which the fund considered or imposed liquidity fees or redemption gates, the
Commission previously estimated that there were ongoing PRA burdens associated with disclosure requirements related to liquidity fees and
redemption gates. See Money Market Fund Reform; Amendments to Form PF, Investment Company Act Release No. 31166 (July 23, 2014) [79
FR 47735 (Aug. 14, 2014)], at section IV.G.
7. The number of funds estimate is based on analysis of the number of non-government money market funds reporting to the Commission on
Form N-MFP as of July 2021.
13.
Cost to Respondents
Cost burden is the cost of goods and services purchased to prepare and amend
registration statements on Form N-1A, such as for the services of independent
auditors and outside counsel. The cost burden does not include the hour burden
discussed in Item 12 above. Estimates are based on the Commission’s experience
with the filing of registration forms.
In our most recent Paperwork Reduction Act submission for Form N-1A,
Commission staff estimated about $132,940,008 in external cost burden per year. We
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believe that the proposed amendments will not change the external cost burdens of
Form N-1A.
Table 2: Summary of Revised Annual Responses, Burden Hours, and Cost
Estimates
IC Title
Annual No. of Responses
Previously
Requested
Change
approved
Form N-1A
14.
6,002
6,002
0
Annual Time Burden (Hrs.)
Previously
Requested
Change
approved
1,672,077
1,672,101.5
24.5
External Cost to Respondents ($)
Previously
Requested
Change
approved
$132,940,008
$132,940,008
Cost to the 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 $25.7 million in fiscal year 2020, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.
15.
Change in Burden
As summarized in the Tables above, the estimated hourly burden associated with
Form N-1A would increase from 1,672,077 hours to 1,672,101.5 hours (an increase
of 24.5 hours) as a result of the proposed amendments. In addition, the cost burden
associated with Form N-1A would not change. The change in burden hours is due to
the estimates of the time burden that will result from the proposed amendments
affecting Form N-1A regarding swing pricing. The Commission requested public
comment on all information collection burden estimates for this OMB control
number.
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$0
16.
Information Collection Planned for Statistical Purposes
The results of any information collected will not be published.
17.
Approval to Omit OMB Expiration Date
We request authorization to omit the expiration date on the electronic version of
the form for design and IT project scheduling reasons. The OMB control number will
be displayed.
18.
Exceptions to Certification Statement for Paperwork Reduction Act
Submission
The Commission is not seeking an exception to the certification statement.
B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
The collection of information will not employ statistical methods.
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File Type | application/pdf |
Author | Nixon, Naseem |
File Modified | 2022-02-10 |
File Created | 2022-02-10 |