Notice2022-20019
Submission for OMB Review; Comment Request; Extension: Rule 139b
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 16, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 179 (Friday, September 16, 2022)</title>
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[Federal Register Volume 87, Number 179 (Friday, September 16, 2022)]
[Notices]
[Pages 57001-57002]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20019]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-815, OMB Control No. 3235-0769]
Submission for OMB Review; Comment Request; Extension: Rule 139b
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
[[Page 57002]]
Notice is hereby given that the Securities and Exchange Commission
(the ``Commission'') has, in accordance with the Paperwork Reduction
Act of 1995 (Pub. L. 104-13, 44 U.S.C. 3501 et seq.) (``PRA''), has
submitted to the Office of Management and Budget a request for
extension of the previously approved collection of information, ``Rule
139b Disclosure of Standardized Performance,'' in connection with the
Rule 139b (17 CFR 230.139b) under the Securities Act of 1933 (15 U.S.C.
77a et seq.) (``Securities Act'') that was adopted by the Commission on
November 30, 2018, as discussed below.\1\
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\1\ See Release No. 33-10580 (Nov. 30, 2018) [83 FR 64180 (Dec.
13, 2018)] (``Adopting Release''). Rule 139b became effective on
January 14, 2019.
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As directed by the Fair Access to Investment Research Act of 2017
(Pub. L. 115-66, 131 Stat. 1196 (2017) (the ``FAIR Act''), the
Commission adopted rule 139b under the Securities Act to extend the
safe harbor under rule 139 to a ``covered investment fund research
report.'' Specifically, rule 139b provides a safe harbor to a broker-
dealer who publishes or distributes, in the regular course of its
business, research reports concerning one or more ``covered investment
fund(s)'' while participating in the distribution of a covered
investment fund's securities.
In the Adopting Release, the Commission adopted the provision that
rule 139b include a standardized performance requirement. The
Commission believes that standardized performance presentation is an
appropriate requirement because investors tend to consider fund
performance a significant factor in evaluating or comparing investment
companies, and the requirement addresses potential investor confusion
if a communication were not easily recognizable as research as opposed
to an advertising prospectus or supplemental sales literature. Rule
139b requires that research reports about open-end funds that include
performance information must present it in accordance with paragraphs
(d), (e), and (g) of rule 482. Rule 139b also requires that research
reports about closed-end funds that include performance information
must present it in accordance with instructions to item 4.1(g) of Form
N-2. Performance measures calculated by broker-dealers are not required
to be kept confidential and there is no mandatory retention period. The
Commission anticipates that compliance with these performance measures
for each fund discussed in a research report, and for which the
performance measures apply, would increase compliance costs for broker-
dealers seeking to publish or distribute a covered investment fund
research report.
It is difficult to provide estimates of the burdens and costs for
those broker-dealers that will include performance information in a
rule 139b research report. As discussed in the Adopting Release, this
is difficult to estimate because current data collected does not
reflect the affiliate exclusion, does not include the entire universe
of covered investment funds, and it is uncertain what percentage of
communications currently filed as rule 482 advertising prospectuses (or
rule 34b-1 supplemental sales materials) will instead be published in
reliance of rule 139b, as covered investment fund research reports.\2\
For purposes of the PRA, we estimate that 10% of the rule 482 and rule
34b-1 communications currently filed by broker-dealers with FINRA
(approximately 48,341) could be considered as rule 139b covered
investment fund research reports. We estimate that broker-dealers will
publish annually 4,834 (10% of 48,341) covered investment fund research
reports. Moreover, we assume for purposes of the PRA that all estimated
rule 139b research reports will include fund performance information.
We further estimate that 1,169 broker-dealers would likely be
respondents to the collection of information with a frequency of 4.1
responses per year.\3\ Additionally, we estimate that each research
report will require 3 hours of ongoing internal burden hours by a
broker-dealers' personnel to comply with the rule 139b collection of
information requirements, which for each broker-dealer is estimated to
be 12.3 internal burden hours.\4\ In sum, we estimate that rule 139b's
requirements will impose a total annual internal hour burden of 14,379
hours on broker-dealers.\5\ We do not think there is an external cost
burden associated with this collection of information.
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\2\ See Adopting Release, supra note 1, n. 413 and accompanying
paragraph.
\3\ Based on information provided by FINRA, for the period
January 1, 2021 through December 31, 2021, there were an aggregate
of 48,341 filings that were coded as either Rule 482 or Rule 34b-1
filings. Furthermore, the Commission estimates that for the period
January 1, 2021 through December 31, 2021, there were 4,834 covered
investment fund research reports/1,169 broker-dealers = 4.1 annual
responses per broker-dealer.
\4\ 4.1 annual responses per broker-dealer x 3 internal burden
hours = 12.3 annual internal burden hours per broker-dealer.
\5\ 12.3 annual burden hours * 1,169 broker-dealers.
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This collection of information requirement would not be mandatory
for broker-dealers seeking to rely upon rule 139b, but would be
necessary for those broker-dealers that would like to provide
performance information in their covered investment fund research
reports. Responses to the information collections 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 control number.
The public may view background documentation for this information
collection at the following website: <a href="http://www.reginfo.gov">www.reginfo.gov</a>. Find this
particular information collection by selecting ``Currently under 30-day
Review--Open for Public Comments'' or by using the search function.
Written comments and recommendations for the proposed information
collection should be sent within 30 days of publication of this notice
by October 17, 2022 to (i) <a href="/cdn-cgi/l/email-protection#09444b512746444b2746405b48275a4c4a566d6c7a6256666f6f606a6c7b4966646b276c6679276e667f"><span class="__cf_email__" data-cfemail="08454a502647454a2647415a49265b4d4b576c6d7b6357676e6e616b6d7a4867656a266d6778266f677e">[email protected]</span></a>
and (ii) David Bottom, Director/Chief Information Officer, Securities
and Exchange Commission, c/o John Pezzullo, 100 F Street NE,
Washington, DC 20549, or by sending an email to: <a href="/cdn-cgi/l/email-protection#39696b7866745850555b5641794a5c5a175e564f"><span class="__cf_email__" data-cfemail="aefefceff1e3cfc7c2ccc1d6eeddcbcd80c9c1d8">[email protected]</span></a>.
Dated: September 12, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20019 Filed 9-15-22; 8:45 am]
BILLING CODE 8011-01-P
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