Notice2021-28424
Submission for OMB Review; Comment Request; Extension: Rule 154
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 3, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 1 (Monday, January 3, 2022)</title>
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[Federal Register Volume 87, Number 1 (Monday, January 3, 2022)]
[Notices]
[Pages 138-139]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28424]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0495, SEC File No. 270-438]
Submission for OMB Review; Comment Request; Extension: Rule 154
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
Notice is hereby given that, under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission (the
``Commission'') has submitted to the Office of Management and Budget a
request for extension of the previously approved collection of
information discussed below.
The federal securities laws generally prohibit an issuer,
underwriter, or dealer from delivering a security for sale unless a
prospectus meeting certain requirements accompanies or precedes the
security. Rule 154 (17 CFR 230.154) under the Securities Act of 1933
(15 U.S.C. 77a) (the ``Securities Act'') permits, under certain
circumstances, delivery of a single prospectus to investors who
purchase securities from the same issuer and share the same address
(``householding'') to satisfy the applicable prospectus delivery
requirements.\1\ The purpose of rule 154 is to reduce the amount of
duplicative prospectuses delivered to investors sharing the same
address.
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\1\ The Securities Act requires the delivery of prospectuses to
investors who buy securities from an issuer or from underwriters or
dealers who participate in a registered distribution of securities.
See Securities Act sections 2(a)(10), 4(1), 4(3), 5(b) (15 U.S.C.
77b(a)(10), 77d(1), 77d(3), 77e(b)); see also rule 174 under the
Securities Act (17 CFR 230.174) (regarding the prospectus delivery
obligation of dealers); rule 15c2-8 under the Securities Exchange
Act of 1934 (17 CFR 240.15c2-8) (prospectus delivery obligations of
brokers and dealers).
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Under rule 154, a prospectus is considered delivered to all
investors at a shared address, for purposes of the federal securities
laws, if the person relying on the rule delivers the prospectus to the
shared address, addresses the prospectus to the investors as a group or
to each of the investors individually, and the investors consent to the
delivery of a single prospectus. The rule applies to prospectuses and
prospectus supplements. Currently, the rule permits householding of all
prospectuses by an issuer, underwriter, or dealer relying on the rule
if, in addition to the other conditions set forth in the rule, the
issuer, underwriter, or dealer has obtained from each investor written
or implied consent to householding.\2\ The rule requires issuers,
underwriters, or dealers that wish to household prospectuses with
implied consent to send a notice to each investor stating that the
investors in the household will receive one prospectus in the future
unless the investors provide contrary instructions. In
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addition, at least once a year, issuers, underwriters, or dealers,
relying on rule 154 for the householding of prospectuses relating to
open-end management investment companies that are registered under the
Investment Company Act of 1940 (``mutual funds'') and each series
thereof must explain to investors who have provided written or implied
consent how they can revoke their consent.\3\ Preparing and sending the
notice and the annual explanation of the right to revoke are
collections of information.
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\2\ Rule 154 permits the householding of prospectuses that are
delivered electronically to investors only if delivery is made to a
shared electronic address and the investors give written consent to
householding. Implied consent is not permitted in such a situation.
See rule d 154(b)(4).
\3\ See Rule 154(c).
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The rule allows issuers, underwriters, or dealers to household
prospectuses if certain conditions are met. Among the conditions with
which a person relying on the rule must comply are providing notice to
each investor that only one prospectus will be sent to the household
and, in the case of issuers that are mutual funds and any series
thereof, providing to each investor who consents to householding an
annual explanation of the right to revoke consent to the delivery of a
single prospectus to multiple investors sharing an address. The purpose
of the notice and annual explanation requirements of the rule is to
ensure that investors who wish to receive individual copies of
prospectuses are able to do so.
Although rule 154 is not limited to mutual funds, the Commission
believes that it is used mainly by mutual funds and by broker-dealers
that deliver mutual fund prospectuses. The Commission is unable to
estimate the number of issuers other than mutual funds that rely on the
rule.
The Commission estimates that, as of June 30, 2021, there are
approximately 13,182 mutual fund series registered on Form N-1A,
approximately 1,279 of which are directly sold and therefore deliver
their own prospectuses. Of these, the Commission estimates that
approximately half (640 mutual fund series): (i) Do not send the
implied consent notice requirement because they obtain affirmative
written consent to household prospectuses in the fund's account opening
documentation; or (ii) do not take advantage of the householding
provision because of electronic delivery options which lessen the
economic and operational benefits of rule 154 when compared with the
costs of compliance. Therefore, the Commission estimates that each of
the 640 directly sold mutual fund series will spend an average of 20
hours per year complying with the notice requirement of the rule, for a
total of 12,800 burden hours. In addition, of the approximately 1,279
mutual fund series that are directly sold, the Commission estimates
that approximately 75% (or 960) will each spend 1 hour complying with
the annual explanation of the right to revoke requirement of the rule,
for a total of 960 hours.
The Commission estimates that as of December 31, 2020, there were
approximately 462 broker-dealers that have customer accounts with
mutual funds, and therefore may be required to deliver mutual fund
prospectuses. The Commission estimates that each affected broker-dealer
will spend, on average, 20 hours complying with the notice requirement
of the rule, for a total of 9,240 hours. In addition, each broker-
dealer will also spend one hour complying with the annual explanation
of the right to revoke requirement, for a total of 462 hours.
Therefore, the total number of respondents for rule 154 is 1,422 (960
\4\ mutual fund series plus 462 broker-dealers), and the estimated
total hour burden is approximately 23,462 hours (13,760 hours for
mutual fund series, plus 9,702 hours for broker-dealers).
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\4\ The Commission estimates that 640 mutual funds prepare both
the implied consent notice and the annual explanation of the right
to revoke consent + 320 mutual funds that prepare only the annual
explanation of the right to revoke.
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The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act, and is not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules and forms.
Compliance with the collection of information requirements of the
rule is necessary to obtain the benefit of relying on the rule.
Responses to the collections of information will not be kept
confidential. The rule does not require these records be retained for
any specific period of time. 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.
The public may view the background documentation for this
information collection at the following website, <a href="http://www.reginfo.gov">www.reginfo.gov</a>.
Comments should be directed to: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503, or by sending an email to:
<a href="/cdn-cgi/l/email-protection#4f0326212b3c2e366102610e2d2e3b2a0f20222d612a203f61282039"><span class="__cf_email__" data-cfemail="97dbfef9f3e4f6eeb9dab9d6f5f6e3f2d7f8faf5b9f2f8e7b9f0f8e1">[email protected]</span></a>; and (ii) David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, c/o John R.
Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to:
<a href="/cdn-cgi/l/email-protection#59090b1806143830353b3621192a3c3a773e362f"><span class="__cf_email__" data-cfemail="431311021c0e222a2f212c3b033026206d242c35">[email protected]</span></a>. Written comments and recommendations for the
proposed information collection should be sent within 30 days of
publication of this notice to <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>. Find
this particular information collection by selecting ``Currently under
30-day Review--Open for Public Comments'' or by using the search
function.
Dated: December 28, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28424 Filed 12-30-21; 8:45 am]
BILLING CODE 8011-01-P
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