Notice2022-05349
Proposed Collection; Comment Request; Extension: Rule 12b-1
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
March 14, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 49 (Monday, March 14, 2022)</title>
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[Federal Register Volume 87, Number 49 (Monday, March 14, 2022)]
[Notices]
[Pages 14315-14316]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-05349]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-188, OMB Control No. 3235-0212]
Proposed Collection; Comment Request; Extension: Rule 12b-1
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, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), 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.
Rule 12b-1 under the Investment Company Act of 1940 (17 CFR
270.12b-1) permits a registered open-end investment company (``fund'')
to bear expenses associated with the distribution of its shares,
provided that the fund complies with certain requirements, including,
among other things, that it adopt a written plan (``rule 12b-1 plan'')
and that it preserves in writing any agreements relating to the rule
12b-1 plan. The rule in part requires that (i) the adoption or material
amendment of a rule 12b-1 plan be approved by the fund's directors,
including its independent directors, and, in certain circumstances, its
shareholders; (ii) the board review quarterly reports of amounts spent
under the rule 12b-1 plan; and (iii) the board, including the
independent directors, consider continuation of the rule 12b-1 plan and
any related agreements at least annually. Rule 12b-1 also requires
funds relying on the rule to preserve for six years, the first two
years in an easily accessible place, copies of the rule 12b-1 plan and
any related agreements and reports, as well as minutes of board
meetings that describe the factors considered and the basis for
adopting or continuing a rule 12b-1 plan.
Rule 12b-1 also prohibits funds from paying for distribution of
fund shares with brokerage commissions on their portfolio transactions.
The rule requires funds that use broker-dealers that sell their shares
to also execute their portfolio securities transactions, to implement
policies and procedures reasonably designed to prevent: (i) The persons
responsible for selecting broker-dealers to effect transactions in fund
portfolio securities from taking into account broker-dealers'
promotional or sales efforts when making those decisions; and (ii) a
fund, its adviser, or its principal underwriter, from entering into any
agreement under which the fund directs brokerage transactions or
revenue generated by those transactions to a broker-dealer to pay for
distribution of the fund's (or any other fund's) shares.
The board and shareholder approval requirements of rule 12b-1 are
designed to ensure that fund shareholders and directors receive
adequate information to evaluate and approve a rule 12b-1 plan and,
thus, are necessary for investor protection. The requirement of
quarterly reporting to the board is designed to ensure that the rule
12b-1 plan continues to benefit the fund and its shareholders. The
recordkeeping requirements of the rule are necessary to enable
Commission staff to oversee compliance with the rule. The requirement
that funds or their advisers implement, and fund boards approve,
policies and procedures in order to prevent persons charged with
allocating fund brokerage from taking distribution efforts into account
is designed to ensure that funds' selection of brokers to effect
portfolio securities transactions is not influenced by considerations
about the sale of fund shares.
Commission staff estimates that there are approximately 6,358 funds
(for purposes of this estimate, registered open-end investment
companies or series thereof) that have at least one share class subject
to a rule 12b-1 plan and approximately 454 fund families with common
boards of directors that have at least one fund with a 12b-1 plan. The
Commission further estimates that the annual hour burden for complying
with the rule is 425 hours for each fund family with a portfolio that
has a rule 12b-1 plan. We therefore estimate that the total hourly
burden per year for all funds to comply with current information
collection requirements under rule 12b-1 is 192,950 hours. Commission
staff estimates that approximately three funds per year prepare a proxy
in connection with the adoption or material amendment of a rule 12b-1
plan. The staff further estimates that the cost of each fund's proxy is
$30,000. Thus, the total annual cost burden of rule 12b-1 to the fund
industry is $90,000.
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. The collections of information required by
rule 12b-1 are necessary to obtain the benefits of the rule. Notices to
the Commission will not be kept confidential. 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 OMB control number.
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
estimates of the burden of the proposed 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 by May 13, 2022.
Please direct your written comments to David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, C/O John
Pezzullo, 100 F Street NE, Washington,
[[Page 14316]]
DC 20549; or send an email to: <a href="/cdn-cgi/l/email-protection#f4a4a6b5abb9959d98969b8cb4879197da939b82"><span class="__cf_email__" data-cfemail="28787a6977654941444a4750685b4d4b064f475e">[email protected]</span></a> .
All submissions should refer to File Number 270-188. 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
(<a href="http://www.sec.gov">http://www.sec.gov</a>). 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: March 9, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-05349 Filed 3-11-22; 8:45 am]
BILLING CODE 8011-01-P
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