Notice2025-06747
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
April 18, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 74 (Friday, April 18, 2025)</title>
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[Federal Register Volume 90, Number 74 (Friday, April 18, 2025)]
[Notices]
[Pages 16582-16583]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-06747]
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SECURITIES AND EXCHANGE COMMISSION
[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\
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\1\ See 17 CFR 270.270.12d3-1(c)(3).
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Rule 12d3-1 requires funds to amend their subadvisory contracts
before they
[[Page 16583]]
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 49 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 would be
0.75 hours. Assuming that all 49 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 37 burden hours annually.
Complying with this collection of information requirement is
necessary to rely on rule 12d3-1. 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 this collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate 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 60
days of this publication by June 17, 2025.
Please direct your written comment to Austin Gerig, Director/Chief
Data Officer, Securities and Exchange Commission, c/o Tanya Ruttenberg,
100 F Street NE, Washington, DC 20549 or send an email to:
<a href="/cdn-cgi/l/email-protection#94c4f5e4f1e6e3fbe6ffc6f1f0e1f7e0fdfbfad5f7e0d4e7f1f7baf3fbe2"><span class="__cf_email__" data-cfemail="a7f7c6d7c2d5d0c8d5ccf5c2c3d2c4d3cec8c9e6c4d3e7d4c2c489c0c8d1">[email protected]</span></a>.
Dated: April 15, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-06747 Filed 4-17-25; 8:45 am]
BILLING CODE 8011-01-P
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