Notice2022-11662
Proposed Collection; Comment Request; Extension: Rule 12d3-1
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
June 1, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 105 (Wednesday, June 1, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 105 (Wednesday, June 1, 2022)]
[Notices]
[Pages 33222-33223]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-11662]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-504, OMB Control No. 3235-0561]
Proposed Collection; Comment Request; Extension: Rule 12d3-1
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
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.
Rule 12d3-1 (17 CFR 270.12d3-1) under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) (``Investment Company Act'') permits a
fund to invest up to five percent of its assets in securities of an
issuer deriving more than fifteen percent of its gross revenues from
securities-related businesses (subject to certain limitations),
notwithstanding the general prohibition in Section 12(d)(3) of the
Investment Company Act of a registered investment company (``fund'')
and companies controlled by the fund purchasing securities issued by a
registered investment adviser, broker, dealer, or underwriter
(``securities-related businesses'').
A fund may, however, rely on an exemption in rule 12d3-1 to acquire
securities issued by its subadvisers in circumstances in which the
subadviser would have little ability to take advantage of the fund,
because it is not in a position to direct the fund's securities
purchases. This exemption in rule 12d3-1 is available if: (i) The
subadviser is not, and is not an affiliated person of, an investment
adviser that provides advice with respect to the portion of the fund
that is acquiring the securities; and (ii) the advisory contracts of
the subadviser, and any subadviser that is advising the purchasing
portion of the fund, prohibit them from consulting with each other
concerning securities transactions of the fund, and limit their
responsibility in providing advice to providing advice with respect to
discrete portions of the fund's portfolio.\1\
---------------------------------------------------------------------------
\1\ See 17 CFR 270.270.12d3-1(c)(3).
---------------------------------------------------------------------------
Rule 12d3-1 requires funds to amend their subadvisory contracts
before they can rely on rule 12d3-1's exemption to ensure that the
subadviser that engages in the transaction does not influence the
fund's investment decision to engage in the transaction.
Based on an analysis of fund filings, Commission staff estimates
that approximately 285 funds enter into such new subadvisory agreements
each year, and that it will require approximately 3 attorney hours to
draft and execute additional clauses in new subadvisory contracts in
order for funds and subadvisers to be able to rely on the exemptions in
rule 12d3-1. Because these additional clauses are identical to the
clauses that a fund would need to insert in their subadvisory contracts
to rely on rules 10f-3 (17 CFR 270.10f-3), 17a-10 (17 CFR 270.17a-10),
and 17e-1 (17 CFR 270.17e-1), and because we believe that funds that
use one such rule generally use all of these rules, we apportion this 3
hour time burden equally to all four rules. Therefore, we estimate that
the burden allocated to rule 12d3-1 for this contract change
[[Page 33223]]
would be 0.75 hours. Assuming that all 285 funds that enter into new
subadvisory contracts each year make the modification to their contract
required by the rule, we estimate that the rule's contract modification
requirement will result in 214 burden hours annually.
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 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 August 1, 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, DC 20549; or send an email to:
<a href="/cdn-cgi/l/email-protection#06565447594b676f6a64697e4675636528616970"><span class="__cf_email__" data-cfemail="19494b5846547870757b7661596a7c7a377e766f">[email protected]</span></a>.
Dated: May 25, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-11662 Filed 5-31-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on June 1, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.