Notice2022-19804
Proposed Collection; Comment Request; Extension: Rule 17a-6
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
September 14, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 177 (Wednesday, September 14, 2022)</title>
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[Federal Register Volume 87, Number 177 (Wednesday, September 14, 2022)]
[Notices]
[Pages 56463-56464]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-19804]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-506, OMB Control No. 3235-0564]
Proposed Collection; Comment Request; Extension: Rule 17a-6
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.
Section 17(a) of the Investment Company Act of 1940 (the ``Act'')
generally prohibits affiliated persons of a registered investment
company (``fund'') from borrowing money or other property from, or
selling or buying securities or other property to or from, the fund or
any company that the fund controls. Rule 17a-6 (17 CFR 270.17a-6)
permits a fund, or a company controlled by the fund, and a ``portfolio
affiliate'' of the fund (a company that is an affiliated person of the
fund because the fund controls the company, or holds five percent or
more of the company's outstanding voting securities) to engage in
principal transactions that would otherwise be prohibited under section
17(a) of the Act under certain conditions. A fund may not rely on the
exemption in the rule to enter into a principal transaction with a
portfolio affiliate if certain prohibited participants (e.g.,
directors, officers, employees, or investment advisers of the fund)
have a financial interest in a party to the transaction. Rule 17a-6
specifies certain interests that are not ``financial interests,''
including any interest that the fund's board of directors (including a
majority of the directors who are not interested persons of the fund)
finds to be not material. A board making this finding is required to
record the basis for the finding in its meeting minutes. This
recordkeeping requirement is a collection of information under the
Paperwork Reduction Act of 1995 (``PRA'').
The rule is designed to permit transactions between funds and their
portfolio affiliates in circumstances in which it is unlikely that the
affiliate would be in a position to take advantage of the fund. In
determining whether a financial interest is ``material,'' the board of
the fund should consider whether the nature and extent of the interest
in the transaction is sufficiently small that a reasonable person would
not believe that the interest affected the determination of whether to
enter into the transaction or arrangement or the terms of the
transaction or arrangement. The information collection requirements in
rule 17a-6 are intended to ensure that Commission staff can review, in
the course of its compliance and examination functions, the basis for a
board of director's finding that the financial interest of an otherwise
prohibited participant in a party to a transaction with a portfolio
affiliate is not material.
Based on public filings made with the Commission, we estimate that
annually 335 funds and their series (collectively, ``funds'') may rely
on rule 17a-6 to engage in otherwise prohibited transactions under
section 17(a) of the 1940 Act. This estimate is based on publicly
available Form N-CEN filings. Solely for the purposes of this PRA
extension, we assume that each of these funds has engaged in one
transaction per reporting period that resulted in a paperwork burden
pursuant to rule 17a-6. We estimate that compliance with the
recordkeeping requirement for rule 17a-6 will impose a burden of .2
hours (12 minutes) for each transaction for which there is a paperwork
burden. Therefore, we estimate 67 burden hours to be associated with
rule 17a-6 recordkeeping requirements annually, with an associated
internal cost of $5,762.
The estimate of burden hours and burden costs is made solely for
the purposes of the PRA. The estimate is not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules. Complying with this collection of information
requirement is necessary to obtain the benefit of relying on rule 17a-
6. 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
estimate of the burden of the 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
[[Page 56464]]
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 by
November 14, 2022.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
Please direct your written comments to: David Bottom, Acting
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#045456455b49656d68666b7c447761672a636b72"><span class="__cf_email__" data-cfemail="f8a8aab9a7b59991949a9780b88b9d9bd69f978e">[email protected]</span></a>.
Dated: September 8, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19804 Filed 9-13-22; 8:45 am]
BILLING CODE 8011-01-P
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