50034 Federal Register / Vol. 62, No. 185 / Wednesday, September 24, 1997 / Notices

1Custody of Investment Company Assets With

Futures Commission Merchants and Commodity

Clearing Organizations, Investment Company Act

Release No. 22389 (Dec. 11, 1996) (61 FR 66207

(Dec. 17, 1996)).

2Commodity Futures Trading Commission,

Annual Report (1996).

Dated: September 16, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25322 Filed 9–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Submission for OMB Review;

Comment Request

Upon Written Request, Copies Available

From: Securities and Exchange Commission,

Office of Filings and Information Services,

Washington, DC 20549.

Extension: Rule 17f–6, SEC File No. 270–

392, OMB Control No. 3235–0447. Rule

2a19–1, SEC File No. 270–294, OMB Control

No. 3235–0332. Rule 17f–2, SEC File No.

270–233, OMB Control No. 3235–0223.

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

(‘‘Commission’’) has submitted to the

Office of Management and Budget

requests for extension of the previously

approved collections of information

discussed below.

Rule 17f–6 under the Investment

Company Act of 1940 (‘‘Act’’) permits

registered investment companies

(‘‘funds’’) to maintain assets (i.e.,

margin) with futures commission

merchants (‘‘FCMs’’) in connection with

commodity transactions effected on

both domestic and foreign exchanges.1

Prior to the adoption of the rule, funds

generally were required to maintain

such assets in special accounts with a

custodian bank.

Rule 17f–6 permits funds to maintain

their assets with FCMs that are

registered under the Commodity

Exchange Act (‘‘CEA’’) and that are not

affiliated with the fund. The rule

requires that the manner in which the

FCM maintains a fund’s assets be

governed by a written contract, which

must contain certain provisions. First,

the contract must provide that the FCM

must comply with the segregation

requirements of section 4d(2) of the CEA

[7 U.S.C. 6d(2)] and the rules thereunder

[17 CFR Chapter I] or, if applicable, the

secured amount requirements of rule

30.7 under the CEA [17 CFR 30.7].

Second, the contract must provide that

when placing the fund’s margin with

another entity for clearing purposes, the

FCM must obtain an acknowledgment

that the fund’s assets are held on behalf

of the FCM’s customers in accordance

with provisions under the CEA. Lastly,

the contract must require the FCM,

upon request, to furnish records on the

fund’s assets to the Commission or its

staff.

The requirement of a written contract

that contains certain provisions ensure

important safeguards and other benefits

relative to the custody of investment

company assets by FCMs. For example,

requiring FCMs upon request to furnish

to the Commission or its staff

information concerning the investment

company’s assets facilitates Commission

inspections of investment companies.

The contract requirement governing

transfers of investment company margin

seeks to accommodate the legitimate

needs of the participants in the

commodity settlement process,

consistent with the safekeeping of

investment company assets. The

contract requirement requiring FCMs to

comply with the segregation or secured

amount requirements of the CEA and

the rules thereunder is designed to

safeguard fund assets held by FCMs.

The Commission estimates that

approximately 2,000 investment

companies could deposit margin with

FCMs under rule 17f–6 in connection

with their investments in futures

contracts and commodity options. It is

estimated that each investment

company uses and deposits margin with

3 different FCMs in connection with its

commodity transactions. Approximately

241 FCMs are eligible to hold

investment company margin under the

rule.2

The only paperwork burden of the

rule consists of meeting the rule’s

contract requirements. The Commission

estimates that after the first year, 2,000

investment companies will spend an

average of 1 hour complying with the

contract requirements of the rule (e.g.,

signing contracts with additional

FCMs), for a total of 2,000 burden hours.

The Commission estimates that each of

the 241 FCMs eligible to hold

investment company margin under the

rule will spend 2 hours complying with

the rule’s contract requirements, for a

total of 482 burden hours. The total

annual burden for the rule are estimated

to be 2,482 hours.

Rule 2a19–1 under the Act provides

that investment company directors will

not be considered interested persons, as

defined by section 2(a) (19) of the Act,

solely because they are registered

broker-dealers or affiliated persons of

registered broker-dealers, provided that

the broker-dealer does not execute any

portfolio transactions for the company’s

complex, engage in any principal

transactions with the complex or

distribute shares for the complex for at

least six months prior to the time that

the director is to be considered not to

be an interested person and for the

period during which the director

continues to be considered not to be an

interested person. The rule also requires

the investment company’s board of

directors to determine that the company

would not be adversely affected by

refraining from business with the

broker-dealer. In addition, the rule

provides that no more than a minority

of the disinterested directors of the

company may be registered brokerdealers or their affiliates.

Before the adoption of rule 2a19–1,

many investment companies found it

necessary to file with the Commission

applications for orders exempting

directors from section 2(a)(19) of the

Act. Rule 2a19–1 is intended to alleviate

the burdens on the investment company

industry of filing for such orders in

circumstances where there is no

potential conflict of interest. The

conditions of the rule are designed to

indicate whether the director has a stake

in the broker-dealer’s business with the

company such that he or she might not

be able to act independently of the

company’s management.

It is estimated that approximately

3,200 investment companies may

choose to rely on the rule, and each

investment company may spend one

hour annually compiling and keeping

records related to the requirements of

the rule. The total annual burden

associated with the rule is estimated to

be 3,200 hours.

Rule 17f–2, under the Act, establishes

safeguards for arrangements in which a

registered management investment

company is deemed to maintain custody

of its own assets, such as when the fund

maintains its assets in a facility that

provides safekeeping but not custodial

services. The rule includes several

recordkeeping or reporting

requirements. The funds directors must

prepare a resolution designating not

more than five fund officers or

responsible employees who may have

access to the fund’s assets. The

designated access persons (two or more

of whom must act jointly when

handling fund assets) must prepare a

written notation providing certain

information about each deposit or

withdrawal of fund assets, and must

transmit the notation to another officer

or director designated by the directors.

Independent public accountants must

verify the fund’s assets without prior

notice to the fund twice each year.
Federal Register / Vol. 62, No. 185 / Wednesday, September 24, 1997 / Notices 50035

The requirement that directors

designate access persons is intended to

ensure that directors evaluate the

trustworthiness of insiders who handle

fund assets. The requirements that

access persons act jointly in handling

fund assets, prepare a written notation

of each transaction, and transmit the

notation to another designated person

are intended to reduce the risk of

misappropriation of the fund assets by

access persons, and to ensure that

adequate records are prepared, reviewed

by a responsible third person, and

available for examination by the

Commission.

The Commission estimates that

approximately 110 funds rely upon the

rule (and that each fund offers an

average of two separate series or

portfolios subject to the rule). It is

estimated that each fund spends

approximately 2 hours annually in

drafting pertinent resolutions by

directors, 24 hours annually in

preparing transaction notations, and 100

hours annually in performing

unscheduled verifications of assets.

Therefore, the total annual burden

associated with this rule is estimated to

be 13,860 hours.

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 regarding the

above information should be directed to

the following persons: (i) Desk Officer

for the Securities and Exchange

Commission, Office of Information and

Regulatory Affairs, Office of

Management and Budget, Room 3208,

New Executive Office Building,

Washington, D.C. 20503; and (ii)

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Comments

must be submitted to OMB on or before

October 24, 1997.

Dated: September 17, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25320 Filed 9–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Submission for OMB Review;

Comment Request

Upon Written Request, Copies Available

From: Securities and Exchange Commission,

Office of Filings and Information Services,

Washington, DC 20549.

Extension: Form 2–E and Rule 609, SEC

File No. 270–222, OMB Control No. 3235–

0233. Rule 6c–7, SEC File No. 270–269, OMB

Control No. 3235–0276. Rule 11a–2, SEC File

No. 270–267, OMB Control No. 3235–0272.

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

(‘‘Commission’’) has submitted to the

Office of Management and Budget

requests for extension of the previously

approved collections of information

discussed below.

Form 2–E is used, pursuant to Rule

609 of Regulation E under the Securities

Act of 1933, by small business

investment companies or business

development companies engaged in

limited offerings of securities to report

semi-annually the progress of an

offering, including the number of shares

sold. The form solicits information such

as the dates an offering has commenced

and completed, the number of shares

sold and still being offered, amounts

received in the offering, and expenses

and underwriting discounts incurred in

the offering. This information assists the

Commission staff in determining

whether the issuer has stayed within the

limits of an exemptive offering.

Form 2–E must be filed semi-annually

during an offering and as a final report

at the completion of the offering. Less

frequent filing would not allow the

Commission to monitor the progress of

the limited offering in order to ensure

that the issuer was not attempting to

avoid the normal registration provisions

of the securities laws.

There has been approximately one

filing on form 2–E under rule 609 of

regulation E during each of the last two

years. On average, approximately one

respondent spends four hours collecting

information, preparing, and filing a form

2–E for a total annual reporting and

recordkeeping burden of four hours.

Rule 6c–7 under the Investment

Company Act of 1940 (‘‘1940 Act’’)

provides exemption from certain

provisions of Sections 22(e) and 27 of

the 1940 Act for registered separate

accounts offering variable annuity

contracts to certain employees of Texas

institutions of higher education

participating in the Texas Optional

Retirement Program.

There are approximately 183

registrants governed by Rule 6c–7, with

an estimated compliance time of 30

minutes per registrant for a total of 92

annual burden hours.

Rule 11a–2 permits certain registered

insurance company separate accounts,

subject to certain conditions, to make

offers to exchange their securities for

other investment company securities

without obtaining prior Commission

approval.

There are approximately 550

registrants governed by Rule 11a–2,

with an estimated compliance time of

15 minutes per registrant for a total of

138 annual burden hours.

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 regarding the

above information should be directed to

the following persons: (i) Desk Officer

for the Securities and Exchange

Commission, Office of Information and

Regulatory Affairs, Office of

Management and Budget, Room 3208,

New Executive Office Building,

Washington, D.C. 20503; and (ii)

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Comments

must be submitted to OMB on or before

October 24, 1997.

Dated: September 18, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25323 Filed 9–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following meeting during

the week of September 29, 1997.

A closed meeting will be held on

Monday, September 29, 1997, at 11:00

a.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c) (4), (8), (9)(A) and (10),

permit consideration of the scheduled

matters at the closed meeting.

Commissioner Hunt, as duty officer,

voted to consider the items listed for the

closed meeting in a closed session.

The subject matter of the closed

meeting scheduled for Monday,

September 29, 1997, at 11:00 a.m., will

be: