15004 Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 

1 17 CFR 275.203A–2(f). Included in rule 203A– 

2(f) is a limited exception to the interactive website 

requirement which allows these advisers to provide 

investment advice to no more than 14 clients 

through other means on an annual basis. 17 CFR 

275.203A–2(f)(1)(i). The rule also precludes 

advisers in a control relationship with the SECregistered Internet adviser from registering with the 

Commission under the common control exemption 

provided by rule 203A–2(c) (17 CFR 275.203A– 

2(c)). 17 CFR 275.203A–2(f)(1)(iii). 

2 15 U.S.C. 80b–3a(a). 

3Public Law 111–203, 124 Stat. 1376 (2010). 

4 15 U.S.C. 80b–3a(a). 

5See section 410 of the Dodd-Frank Act. A midsized adviser managing between $25 million and 

$100 million also will be permitted to register with 

the Commission if it would be required to register 

with 15 or more states. These amendments are 

effective on July 21, 2011. 

6The five-year record retention period is a similar 

recordkeeping retention period as imposed on all 

advisers under rule 204–2 of the Adviser Act. See 

rule 204–2 (17 CFR 275.204–2). 

7 17 CFR 275.203A–2(f)(1)(ii). 

8 15 U.S.C. 80b–10(b). 

1 17 CFR 270.19b–1. 

2 17 CFR 270.19b–1(c)(1). 

3The notice requirement in rule 19b–1(c)(2) (17 

CFR 270.19b–1(c)(2)) supplements the notice 

requirement of section 19(a) [15 U.S.C. 80a–19(a)] 

and rule 19a–1 [17 CFR 270.19a–1], which requires 

any distribution in the nature of a dividend 

payment made by a fund to its investors to be 

accompanied by a notice disclosing the source of 

the distribution. 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Revision and Extension: 

Rule 203A–2(f); SEC File No. 270– 

501; OMB Control No. 3235–0559. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) (‘‘PRA’’), the 

Securities and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collections of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Rule 203A–2(f),1 which is entitled 

‘‘Internet Investment Advisers,’’ exempts 

from the prohibition on Commission 

registration an Internet investment 

adviser who provides investment advice 

to all of its clients exclusively through 

computer software-based models or 

applications, termed under the rule as 

‘‘interactive websites.’’ These advisers 

generally would not meet the statutory 

thresholds currently set out in section 

203A of the Advisers Act 2 or the 

thresholds set out in section 203A as 

amended by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(‘‘Dodd-Frank Act’’) beginning on July 

21, 20113—they do not manage $25 

million or more in assets and do not 

advise registered investment 

companies,4 or they manage between 

$25 million and $100 million in assets, 

do not advise registered investment 

companies or business development 

companies, and are required to be 

registered as investment advisers with 

the states in which they maintain their 

principal offices and places of business 

and are subject to examination as an 

adviser by such states.5 Eligibility under 

rule 203A–2(f) is conditioned on an 

adviser maintaining in an easily 

accessible place, for a period of not less 

than five years from the filing of Form 

ADV relying on the rule,6 a record 

demonstrating that the adviser’s 

advisory business has been conducted 

through an interactive website in 

accordance with the rule.7

This record maintenance requirement 

is a ‘‘collection of information’’ for PRA 

purposes. The Commission believes that 

approximately 58 advisers are registered 

with the Commission under rule 203– 

2A(f), which involves a recordkeeping 

requirement manifesting in 

approximately four burden hours per 

year per adviser and results in an 

estimated 232 of total burden hours (4 

× 58) for all advisers. 

This collection of information is 

mandatory, as it is used by Commission 

staff in its examination and oversight 

program in order to determine 

continued Commission registration 

eligibility for advisers registered under 

this rule. Responses generally are kept 

confidential pursuant to section 210(b) 

of the Advisers Act.8 Written comments 

are invited on: (a) Whether the proposed 

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 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 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. 

Please direct your written comments 

to Thomas Bayer, Chief Information 

Officer, Securities and Exchange 

Commission, c/o Remi Pavlik-Simon, 

6432 General Green Way, Alexandria, 

VA 22312; or send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: March 15, 2011. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6367 Filed 3–17–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Rule 19b–1; SEC File No. 270–312; 

OMB Control No. 3235–0354. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 350l–3520), the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget (‘‘OMB’’) for 

extension and approval. 

Section 19(b) of the Investment 

Company Act of 1940 (the ‘‘Act’’) (15 

U.S.C. 80a–19(b)) authorizes the 

Commission to regulate registered 

investment company (‘‘fund’’) 

distributions of long-term capital gains 

made more frequently than once every 

twelve months. Rule 19b–1 under the 

Act 1 prohibits funds from distributing 

long-term capital gains more than once 

every twelve months unless certain 

conditions are met. Rule 19b–1(c)(17 

CFR 270.19b–1(c)) permits unit 

investment trusts (‘‘UITs’’) engaged 

exclusively in the business of investing 

in certain eligible fixed-income 

securities to distribute long-term capital 

gains more than once every twelve 

months, if: (i) The capital gains 

distribution falls within one of several 

categories specified in the rule 2 and (ii) 

the distribution is accompanied by a 

report to the unit holder that clearly 

describes the distribution as a capital 

gains distribution (the ‘‘notice 

requirement’’).3 Rule 19b–1(e) (17 CFR 

270.19b–1(e)) permits a fund to apply to 


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Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 15005 

4Rule 19b–1(e) also requires that the application 

comply with rule 0–2 [17 CFR 270.02], which sets 

forth the general requirements for papers and 

applications filed with the Commission. 

5This understanding is based on conversations 

with representatives from the fund industry. 

6This estimate is based on the following 

calculation: 10 hours multiplied by $400 per hour 

equals $4,000. 

7This estimate is based on the following 

calculation: $4,000 multiplied by 6 (funds) equals 

$24,000. 

8The Investment Company Institute, Unit 

Investment Trust Data, (January 2011). 

9The number of times UITs rely on the rule to 

make capital gains distributions depends on a wide 

range of factors and, thus, can vary greatly across 

years. A number of UITs are organized as grantor 

trusts, and therefore do not generally make capital 

gains distributions under rule 19b–1(c), or may not 

rely on rule 19b–1(c) as they do not meet the rule’s 

requirements. Other UITs may distribute capital 

gains biannually, annually, quarterly, or at other 

intervals. 

10This estimate is based on the following 

calculation: 3,759 UITs multiplied by $50 equals 

$187,950. 

the Commission for permission to 

distribute long-term capital gains more 

than once a year if the fund did not 

foresee the circumstances that created 

the need for the distribution. The 

application must set forth the pertinent 

facts and explain the circumstances that 

justify the distribution.4 An application 

that meets those requirements is 

deemed to be granted unless the 

Commission denies the request within 

15 days after the Commission receives 

the application. 

Commission staff estimates that, on 

average, each year six funds file an 

application under rule 19b–1(e). The 

staff understands that funds that file an 

application generally use outside 

counsel to prepare the application. The 

cost burden of using outside counsel is 

discussed below. The staff estimates 

that, on average, the fund’s investment 

adviser spends a total of approximately 

4 hours to review an application, 

including 3.5 hours by an assistant 

general counsel, 0.5 hours by an 

administrative assistant, and the fund’s 

board of directors spends an additional 

1 hour, for a total of 5 hours. Thus, the 

Commission staff estimates that the 

annual hour burden of the collection of 

information imposed by rule 19b–1 is 

approximately five hours per fund, for 

a total burden of 30 hours. 

The Commission staff estimates that 

there is no hourly burden associated 

with complying with the collection of 

information component of rule 19b–1(c). 

As noted above, the Commission staff 

understands that funds that file an 

application under rule 19b–1(e) 

generally use outside counsel to prepare 

the application.5 The staff estimates 

that, on average, outside counsel spends 

10 hours preparing a rule 19b–1(e) 

application, including eight hours by an 

associate and two hours by a partner. 

Outside counsel billing arrangements 

and rates vary based on numerous 

factors, but the staff has estimated the 

average cost of outside counsel as $400 

per hour, based on information received 

from funds, intermediaries, and their 

counsel. The staff therefore estimates 

that the average cost of outside counsel 

preparation of the 19b–(e) exemptive 

application is $4,000.6 Thus, the staff 

estimates that the total annual cost 

burden imposed by the exemptive 

application requirements of rule 19b– 

1(e) is $24,000.7

The Commission staff estimates that 

there are approximately 3759 UITs 8 that 

may rely on rule 19b–1(c) to make 

capital gains distributions. The staff 

estimates that, on average, these UITs 

rely on rule 19b–1(c) once a year to 

make a capital gains distribution.9 In 

most cases, the trustee of the UIT is 

responsible for preparing and sending 

the notices that must accompany a 

capital gains distribution under rule 

19b–1(c)(2). These notices require 

limited preparation, the cost of which 

accounts for only a small, indiscrete 

portion of the comprehensive fee 

charged by the trustee for its services to 

the UIT. The staff believes that as a 

matter of good business practices, and 

for tax preparation reasons, UITs would 

collect and distribute the capital gains 

information required to be sent to 

unitholders under rule 19b–1(c) even in 

the absence of the rule. The staff 

estimates that the cost of preparing a 

notice for a capital gains distribution 

under rule 19b–1(c)(2) is approximately 

$50. There is no separate cost to mail 

the notices because they are mailed with 

the capital gains distribution. Thus, the 

staff estimates that the capital gains 

distribution notice requirement imposes 

an annual cost on UITs of 

approximately $187,950.10 The staff 

therefore estimates that the total cost 

imposed by rule 19b–1 is $211,950 

($187,950 plus $24,000 equals 

$211,950). 

Based on these calculations, the total 

number of respondents for rule 19b–1 is 

estimated to be 3,765 (3759 UIT 

portfolios + 6 funds filing an application 

under rule 19b–1(e)), the total annual 

hour burden is estimated to be 30 hours, 

and the total annual cost burden is 

estimated to be $211,950. These 

estimates of average annual burden 

hours and costs are made solely for 

purposes of the Paperwork Reduction 

Act. The collections of information 

required by 19b–1(c) and 19b–1(e) are 

necessary to obtain the benefits 

described above. Responses 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. 

Written comments are invited on: (a) 

Whether the collection of information is 

necessary for the proper performance of 

the functions of the Commission, 

including whether the information has 

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 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. 

Please direct your written comments 

to Thomas Bayer, Chief Information 

Officer, Securities and Exchange 

Commission, c/o Remi Pavlik-Simon, 

6432 General Green Way, Alexandria, 

VA 22312; or send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: March 15, 2011. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6366 Filed 3–17–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Rule 17f–5; SEC File No. 270–259; 

OMB Control No. 3235–0269. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520), the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit the existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Rule 17f–5 under the Investment 

Company Act of 1940 (15 U.S.C. 80a) 

(‘‘Investment Company Act’’ or ‘‘Act’’) 


Emcdonald on DSK2BSOYB1PROD with NOTICES