Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 11403 

1Prevention of Certain Unlawful Activities with 

Respect to Registered Investment Companies, 

Investment Company Act Release No. 11421 (Oct. 

31, 1980) (45 FR 73915 (Nov. 7, 1980)). 

2Personal Investment Activities of Investment 

Company Personnel, Investment Company Act 

Release No. 23958 (Aug. 20, 1999) (64 FR 46821–

01 (Aug. 27, 1999)). 

3 Investment Adviser Codes of Ethics, Investment 

Advisers Act Release No. 2256 (Jul. 2, 2004) (66 FR 

41696 (Jul. 9, 2004)). 

4Rule 17j–1(a)(1) defines an ‘‘access person’’ as 

‘‘Any advisory person of a Fund or of a Fund’s 

investment adviser. If an investment adviser’s 

primary business is advising Funds or other 

advisory clients, all of the investment adviser’s 

directors, officers, and general partners are 

presumed to be Access Persons of any Fund advised 

by the investment adviser. All of a Fund’s directors, 

Continued 

Commission, Washington, DC 20555–

0001, Attention: Rulemaking and 

Adjudications Staff; (2) courier, express 

mail, and expedited delivery services: 

Office of the Secretary, Sixteenth Floor, 

One White Flint North, 11555 Rockville 

Pike, Rockville, Maryland, 20852, 

Attention: Rulemaking and 

Adjudications Staff; (3) E-mail 

addressed to the Office of the Secretary, 

U.S. Nuclear Regulatory Commission, 

HearingDocket@nrc.gov; or (4) facsimile 

transmission addressed to the Office of 

the Secretary, U.S. Nuclear Regulatory 

Commission, Washington, DC, 

Attention: Rulemakings and 

Adjudications Staff at (301) 415–1101, 

verification number is (301) 415–1966. 

A copy of the request for hearing and 

petition for leave to intervene should 

also be sent to the Office of the General 

Counsel, U.S. Nuclear Regulatory 

Commission, Washington, DC 20555–

0001, and it is requested that copies be 

transmitted either by means of facsimile 

transmission to (301) 415–3725 or by email to OGCMailCenter@nrc.gov. A copy 

of the request for hearing and petition 

for leave to intervene should also be 

sent to the attorney for the licensee. 

Nontimely requests and/or petitions 

and contentions will not be entertained 

absent a determination by the 

Commission or the presiding officer or 

the Atomic Safety and Licensing Board 

that the petition, request and/or the 

contentions should be granted based on 

a balancing of the factors specified in 10 

CFR 2.309(a)(1)(i)–(viii). 

Energy Northwest, Docket No. 50–397, 

Columbia Generating Station, Benton 

County, Washington 

Date of amendment request: February 

2, 2007. 

Description of amendment request: 

The amendment revised Technical 

Specification 3.6.1.7, ‘‘Suppression 

Chamber-to-Drywell Vacuum Breakers,’’

to allow a one-time extension to the 

current closure verification surveillance 

requirement for one of two redundant 

disks in one of nine vacuum breakers 

until reliable position indication can be 

restored in the main control room 

during the next refueling outage (R–18), 

which is scheduled to begin on May 12, 

2007. 

Date of issuance: February 27, 2007. 

Effective date: As of its date of 

issuance and shall be implemented 

within 14 days from the date of 

issuance. 

Amendment No.: 202. 

Facility Operating License No.: NPF–

21: Amendment revises the technical 

specifications and license. 

Public comments requested as to 

proposed no significant hazards 

consideration (NSHC): Yes. 72 FR 6606, 

published February 12, 2007. The notice 

provided an opportunity to submit 

comments on the Commission’s 

proposed NSHC determination. No 

comments have been received. The 

notice also provided an opportunity to 

request a hearing within 60 days after 

the date of publication of the notice, but 

indicated that if the Commission makes 

a final NSHC determination, any such 

hearing would take place after issuance 

of the amendment. 

The Commission’s related evaluation 

of the amendment, finding of exigent 

circumstances, state consultation, and 

final NSHC determination are contained 

in a safety evaluation dated February 27, 

2007. 

Attorney for licensee: William A. 

Horin, Esq., Winston & Strawn, 1700 K 

Street, NW., Washington, DC 20006–

3817. 

NRC Branch Chief: David Terao. 

Dated at Rockville, Maryland, this 2nd day 

of March 2007. 

For the Nuclear Regulatory Commission. 

Michael C. Cheok, 

Acting Director, Division of Operating Reactor 

Licensing, Office of Nuclear Reactor 

Regulation. 

[FR Doc. E7–4251 Filed 3–12–07; 8:45 am] 

BILLING CODE 7590–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Filings and 

Information Services, Washington, DC 

20549. 

Extension: 

Rule 17j–1, SEC File No. 270–239, OMB 

Control No. 3235–0224. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

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

and Exchange Commission (the 

‘‘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. 

Conflicts of interest between 

investment company personnel (such as 

portfolio managers) and their funds can 

arise when these persons buy and sell 

securities for their own accounts 

(‘‘personal investment activities’’). 

These conflicts arise because fund 

personnel have the opportunity to profit 

from information about fund 

transactions, often to the detriment of 

fund investors. Beginning in the early 

1960s, Congress and the Securities and 

Exchange Commission (‘‘Commission’’) 

sought to devise a regulatory scheme to 

effectively address these potential 

conflicts. These efforts culminated in 

the addition of section 17(j) to the 

Investment Company Act of 1940 (the 

‘‘Investment Company Act’’) (15 U.S.C. 

80a–17(j)) in 1970 and the adoption by 

the Commission of rule 17j–1 (17 CFR 

270.17j–1) in 1980.1 The Commission 

proposed amendments to rule 17j–1 in 

1995 in response to recommendations 

made in the first detailed study of fund 

policies concerning personal investment 

activities by the Commission’s Division 

of Investment Management since rule 

17j–1 was adopted. Amendments to rule 

17j–1, which were adopted in 1999, 

enhanced fund oversight of personal 

investment activities and the board’s 

role in carrying out that oversight.2

Additional amendments to rule 17j–1 

were made in 2004, conforming rule 

17j–1 to rule 204A–1 under the 

Investment Advisers Act of 1940 (15 

U.S.C. 80b), avoiding duplicative 

reporting, and modifying certain 

definitions and time restrictions.3

Section 17(j) makes it unlawful for 

persons affiliated with a registered 

investment company(‘‘fund’’) or with 

the fund’s investment adviser or 

principal underwriter (each a ‘‘17j–1 

organization’’), in connection with the 

purchase or sale of securities held or to 

be acquired by the investment company, 

to engage in any fraudulent, deceptive, 

or manipulative act or practice in 

contravention of the Commission’s rules 

and regulations. Section 17(j) also 

authorizes the Commission to 

promulgate rules requiring 17j–1 

organizations to adopt codes of ethics. 

In order to implement section 17(j), 

rule 17j–1 imposes certain requirements 

on 17j–1 organizations and ‘‘Access 

Persons’’ 4 of those organizations. The 


cprice-sewell on PROD1PC66 with NOTICES
11404 Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 

officers, and general partners are presumed to be 

Access Persons of the Fund.’’ The definition of 

Access Person also includes ‘‘Any director, officer 

or general partner of a principal underwriter who, 

in the ordinary course of business, makes, 

participates in or obtains information regarding, the 

purchase or sale of Covered Securities by the Fund 

for which the principal underwriter acts, or whose 

functions or duties in the ordinary course of 

business relate to the making of any 

recommendation to the Fund regarding the 

purchase or sale of Covered Securities.’’ Rule 17j–

1(a)(1). 

5A ‘‘Covered Security’’ is any security that falls 

within the definition in section 2(a)(36) of the Act, 

except for direct obligations of the U.S. 

Government, bankers’ acceptances, bank certificates 

of deposit, commercial paper and high quality 

short-term debt instruments, including repurchase 

agreements, and shares issued by open-end funds. 

Rule 17j–1(a)(4). 

6Rule 17j–1(d)(2) contains the following 

exceptions: (i) An Access Person need not file a 

report for transactions effected for, and securities 

held in, any account over which the Access Person 

does not have control; (ii) an independent director 

of the fund, who would otherwise not need to 

report and who does not have information with 

respect to the fund’s transactions in a particular 

security, does not have to file an initial holdings 

report or a quarterly transaction report; (iii) an 

Access Person of a principal underwriter of the 

fund does not have to file reports if the principal 

underwriter is not affiliated with the fund (unless 

the fund is a unit investment trust) or any 

investment adviser of the fund and the principal 

underwriter of the fund does not have any officer, 

director, or general partner who serves in one of 

those capacities for the fund or any investment 

adviser of the fund; (iv) an Access Person to an 

investment adviser need not make quarterly reports 

if the report would duplicate information provided 

under the reporting provisions of the Investment 

Adviser’s Act; and (v) an Access Person need not 

make quarterly transaction reports if the 

information provided in the report would duplicate 

information received by the 17j–1 organization in 

the form of broker trade confirmations or account 

statements or information otherwise in the records 

of the 17j–1 organization. 

7The cost burden associated with filing of new 

and amended codes of ethics on the Commission’s 

Electronic Data Gathering, Analysis, and Retrieval 

system (EDGAR) is included in the Paperwork 

Reduction Act estimates for the relevant forms to 

which these codes must be appended. 

rule prohibits fraudulent, deceptive or 

manipulative acts by persons affiliated 

with a 17j–1 organization in connection 

with their personal securities 

transactions in securities held or to be 

acquired by the fund. The rule requires 

each 17j–1 organization, unless it is a 

money market fund or a fund that does 

not invest in Covered Securities,5 to: (i) 

Adopt a written codes of ethics, (ii) 

submit the code and any material 

changes to the code, along with a 

certification that it has adopted 

procedures reasonably necessary to 

prevent Access Persons from violating 

the code of ethics, to the fund board for 

approval, (iii) use reasonable diligence 

and institute procedures reasonably 

necessary to prevent violations of the 

code, (iv) submit a written report to the 

fund describing any issues arising under 

the code and procedures and certifying 

that the 17j–1 entity has adopted 

procedures reasonably necessary to 

prevent Access Persons from violating 

the code, (v) identify Access Persons 

and notify them of their reporting 

obligations, and (vi) maintain and make 

available to the Commission for review 

certain records related to the code of 

ethics and transaction reporting by 

Access Persons. 

The rule requires each Access Person 

of a fund (other than a money market 

fund or a fund that does not invest in 

Covered Securities) and of an 

investment adviser or principal 

underwriter of the fund, who is not 

subject to an exception,6 to file: (i) 

Within 10 days of becoming an Access 

Person, a dated initial holdings report 

that sets forth certain information with 

respect to the access person’s securities 

and accounts; (ii) dated quarterly 

transaction reports within 30 days of the 

end of each calendar quarter providing 

certain information with respect to any 

securities transactions during the 

quarter and any account established by 

the Access Person in which any 

securities were held during the quarter; 

and (iii) dated annual holding reports 

providing information with respect to 

each Covered Security the Access 

Person beneficially owns and accounts 

in which securities are held for his or 

her benefit. In addition, rule 17j–1 

requires investment personnel of a fund 

or its investment adviser, before 

acquiring beneficial ownership in 

securities through an initial public 

offering (IPO) or in a private placement, 

to obtain approval from the fund or the 

fund’s investment adviser. 

The requirements that the 

management of a rule 17j–1 organization 

provide the fund’s board with new and 

amended codes of ethics and an annual 

issues and certification report are 

intended to enhance board oversight of 

personal investment policies applicable 

to the fund and the personal investment 

activities of Access Persons. The 

requirements that Access Persons 

provide initial holdings reports, 

quarterly transaction reports, and 

annual holdings reports and request 

approval for purchases of securities 

through IPOs and private placements 

are intended to help fund compliance 

personnel and the Commission’s 

examinations staff monitor potential 

conflicts of interest and detect 

potentially abusive activities. The 

requirement that each rule 17j–1 

organization maintain certain records is 

intended to assist the organization and 

the Commission’s examinations staff in 

determining if there have been 

violations of rule 17j–1. 

We estimate that annually there are 

approximately 75,363 respondents 

under rule 17j–1, of which 5,363 are 

rule 17j–1 organizations and 70,000 are 

Access Persons. In the aggregate, these 

respondents make approximately 

113,970 responses annually. We 

estimate that the total annual burden of 

complying with the information 

collection requirements in rule 17j–1 is 

approximately 169,950 hours. This hour 

burden represents time spent by Access 

Persons that must file initial and annual 

holdings reports and quarterly 

transaction reports, investment 

personnel that must obtain approval 

before acquiring beneficial ownership in 

any securities through an IPO or private 

placement, and the responsibilities of 

Rule 17j–1 organizations arising from 

information collection requirements 

under rule 17j–1. These include 

notifying Access Persons of their 

reporting obligations, preparing an 

annual rule 17j–1 report and 

certification for the board, documenting 

their approval or rejection of IPO and 

private placement requests, maintaining 

annual rule 17j–1 records, maintaining 

electronic reporting and recordkeeping 

systems, amending their codes of ethics 

as necessary, and, for new fund 

complexes, adopting a code of ethics. 

In addition, we estimate that there is 

an additional annual cost burden of 

approximately $2,000 per fund 

complex, for a total of $1,100,000, 

associated with complying with the 

information collection requirements in 

rule 17j–1, aside from the cost of the 

burden hours discussed above.7 This 

represents the costs of purchasing and 

maintaining computers and software to 

assist funds in carrying out rule 17j–1 

recordkeeping. 

These burden hour and cost estimates 

are based upon the Commission staff’s 

experience and discussions with the 

fund industry. The estimates of average 

burden hours and costs are made solely 

for the purposes of the Paperwork 

Reduction Act. These estimates are not 

derived from a comprehensive or even 

a representative survey or study of the 

costs of Commission rules. 

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 will 

have practical utility; (b) the accuracy of 

the Commission’s estimate of the 

burden of the collections of information; 

(c) ways to enhance the quality, utility, 

and clarity of the information collected; 

and (d) ways to minimize the burdens 

of the collection of information on 

respondents, including through the use 


cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 11405 

1Status of Investment Advisory Programs Under 

the Investment Company Act of 1940, Investment 

Company Act Release No. 22579 (Mar. 24, 1997) (62 

FR 15098 (Mar. 31, 1997)) (‘‘Adopting Release’’). In 

addition, there are no registration requirements 

under section 5 of the Securities Act of 1933 for 

these programs. See 17 CFR 270.3a–4, introductory 

note. 

2For purposes of rule 3a–4, the term ‘‘sponsor’’

refers to any person who receives compensation for 

sponsoring, organizing or administering the 

program, or for selecting, or providing advice to 

clients regarding the selection of, persons 

responsible for managing the client’s account in the 

program. 

3Clients specifically must be allowed to designate 

securities that should not be purchased for the 

account or that should be sold if held in the 

account. The rule does not require that a client be 

able to require particular securities be purchased for 

the account. 

4The sponsor also must provide a means by 

which clients can contact the sponsor (or its 

designee). 

5These estimates are based on statistical 

information on wrap fee and mutual fund wrap 

programs provided by Cerulli Associates in 2003. 

We request comment on whether the number of 

wrap programs and program sponsors has changed. 

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 R. Corey Booth, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O Shirley 

Martinson, 6432 General Green Way, 

Alexandria, Virginia, 22312; or send an 

e-mail to: PRA_Mailbox@sec.gov. 

Dated: March 5, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4458 Filed 3–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Filings and 

Information Services, Washington, DC 

20549. 

Extension: 

Rule 3a–4, SEC File No. 270–401, OMB 

Control No. 3235–0459. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

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

and Exchange Commission (the 

‘‘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 (‘‘OMB’’) for 

extension and approval. 

Rule 3a–4 (17 CFR 270.3a–4) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a) (‘‘Investment Company 

Act’’ or ‘‘Act’’) provides a nonexclusive 

safe harbor from the definition of 

investment company under the Act for 

certain investment advisory programs. 

These programs, which include ‘‘wrap 

fee’’ and ‘‘mutual fund wrap’’ programs, 

generally are designed to provide 

professional portfolio management 

services to clients who are investing less 

than the minimum usually required by 

portfolio managers but more than the 

minimum account size of most mutual 

funds. Under wrap fee and similar 

programs, a client’s account is typically 

managed on a discretionary basis 

according to pre-selected investment 

objectives. Clients with similar 

investment objectives often receive the 

same investment advice and may hold 

the same or substantially the same 

securities in their accounts. Some of 

these investment advisory programs 

may meet the definition of investment 

company under the Act because of the 

similarity of account management. 

In 1997, the Commission adopted rule 

3a–4, which clarifies that programs 

organized and operated in a manner 

consistent with the conditions of rule 

3a–4 are not required to register under 

the Investment Company Act or comply 

with the Act’s requirements.1 These 

programs differ from investment 

companies because, among other things, 

they provide individualized investment 

advice to the client. The rule’s 

provisions have the effect of ensuring 

that clients in a program relying on the 

rule receive advice tailored to the 

client’s needs. 

Rule 3a–4 provides that each client’s 

account must be managed on the basis 

of the client’s financial situation and 

investment objectives and consistent 

with any reasonable restrictions the 

client imposes on managing the 

account. When an account is opened, 

the sponsor 2 (or its designee) must 

obtain information from each client 

regarding the client’s financial situation 

and investment objectives, and must 

allow the client an opportunity to 

impose reasonable restrictions on 

managing the account.3 In addition, the 

sponsor (or its designee) annually must 

contact the client to determine whether 

the client’s financial situation or 

investment objectives have changed and 

whether the client wishes to impose any 

reasonable restrictions on the 

management of the account or 

reasonably modify existing restrictions. 

The sponsor (or its designee) also must 

notify the client quarterly, in writing, to 

contact the sponsor (or the designee) 

regarding changes to the client’s 

financial situation, investment 

objectives, or restrictions on the 

account’s management.4

The program must provide each client 

with a quarterly statement describing all 

activity in the client’s account during 

the previous quarter. The sponsor and 

personnel of the client’s account 

manager who know about the client’s 

account and its management must be 

reasonably available to consult with the 

client. Each client also must retain 

certain indicia of ownership of all 

securities and funds in the account. 

Rule 3a–4 is intended primarily to 

provide guidance regarding the status of 

investment advisory programs under the 

Investment Company Act. The rule is 

not intended to create a presumption 

about a program that is not operated 

according to the rule’s guidelines. 

The requirement that the sponsor (or 

its designee) obtain information about 

the client’s financial situation and 

investment objectives when the account 

is opened is designed to ensure that the 

investment adviser has sufficient 

information regarding the client’s 

unique needs and goals to enable the 

portfolio manager to provide 

individualized investment advice. The 

sponsor is required to contact clients 

annually and provide them with 

quarterly notices to ensure that the 

sponsor has current information about 

the client’s financial status, investment 

objectives, and restrictions on 

management of the account. 

Maintaining current information enables 

the program manager to evaluate the 

client’s portfolio in light of the client’s 

changing needs and circumstances. The 

requirement that clients be provided 

with quarterly statements of account 

activity is designed to ensure the client 

receives an individualized report, which 

the Commission believes is a key 

element of individualized advisory 

services. 

The Commission staff estimates that 

approximately 64 wrap fee and mutual 

fund wrap programs administered by 56 

program sponsors use the procedures 

under rule 3a–4.5 Although it is 

impossible to determine the exact 

number of clients that participate in 

investment advisory programs, an 

estimate can be made by dividing total 

assets by the industry average account 


cprice-sewell on PROD1PC66 with NOTICES