Rule 204-2 under the Investment Advisers Act of 1940

Forms and Documents

Document Name	Status
Supporting Statement_Rule 204-2.pdf Supporting Statement A	2023-11-19

IC Document Collections

IC ID	Document Title	Status
34747	Rule 204-2, Books and Records to Be Maintained by Investment Advisers	Modified

ICR Details

OMB Control No: 3235-0278	ICR Reference No: 202311-3235-028
Status: Received in OIRA	Previous ICR Reference No: 202304-3235-012
Agency/Subagency: SEC	Agency Tracking No: IM-270-215
Title: Rule 204-2 under the Investment Advisers Act of 1940
Type of Information Collection: Revision of a currently approved collection	Common Form ICR:  No
Type of Review Request: Regular	Date Submitted to OIRA: 11/19/2023

	Requested	Previously Approved
Expiration Date	36 Months From Approved	05/31/2026
Responses	15,402	15,160
Time Burden (Hours)	3,088,473	2,803,536
Cost Burden (Dollars)	0	0

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Abstract: Rule 204-2 sets forth mandatory requirements for maintaining and preserving specified books and records. The records that an adviser must keep in accordance with rule 204-2 must generally be retained for not less than five years. The proposed amendments would require advisers to make and retain the following records for client accounts: all records required to be made and maintained pursuant to proposed rule 275.211(h)(2)-4, including: (i) written documentation of the evaluation conducted pursuant to proposed rule 275.211(h)(2)-4(b)(1), (ii) written documentation of each determination made pursuant to proposed rule 275.211(h)(2)-4(b)(2), including the rationale for such determination; (iii) written documentation of each elimination or neutralization made pursuant to proposed rule 275.211(h)(2)-4(b)(3); (iv) written policies and procedures prepared in accordance with proposed rule 275.211(h)(2)-4(c), including any written description and the date on which the policies and procedures were last reviewed; (v) a record of any disclosures provided to each investor regarding the investment adviser’s use of covered technologies, including, if applicable, the date such disclosure was provided or updated; (vi) a record of each instance in which a covered technology was altered, overridden, or disabled, the reason for such action, and the date thereof, including a record of all instances where an investor requested that a covered technology be altered or restricted in any manner.

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Authorizing Statute(s): US Code: 15 USC 80b-11 Name of Law: Investment Advisers Act of 1940
   US Code: 15 USC 80b-4 Name of Law: Investment Advisers Act of 1940
  

Citations for New Statutory Requirements: PL: Pub.L. 111 - 213 410 Name of Law: Dodd-Frank Wall Street Reform and Consumer Protection Act

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
3235-AN17	Proposed rulemaking	88 FR 53960	08/09/2023

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Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 1

IC Title	Form No.	Form Name
Rule 204-2, Books and Records to Be Maintained by Investment Advisers

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ICR Summary of Burden

	Total Request	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	15,402	15,160	0	242	0	0
Annual Time Burden (Hours)	3,088,473	2,803,536	0	284,937	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Miscellaneous Actions

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: The estimated annual burden hours associated with rule 204-2 has increased from 2,803,536 hours to 3,088,473 hours (an increase of 284,937 hours). In addition, the external cost burden associated with rule 204-2 ($0) has not changed. The change in annual burden hours is due to our proposed amendments to rule 204-2, to correspond to proposed new rule 211(h)(2)-4, requiring advisers to maintain the following records: (i) written documentation of the evaluation conducted pursuant to proposed rule 275.211(h)(2)-4(b)(1), (ii) written documentation of each determination made pursuant to proposed rule 275.211(h)(2)-4(b)(2), including the rationale for such determination; (iii) written documentation of each elimination or neutralization made pursuant to proposed rule 275.211(h)(2)-4(b)(3); (iv) written policies and procedures prepared in accordance with proposed rule 275.211(h)(2)-4(c), including any written description and the date on which the policies and procedures were last reviewed; (v) a record of any disclosures provided to each investor regarding the investment adviser’s use of covered technologies, including, if applicable, the date such disclosure was provided or updated; (vi) a record of each instance in which a covered technology was altered, overridden, or disabled, the reason for such action, and the date thereof, including a record of all instances where an investor requested that a covered technology be altered or restricted in any manner.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Does this ICR request any personally identifiable information (see OMB Circular No. A-130 for an explanation of this term)? Please consult with your agency's privacy program when making this determination.     No

Does this ICR include a form that requires a Privacy Act Statement (see 5 U.S.C. §552a(e)(3))? Please consult with your agency's privacy program when making this determination.     No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? No

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Common Form ICR:  No

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On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 11/19/2023

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