[Federal Register Volume 65, Number 110 (Wednesday, June 7, 2000)]
[Notices]
[Pages 36174-36175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-14245]


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SECURITIES AND EXCHANGE COMMISSION


Request Under Review by Office of Management and Budget

    Upon Written Request, Copies Available From: Securities and 
Exchange Commission, Office of Filings and Information Services, 
Washington, DC 20549.
    Extension: Rule 12b-1; SEC File No. 270-188; OMB Control No. 
3235-0212.

    Notice is hereby given that under the Paperwork Reduction Act of 
1995 [44 U.S.C. 3501[, the Securities and Exchange Commission (the 
``SEC'') has submitted to the Office of Management and Budget 
(``OMB''), a request for extension of OMB approval for rule 12b-1 [17 
CFR 270.12b-1] under the Investment Company Act of 1940 [15 U.S.C. 80a] 
(the ``Act'').
    Rule 12b-1 permits a registered open-end investment company 
(``mutual fund'') to distribute its own shares and pay expenses of 
distribution provided, among other things, that the mutual fund adopts 
a written plan (``rule 12b-1 plan'') and has in writing any agreements 
relating to the implementation of the rule 12b-1 plan. The rule in part 
requires that (i) the adoption or material amendment of a rule 12b-1 
plan be approved by the mutual fund's directors and shareholders; (ii) 
the board review quarterly reports of amounts spend under the rule 12b-
1 plan; and (iii) the board consider continuation of the rule 12b-1 
plan at least annually. Rule 12b-1 also requires funds relying on the 
rule to preserve for six years, the first two years in an easily 
accessible place, copies of the rule 12b-1 plan, related agreements and 
reports, as well as minutes of board meetings that describe the factors 
considered and the basis for adopting or continuing a rule 12b-1 plan.
    The board and shareholder approval requirements of rule 12b-1 are 
designed to ensure that fund shareholders and directors receive 
adequate information to evaluate and approve a rule 12b-1 plan. The 
requirement of quarterly reporting to the board is designed to ensure 
that the 12b-1 plan continues to benefit the fund and its shareholders. 
The recordkeeping requirements of the rule are necessary to enable 
Commission staff to oversee compliance with the rule.
    Based on information filed with the Commission by funds, Commission 
staff estimates that there are 4,500 mutual funds with the 12b-1 plans. 
As discussed above, 12b-1 requires the board of each fund with a 12b-1 
plan to (i) review quarterly reports of amounts spent under the plan 
and (ii) annually consider the plan's continuation (which generally is 
combined with the foruth quarterly review). This results in a total 
number of annual responses per fund of four and an estimated total 
number of industry responses of 18,000 (4,500 funds  x  4 annual 
responses per fund = 18,000 resonses).
    Based on conversations with fund industry representatives, 
Commission staff estimates that for each of the 4,500 mutual funds that 
currently have a 12b-1 plan, the average annual burden of complying 
with the rule if 50 hours to maintain the plan. This estimate takes 
into account the time needed to prepare quarterly reports to the board 
of directors, the board's consideration of those reports, and the 
board's annual consideration of the plan's continuation. Commission 
staff therefore estimates that the total burden of the rule's paperwork 
requirements is 225,000 hours (4,500 funds x 50 hours per fund = 
225,000 hours).
    The estimate of burden hours is made solely for the purpose of the 
Paperwork Reduction Act. The estimate is not derived form a 
comprehensive or even a representative survey or study of Commission 
rules.
    If a currently operating fund seeks to (i) adopt a new rule 12b-1 
plan or (ii) materially increase the amount it spends for distribution 
under its rule 12b-1 plan, rule 12b-1 requires that the fund obtain 
shareholder approval. As a consequence, the fund will incur the cost of 
a proxy. Commission staff estimates that four funds per year prepare a 
proxy in connection with the adoption or material amendment of a rule 
12b-1 plan. Commission staff further estimates that the cost of each 
fund's proxy is $15,000. Thus the total

[[Page 36175]]

annualized cost burden of rule 12b-1 to the fund industry is $60,000 (4 
funds requiring a proxy  x  $15,000 per proxy).
    The collections of information required by rule 12b-1 are necessary 
to obtain the benefits of the rule. Notices to the Commission 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.
    Please direct general comments regarding the information above to: 
(i) Desk Officer for the Securities and Exchange Commission, Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
New Executive Office Building, Washington, DC 20503; and (ii) Michael 
Bartell, Associate Executive Director, Office of Information 
Technology, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549. Comments must be submitted to OMB within 30 days 
of this notice.

    Dated: May 30, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-14245 Filed 6-06-00; 8:45 am]
BILLING CODE 8010-01-M