Federal Register / Vol. 77, No. 11 / Wednesday, January 18, 2012 / Notices 2575 

17We include the burden for funds that develop 

and operate these information sharing systems 

internally rather than purchasing them from third 

parties as a cost rather than as an hourly burden 

because Commission staff understands that, even 

when developing these systems themselves, funds 

generally either use independent contractors or hire 

new personnel, and thereby incur this burden as a 

cost, not an hourly expenditure. 

18This estimate is based on the following 

calculations: (100,000 transaction requests × 

$0.0025 = $250); ($250 × 52 weeks = $13,000). 

19This estimate is based on the following 

calculation: (669 fund groups × $43,000 = 

$28,767,000). 

20This estimate is based on the following 

estimate: ($100,000 × 40 new fund groups = 

$4,000,000). 

intermediaries have either developed 

information systems themselves or 

purchased them from third parties. 

However, these funds and 

intermediaries also incur certain 

ongoing costs related to these systems’ 

maintenance and operation. The 

Commission staff understands that 

various organizations have developed 

enhancements to their systems that 

allow funds and intermediaries to share 

the information required by the rule 

without developing or maintaining 

systems of their own. Other 

organizations have developed ‘‘22c–2 

solution’’ systems that funds may lease. 

The Commission staff understands that 

most funds and intermediaries use these 

outside systems. In general, the staff 

estimates that the typical charges 

involved in operating and maintaining 

information sharing systems average 25 

cents for every 100 account transactions 

requested. These systems generally also 

provide analytics, spreadsheets, and 

other tools designed to enable funds to 

analyze the data presented, as well as 

communication tools to process fund 

instructions regarding the restrictions 

and prohibitions they may request. 

Commission staff estimates that the 

costs of developing, maintaining and 

operating information systems for funds 

and intermediaries that do not use 

outside provider’s systems is 

comparable to the costs charged by 

outside providers.17

The Commission staff estimates that, 

on average, each fund group requests 

information for 100,000 transactions 

each week, incurring costs of $250 

weekly, or $13,000 a year.18 In addition, 

the Commission staff estimates that 

funds pay access fees to use these 

information sharing systems (or 

comparable internal costs) of 

approximately $30,000 each year. The 

Commission staff therefore estimates 

that a fund group would typically incur 

approximately $43,000 in costs each 

year related to the operation and 

maintenance of information sharing 

systems required by rule 22c–2. The 

Commission staff has previously 

estimated that there are approximately 

669 fund groups currently active, and 

therefore estimates that all fund groups 

incur a total of $28,767,000 in ongoing 

costs each year related to maintaining 

and operating information sharing 

systems.19

In addition, newly formed funds and 

fund groups advised by advisers who 

are new entrants would also need to 

incur certain additional costs related to 

the initial development or purchase of 

these information-sharing systems. 

Commission staff estimates that it 

requires approximately $100,000 to 

purchase or develop and implement 

such an information sharing system for 

the first time. Commission staff has 

previously estimated that approximately 

40 funds or fund groups are formed each 

year managed by new advisers, and 

therefore estimates that all these funds 

would incur total costs of approximately 

$4,000,000.20 Therefore the staff 

estimates that the total costs related to 

rule 22c–2 would be approximately 

$32,767,000 ($28,767,000 + $4,000,000 

= $32,767,000). 

Responses provided to the 

Commission will be accorded the same 

level of confidentiality accorded to 

other responses provided to the 

Commission in the context of its 

examination and oversight program. 

Responses provided in the context of 

the Commission’s examination and 

oversight program are generally kept 

confidential. Complying with the 

information collections of rule 22c–2 is 

mandatory for funds that redeem their 

shares within 7 days of purchase. 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. 

The public may view the background 

documentation for this information 

collection at the following Web site, 

www.reginfo.gov. Comments should be 

directed to: (i) Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503, 

or by sending an email to: 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Thomas Bayer, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way 

Alexandria, VA 22312 or send an email 

to: PRA_Mailbox@sec.gov. Comments 

must be submitted to OMB within 30 

days of this notice. 

Dated: January 11, 2012. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–781 Filed 1–17–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Rule 17Ad–6 and 17Ad–7; SEC File No. 

270–151; OMB Control No. 3235–0291. 

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 

(‘‘OMB’’) a request for approval of 

extension of the existing collection of 

information provided for in the 

following rules: Rule 17Ad–6 (17 CFR 

240.17Ad–6) and Rule 17Ad–7 (17 CFR 

240.17Ad–7) under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et 

seq.) (‘‘Exchange Act’’). 

Rule 17Ad–6 under the Exchange Act 

requires every registered transfer agent 

to make and keep current records about 

a variety of information, such as: (1) 

Specific operational data regarding the 

time taken to perform transfer agent 

activities (to ensure compliance with 

the minimum performance standards in 

Rule 17Ad–2 (17 CFR 240.17Ad–2)); (2) 

written inquiries and requests by 

shareholders and broker-dealers and 

response time thereto; (3) resolutions, 

contracts or other supporting documents 

concerning the appointment or 

termination of the transfer agent; (4) 

stop orders or notices of adverse claims 

to the securities; and (5) all canceled 

registered securities certificates. 

Rule 17Ad–7 under the Exchange Act 

requires each registered transfer agent to 

retain the records specified in Rule 

17Ad–6 in an easily accessible place for 

a period of six months to six years, 

depending on the type of record or 

document. Rule 17Ad–7 also specifies 

the manner in which records may be 

maintained using electronic, microfilm, 

and microfiche storage methods. 

These recordkeeping requirements are 

designed to ensure that all registered 

transfer agents are maintaining the 

records necessary for transfer agents to 

monitor and keep control over their own 

performance and for the Commission to 


tkelley on DSK3SPTVN1PROD with NOTICES
2576 Federal Register / Vol. 77, No. 11 / Wednesday, January 18, 2012 / Notices 

1 15 U.S.C. 7201 et seq. 

2Public Law 111–203, 124 Stat. 1376 (2010). 

3 17 CFR 202.190. 

4See 17 CFR 202.190(c). The budget rule also 

provides that in the event the Commission has not 

approved a budget prior to the beginning of the 

fiscal year, the PCAOB may spend funds from its 

reserve and continue to incur obligations as if the 

adequately examine registered transfer 

agents on an historical basis for 

compliance with applicable rules. 

The Commission estimates that 

approximately 473 registered transfer 

agents will spend a total of 236,500 

hours per year complying with Rules 

17Ad–6 and 17Ad–7 (500 hours per year 

per transfer agent). 

The retention period for the 

recordkeeping requirements under Rule 

17Ad–6 is six months to one year. In 

addition, such records must be retained 

for a total of two to six years or for one 

year after termination of the transfer 

agency, depending on the particular 

record or document. The recordkeeping 

requirements under Rules 17Ad–6 and 

17Ad–7 are mandatory to assist the 

Commission and other regulatory 

agencies with monitoring transfer agents 

and ensuring compliance with the rule. 

This rule does not involve the collection 

of confidential information. 

The Commission may not conduct or 

sponsor a collection of information 

unless it displays a currently valid 

control number. No person shall be 

subject to any penalty for failing to 

comply with a collection of information 

subject to the Paperwork Reduction Act 

that does not display a valid OMB 

control number. 

The public may view the background 

documentation for this information 

collection at the following Web site, 

www.reginfo.gov. Comments should be 

directed to: (i) Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503, 

or by sending an email to: 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Thomas Bayer, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way, 

Alexandria, VA 22312 or send an email 

to: PRA_Mailbox@sec.gov. Comments 

must be submitted to OMB within 30 

days of this notice. 

Dated: January 11, 2011. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–780 Filed 1–17–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Securities Act of 1933 Release No. 33– 

9294/January 11, 2012 Securities Exchange 

Act of 1934 Release No. 34–66141/January 

11, 2012] 

Order Approving Public Company 

Accounting Oversight Board Budget 

and Annual Accounting Support Fee 

for Calendar Year 2012 

The Sarbanes-Oxley Act of 2002, as 

amended (the ‘‘Sarbanes-Oxley Act’’),1

established the Public Company 

Accounting Oversight Board (‘‘PCAOB’’) 

to oversee the audits of companies that 

are subject to the securities laws, and 

related matters, in order to protect the 

interests of investors and further the 

public interest in the preparation of 

informative, accurate and independent 

audit reports. The PCAOB is to 

accomplish these goals through 

registration of public accounting firms 

and standard setting, inspection, and 

disciplinary programs. The PCAOB is 

subject to the comprehensive oversight 

of the Securities and Exchange 

Commission (the ‘‘Commission’’). 

Section 109 of the Sarbanes-Oxley Act 

provides that the PCAOB shall establish 

a reasonable annual accounting support 

fee, as may be necessary or appropriate 

to establish and maintain the PCAOB. 

Under Section 109(f) of the SarbanesOxley Act, the aggregate annual 

accounting support fee shall not exceed 

the PCAOB’s aggregate ‘‘recoverable 

budget expenses,’’ which may include 

operating, capital and accrued items. 

The PCAOB’s annual budget and 

accounting support fee is subject to 

approval by the Commission. 

Section 982 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (the ‘‘Dodd-Frank Act’’) 2 amended 

the Sarbanes-Oxley Act to provide the 

PCAOB with explicit authority to 

oversee auditors of broker-dealers 

registered with the Commission. In 

addition, the PCAOB must allocate the 

annual accounting support fee among 

issuers and among brokers and dealers. 

Section 109(b) of the Sarbanes-Oxley 

Act directs the PCAOB to establish a 

budget for each fiscal year in accordance 

with the PCAOB’s internal procedures, 

subject to approval by the Commission. 

Rule 190 of Regulation P facilitates the 

Commission’s review and approval of 

PCAOB budgets and annual accounting 

support fees.3 This budget rule 

provides, among other things, a 

timetable for the preparation and 

submission of the PCAOB budget and 

for Commission actions related to each 

budget, a description of the information 

that should be included in each budget 

submission, limits on the PCAOB’s 

ability to incur expenses and obligations 

except as provided in the approved 

budget, procedures relating to 

supplemental budget requests, 

requirements for the PCAOB to furnish 

on a quarterly basis certain budgetrelated information, and a list of 

definitions that apply to the rule and to 

general discussions of PCAOB budget 

matters. 

In accordance with the budget rule, in 

March 2011 the PCAOB provided the 

Commission with a narrative 

description of its program issues and 

outlook for the 2012 budget year. In 

response, the Commission provided the 

PCAOB with economic assumptions and 

budgetary guidance for the 2012 budget 

year. The PCAOB subsequently 

delivered a preliminary budget and 

budget justification to the Commission. 

Staff from the Commission’s Offices of 

the Chief Accountant and Financial 

Management dedicated a substantial 

amount of time to the review and 

analysis of the PCAOB’s programs, 

projects and budget estimates; reviewed 

the PCAOB’s estimates of 2011 actual 

spending; and attended several meetings 

with management and staff of the 

PCAOB to further develop an 

understanding of the PCAOB’s budget 

and operations. During the course of 

this review, Commission staff relied 

upon representations and supporting 

documentation from the PCAOB. Based 

on this review, the Commission issued 

a ‘‘pass back’’ letter to the PCAOB. 

On November 30, 2011, the PCAOB 

approved its 2012 budget during an 

open meeting and submitted that budget 

to the Commission for approval. Upon 

review of the submitted budget and 

budget justification, Commission staff 

raised questions regarding the 

calculation and presentation of the 

accounting support fee in the budget 

justification. On December 23, 2011, the 

PCAOB supplemented the original 

budget justification with additional 

materials, including a revised 

calculation and presentation of the 

accounting support fee. Due to the time 

needed to resolve this matter, 

consideration of the budget and 

accounting support fee was delayed 

beyond the normal expected date of 

December 23rd.4


tkelley on DSK3SPTVN1PROD with NOTICES