Notice2023-16311
Submission for OMB Review; Comment Request; Extension: Rules 15Ba1-1 through 15Ba1-8
Primary source
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Published
August 1, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 146 (Tuesday, August 1, 2023)</title>
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[Federal Register Volume 88, Number 146 (Tuesday, August 1, 2023)]
[Notices]
[Pages 50202-50205]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-16311]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-619, OMB Control No. 3235-0681]
Submission for OMB Review; Comment Request; Extension: Rules
15Ba1-1 through 15Ba1-8
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 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget (``OMB'') a request for approval of extension of the
previously approved collection of information provided for in Rules
15Ba1-1 to 15Ba1-8 (17 CFR 240.15Ba1-1 to 17 CFR 240.15Ba1-8)--
Registration of Municipal Advisors, under the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.) (the ``Exchange Act'').
On September 20, 2013 (see 78 FR 67468, November 12, 2013), the
Commission adopted Rules 15Ba1-1 through 15Ba1-8 and Rule 15Bc4-1 under
the Exchange Act to establish the rules by which a municipal advisor
must obtain, maintain, and terminate its registration with the
Commission. In addition, the rules interpret the definition of the term
``municipal advisor,'' interpret the statutory exclusions from that
definition, and provide certain additional regulatory exemptions. The
rules became effective on January 13, 2014; however, on January 13,
2014, the Commission temporarily stayed such rules until July 1, 2014
(see 79 FR 2777, January 16, 2014). Amendments to Form MA and Form MA-I
designed to eliminate aspects of the forms that request filers to
provide certain forms of personally identifiable information of natural
persons, including Social Security numbers, dates of birth, and foreign
identity numbers became effective on May 14, 2018 (see 83 FR 22190, May
14, 2018). Section 15B(a)(1) of the Exchange Act makes it unlawful for
a municipal advisor to provide advice to or on behalf of a municipal
entity or obligated person with respect to municipal financial products
or the issuance of municipal securities, or to undertake certain
solicitations of a municipal entity or obligated person, unless the
municipal advisor is registered with the Commission. The rules, among
other things: (i) require municipal advisors to file certain forms
(i.e., Form MA, Form MA-A, Form MA/A, Form MA-I, Form MA-I/A, Form MA-
NR, and Form MA-W) with the Commission to obtain, maintain, or
terminate their registration with the Commission and maintain certain
books and records in accordance with the Exchange Act, and (ii) set
forth how certain entities may meet the requirements of the statutory
exclusions or regulatory exemptions from the definition of ``municipal
advisor.''
Form MA
The initial application for municipal advisor registration under
Form MA is a one-time reporting burden. The Commission estimates that
approximately 15 respondents will submit new Form MA applications
annually in each of the next three years.\1\ The Commission further
estimates that the average amount of time for a municipal advisor to
complete a new Form MA submission will be approximately 3.5 hours.
Thus, the total annual burden borne by respondents for submitting an
initial Form MA application will be approximately 53 hours.\2\ The
Commission estimates that respondents submitting new Form MA
applications would, on average, consult with outside counsel for one
hour, at a rate of $518/hour. Thus, the Commission estimates that the
average total annual cost that may be incurred by all respondents
filing new Form MA applications will be $7,770.\3\
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\1\ The estimate is derived by averaging the number of Form MA
filings over the last three years. There were 21 Form MA submissions
in 2020, 16 Form MA submissions in 2021, and 8 Form MA submissions
in 2022.
\2\ 15 respondents x 3.5 hours = 52.5 hours.
\3\ 15 respondents x ($518/hour x 1 hour) = $7,770.
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In addition to filing initial Form MA applications, the rules
require municipal advisors to amend Form MA once annually (Form MA-A)
and after the occurrence of any enumerated material event (Form MA/A).
The requirement to amend Form MA applies to all registered municipal
advisors. As of December 31, 2022, there were approximately 446
municipal advisors registered with the Commission and, as noted above,
the Commission anticipates receiving 15 new Form MA submissions
annually in each of the next three years; however, the Commission also
estimates that it will receive an average of 35 withdrawals on Form MA-
W annually in each of the next three years,\4\ and the Commission
further estimates that it will enter orders cancelling or revoking the
registration of 9 municipal advisors on average in each of the next
three years,\5\ for a net decrease of 29 municipal advisors annually in
each of the next three years.\6\ Therefore, the Commission expects that
the rules' requirement to amend Form MA will apply to approximately 417
municipal advisors in year one, approximately 388 municipal advisors in
year two, and approximately 359 municipal advisors in year three. The
Commission estimates that the average amount of time for a municipal
advisor to prepare an annual amendment to Form MA would be 1.5 hours,
and the average amount of time necessary to prepare any interim
updating amendment to Form MA other than the required annual amendment
would be 0.5 hours. The Commission further estimates that each
municipal advisor will likely submit two amendments annually in each of
the next three years (one Form MA-A and
[[Page 50203]]
one Form MA/A). Thus, the Commission estimates that the average annual
burden borne by respondents for amending Form MA during the three-year
period will be approximately 776 hours.\7\
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\4\ See infra Form MA-W section.
\5\ The estimate is derived by averaging the number of
CANCELLATION-MA and REVOCATION-MA filings over the last three years.
There were 0 CANCELLATION-MA filings in 2020, 18 CANCELLATION-MA
filings in 2021, and 9 CANCELLATION-MA filings in 2022. There were 0
REVOCATION-MA filings in 2020, 0 REVOCATION-MA filings in 2021, and
0 REVOCATION-MA filings in 2022. ((0 + 0) + (18 + 0) + (9 + 0))/3 =
9.
\6\ 15-(35 + 9) = -29.
\7\ ((417 respondents x 2 hours) + (388 respondents x 2 hours) +
(359 respondents x 2 hours))/3 = 776 hours.
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Form MA-I
The initial completion of Form MA-I for each natural person who is
a person associated with a municipal advisor is a one-time reporting
burden. The Commission estimates that it will receive approximately 330
new Form MA-I submissions annually in each of the next three years.\8\
The Commission further estimates that the average amount of time for a
municipal advisor to complete a new Form MA-I submission will be
approximately three hours. Thus, the total annual burden borne by
respondents submitting an initial Form MA-I will be approximately 990
hours.\9\
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\8\ The estimate is derived by averaging the number of Form MA-I
submissions over the last three years and rounding up. There were
293 Form MA-I submissions in 2020, 363 Form MA-I submissions in
2021, and 332 Form MA-I submissions in 2022.
\9\ 330 submissions x 3 hours = 990 hours.
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In addition, municipal advisors will need to complete updating
amendments to Form MA-I whenever the information previously provided
therein becomes inaccurate, or to indicate that the individual is no
longer an associated person of the municipal advisor or no longer
engages in municipal advisory activities on its behalf. The Commission
estimates that a Form MA-I respondent will submit an average of 2.39
updating amendments annually in each of the next three years (Form MA-
I/A), and that each such amendment will take approximately 0.5 hours to
complete.\10\ As of December 31, 2022, there were approximately 3,254
Form MA-Is on file with the Commission for natural persons actively
associated with a municipal advisor \11\ and, as noted above, the
Commission anticipates receiving 330 new Form MA-I submissions annually
in each of the next three years. Therefore, the Commission expects the
rules' requirement to amend Form MA-I to apply to approximately 3,584
Form MA-Is in year one, approximately 3,914 Form MA-Is in year two, and
approximately 4,244 Form MA-Is in year three. Thus, the Commission
estimates that the average annual burden borne by respondents
submitting Form MA-I amendments during the three-year period will be
approximately 4,677 hours.\12\
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\10\ The estimate is derived by averaging the number of updating
amendments submitted by respondents over the last three years. In
2020, the average number was 1,080 Form MA-I/As/525 municipal
advisors = 2.06. In 2021, the average number was 1,163 Form MA-I/As/
477 municipal advisors = 2.44. In 2022, the average number was 1,188
Form MA-I/As/446 municipal advisors = 2.66. Averaging the average
number of updating amendments for the last three years: (2.06 (2020)
+ 2.44 (2021) + 2.66 (2022))/3 = 2.39 updating amendments per year.
\11\ The estimated number of active Form MA-I filings is derived
by taking the total number of Form MA-I submissions filed with the
Commission from the inception of the rules to December 31, 2022, and
subtracting the total number of Form MA-I/A withdrawals filed with
the Commission from the inception of the rules to December 31, 2022.
8,488 (Form MA-I submissions)-5,234 (Form MA-I/A withdrawals) =
3,254 active Form MA-Is on file.
\12\ (((3,584 Form MA-I/As x (2.39 amendments x 0.5 hours)) +
((3,914 Form MA-I/As x (2.39 amendments x 0.5 hours)) + ((4,244 Form
MA-I/As x (2.39 amendments x 0.5 hours)))/3 = 4,677.23 hours.
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Form MA-W
Withdrawal from municipal advisor registration is a one-time
reporting burden. The Commission estimates that it will receive an
average of 35 Form MA-W submissions annually in each of the next three
years.\13\ The Commission further estimates that the average amount of
time for a municipal advisor to complete each Form MA-W submission will
be approximately 0.5 hours. Thus, the total annual burden borne by
respondents submitting Form MA-W will be approximately 17.5 hours.\14\
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\13\ The estimate of 35 Form MA-W submissions is derived by
averaging the number of Form MA-W submissions over the last three
years and rounding up. There were 28 Form MA-W submissions in 2020,
46 Form MA-W submissions in 2021, and 30 Form MA-W submissions in
2022.
\14\ 35 respondents x 0.5 hours = 17.5 hours.
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Form MA-NR
The designation of a U.S. agent for service of process is a one-
time reporting burden. The Commission estimates that approximately
three municipal advisors will have a non-resident general partner, non-
resident managing agent, or non-resident associated person \15\ and
such advisors will submit a total of approximately five Form MA-NRs
annually in each of the next three years.\16\ The Commission further
estimates that each Form MA-NR submission will take, on average,
approximately one hour to complete. Thus, the total annual burden borne
by respondents submitting Form MA-NR will be approximately 5 hours.\17\
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\15\ The estimate is derived by averaging the number of Form MA-
NR respondents over the last three years and rounding up. There were
two Form MA-NR respondents in 2020, one Form MA-NR respondent in
2021, and four Form MA-NR respondents in 2022.
\16\ The estimate is derived by averaging the number of Form MA-
NR submissions over the last three years. There were seven Form MA-
NR submissions in 2020, two Form MA-NR submissions in 2021, and six
Form MA-NR submissions in 2022.
\17\ 3 respondents x (5 Form MA-NR submissions/3 respondents) x
1 hour = 5 hours.
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In addition, each respondent that submits a Form MA-NR must also
provide an opinion of counsel on Form MA stating that the municipal
advisor can, as a matter of law, provide the Commission with access to
its books and records as required by law and submit to inspection and
examination by the Commission. The Commission estimates that such an
opinion of counsel would take three hours to complete, at a rate of
$518/hour. Thus, the Commission estimates that the total annual burden
borne by respondents providing an opinion of counsel will be
approximately nine hours.\18\ The estimated average total cost that may
be incurred by all respondents providing an opinion of counsel will be
$4,662.\19\
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\18\ 3 respondents x 3 hours = 9 hours.
\19\ 3 respondents x (3 hours x $518/hour) = $4,662.
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Consent to Service of Process From Certain Associated Persons
The consent to service of process from certain associated persons
is a one-time recordkeeping burden. The Commission estimates that all
15 new municipal advisors expected to register with the Commission
annually in each of the next three years will have to develop a
template document to use in obtaining written consents to service of
process from their associated persons. The Commission further estimates
that each template document will take approximately one hour to draft.
Thus, the Commission estimates that the total annual burden borne by
respondents developing a template document will be approximately 15
hours.\20\
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\20\ 15 respondents x 1 hour = 15 hours.
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In addition to the one-time burden borne by new municipal advisors
that register with the Commission each year, the Commission estimates
that municipal advisors will need to obtain 330 new consents to service
of process from associated persons annually in each of the next three
years. The Commission further estimates that, after the written
consents are drafted, it will take municipal advisors approximately
0.10 hours to obtain each consent. Thus, the Commission estimates that
the total annual burden borne by respondents obtaining consents to
service of process will be 48 hours.\21\
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\21\ 15 hours + (330 respondents x 0.1 hours) = 48 hours.
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[[Page 50204]]
Books and Records To Be Made and Maintained by Municipal Advisors
The maintenance of books and records is an ongoing annual
recordkeeping burden. The Commission estimates that approximately
417,388, and 359 municipal advisors will be subject to the books and
records rules annually in each of the next three years, respectively.
The Commission further estimates that the average annual burden for a
municipal advisor to comply with the books and records requirement is
approximately 182 hours. Thus, the Commission estimates that the
average annual burden borne by respondents to comply with the books and
records requirements during the three-year period will be approximately
70,616 hours.\22\
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\22\ ((417 respondents x 182 hours) + (388 respondents x 182
hours) + (359 respondents x 182 hours))/3 = 70,616 hours.
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Independent Registered Municipal Advisor Exemption
The written representations required pursuant to the exemption when
a municipal entity or obligated person is represented by an independent
registered municipal advisor is a one-time third-party disclosure
burden. The Commission estimates that approximately 188 persons will
seek to rely on the independent registered municipal advisor exemption
annually in each of the next three years.\23\ The Commission further
estimates that the one-time burden of developing a template disclosure
document to use in obtaining the written representations will be
approximately one hour. Thus, the Commission estimates that the total
one-time burden borne by respondents developing a template disclosure
document will be approximately 188 hours.\24\
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\23\ Estimate based on information obtained from Mergent
Municipal Bond Securities Database. The estimate is derived by
averaging the number of underwriters that participated in negotiated
transactions from 2020 to 2022 and rounding up. There were 193
underwriters that participated in negotiated transactions in 2020,
191 underwriters that participated in negotiated transactions in
2021, and 178 underwriters that participated in negotiated
transactions in 2022.
\24\ 188 respondents x 1 hour = 188 hours.
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The Commission also recognizes that respondents will be subject to
a recurring burden each time they seek to rely on the exemption. The
Commission estimates that respondents may seek the exemption on
approximately 12,170 transactions annually in each of the next three
years.\25\ The Commission further estimates that the burden of
obtaining the written representations needed from the municipal entity
or obligated person will be approximately 0.25 hours. Thus, the
Commission estimates that the total annual burden borne by respondents
seeking to rely on the independent registered municipal advisor
exemption will be approximately 3,043 hours.\26\
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\25\ Estimate based on information obtained from Mergent
Municipal Bond Securities Database. The estimate is derived by
averaging the number of negotiated deals using an underwriter each
year from 2020 to 2022 and rounding up. There were 14,278 negotiated
deals using an underwriter in 2020, 11,855 negotiated deals using an
underwriter in 2021, and 10,376 negotiated deals using an
underwriter in 2022.
\26\ 12,170 transactions x 0.25 hours = 3,042.5 hours.
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Exception to Definition of Municipal Escrow Investments
The written representations required to qualify for the exception
for reasonable reliance on representations related to municipal escrow
investments is a one-time third-party disclosure burden. The Commission
believes that state-registered investment advisers with municipal
entity clients are the persons most likely to rely on this exception.
The Commission estimates that approximately 432 respondents will seek
to rely on the exception.\27\ The Commission further estimates that the
one-time burden of creating a template document to use in obtaining the
written representations necessary to rely on the exception will be
approximately one hour. Thus, the Commission estimates that the total
one-time burden borne by respondents developing a template document
will be approximately 432 hours.\28\
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\27\ The Commission estimates in this section are based on
information reported directly by state-registered-only investment
advisers (i.e., not dual registrants) in Item 5.D.(i)(1) within Form
ADV, as of December 31, 2022. The number of state-registered
investment advisers that reported state or municipal government
entity clients in Item 5.D.(i)(1) within Form ADV = 432.
\28\ 432 respondents x 1 hour = 432 hours.
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The Commission also recognizes that respondents will be subject to
a recurring burden each time they seek to rely on the exception. The
Commission estimates that the respondents will seek to rely on the
exception with approximately 1,356 municipal entity clients.\29\ The
Commission further estimates that the burden of obtaining the required
written representations from the respondent's client will be
approximately 0.25 hours. Thus, the Commission estimates that the total
annual burden borne by respondents seeking to rely on the municipal
escrow investments exemption will be approximately 339 hours.\30\
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\29\ The number of state or municipal government entity clients
reported by state-registered investment advisers in Item 5.D.(i)(1)
within Form ADV = 1,356.
\30\ 1,356 clients x 0.25 hours = 339 hours.
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Exception to Definition of Proceeds of Municipal Securities
The written representations required to qualify for the exception
for reasonable reliance on representations related to proceeds of
municipal securities is a one-time third-party disclosure burden. The
Commission believes the persons most likely to rely on this exception
are state-registered investment advisers with clients that are: (i)
state or municipal government entities, or (ii) certain pooled
investment vehicles in which municipal entities invest. The Commission
estimates that approximately 479 respondents will seek to rely on the
exception.\31\ The Commission further estimates that the one-time
burden of creating a template document to use in obtaining the written
representations necessary to rely on the exception will be
approximately one hour. Thus, the Commission estimates that the total
one-time burden borne by respondents developing a template document
will be approximately 479 hours.\32\
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\31\ The Commission estimates in this section are based on
information reported directly by state-registered-only investment
advisers (i.e., not dual registrants) in Items 5.D.(i)(1) and
5.D.(f)(1) within Form ADV, as of December 31, 2022. The number of
state-registered investment advisers that reported pooled investment
vehicle clients (other than investment company and business
development company clients) in Item 5.D.(f)(1) within Form ADV =
592. The percentage of state-registered investment advisers that
reported state or municipal government entity clients in Item
5.D.(f)(1) within Form ADV, out of the total number of state-
registered investment advisers = 8%. (592 x .08) = approximately 47
state-registered investment advisers with clients that are pooled
investment vehicles (other than registered investment companies and
business development companies) in which municipal entities invest.
The number of state-registered investment advisers that reported
state or municipal government entity clients in Item 5.D.(i)(1)
within Form ADV = 432. (47 + 432) = 479 respondents.
\32\ 479 respondents x 1 hour = 479 hours.
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The Commission also recognizes that respondents will be subject to
a recurring burden each time they seek to rely on the exception. The
Commission estimates that respondents will seek to rely on the
exception in connection with services provided to approximately 2,989
clients.\33\ The Commission further estimates that the burden of
obtaining the required written representations from the respondent's
client will be approximately 0.25 hours. Thus, the Commission estimates
that the total annual burden borne by respondents
[[Page 50205]]
seeking to rely on the proceeds of municipal securities exception will
be approximately 747 hours.\34\
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\33\ The number of state or municipal government entity clients
reported by state-registered investment advisers in Item 5.D.(i)(1)
within Form ADV = 1,356 clients. The number of pooled investment
vehicle clients (other than investment company and business
development company clients) reported by state-registered investment
advisers in Item 5.D.(f)(1) within Form ADV = 1,633 clients. (1,356
+ 1,633) = 2,989 clients.
\34\ 2,989 clients x 0.25 hours = 747.25 hours.
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Written comments are invited on: (a) whether this proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information will
have practical utility; (b) the accuracy of the Commission's estimates
of the burden imposed by 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 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 30
days of this publication.
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.
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 August 31, 2023 to (i) <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</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#58080a1907153931343a3720182b3d3b763f372e"><span class="__cf_email__" data-cfemail="38686a7967755951545a5740784b5d5b165f574e">[email protected]</span></a>.
Dated: July 27, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16311 Filed 7-31-23; 8:45 am]
BILLING CODE 8011-01-P
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