[Federal Register Volume 65, Number 199 (Friday, October 13, 2000)]
[Notices]
[Pages 60990-60991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26377]


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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 154, SEC File No. 270-438, OMB Control No. 3235-
0495.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), 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 for extension and approval.
    The federal securities laws generally prohibit an issuer, 
underwriter, or dealer from delivering a security for sale unless a 
prospectus meeting certain requirements accompanies or precedes the 
security. Rule 154 [17 CFR 230.154] under the Securities Act of 1933 
[15 U.S.C. 77a] (the ``Securities Act'') permits, under certain 
circumstances, delivery of a single prospectus to investors who 
purchase securities from the same issuer and share the same address 
(``householding'') to satisfy the applicable prospectus delivery 
requirements.\1\ The purpose of rule 154 is to reduce the amount of 
duplicative prospectuses delivered to investors sharing the same 
address.
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    \1\ The Securities Act requires the delivery of prospectuses to 
investors who buy securities from an issuer or from underwriters or 
dealers who participate in a registered distribution of securities. 
See Securities Act sections 2(a)(10), 4(1), 4(3), 5(b), [15 U.S.C. 
77b(a)(10), 77d(1), 77d(3), 77e(b); see also rule 174 under the 
Securities Act [17 CFR 230.174] (regarding the prospectus delivery 
obligation of dealers); rule 15c2-8 under the Securities and 
Exchange Act of 1934 [17 CFR 240.15c2-8] (prospectus delivery 
obligations of brokers and dealers).
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    Under rule 154, a prospectus is considered delivered to all 
investors at a shared address, for purposes of the federal securities 
laws, if the person relying on the rule delivers the prospectus to the 
share address and the investors consent to the delivery of a single 
prospectus. The rule applies to prospectuses and prospectus 
supplements. Currently, the rule permits householding of all 
prospectuses except those required to be delivered for business 
combinations, exchange offers, or reclassifications of securities.\2\ 
Rule 154 permits householding of prospectuses by an issuer, 
underwriter, or dealer relying on the rule if, in addition to the other 
conditions set forth in the rule, the issuer, underwriter, or dealer 
has obtained from each investor written or implied consent to 
householding.\3\ The rule requires issuers, underwriters, or dealers 
that wish to household prospectuses with implied consent to send a 
notice to each investor stating that the investors in the household 
will receive one prospectus in the future unless the investors provide 
contrary instructions. In addition, at least once a year, issuers, 
underwriters, or dealers, relying on rule 154 for the householding of 
prospectuses, must explain to investors who have provided written or 
implied consent how they can revoke their consent. Preparing and 
sending the initial notice and the annual explanation of the right to 
revoke are collections of information.
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    \2\ The Commission has proposed an amendment to rule 154 that 
would permit the householding of prospectuses required to be 
delivered for business combinations, exchange offers, or 
reclassifications of securities. See Delivery of Proxy and 
Information Statements to Households, Securities Act Rel. No. 7767; 
Securities Exchange Act Rel. No. 42102; Investment Company Act Rel. 
No. 24124 (Nov. 4, 1999) [64 FR 62548 (Nov. 16, 1999)]. The proposed 
amendment has not been adopted as of the date of this notice.
    \3\ Rule 154 permits the householding of prospectuses that are 
delivered electronically to investors only if delivery is made to a 
shared electronic address and the investors give written consent to 
householding. Implied consent is not permitted in such a situation. 
See rule 154(b)(4).
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    The rule allows issuers, underwriters, or dealers to household 
prospectuses and prospectus supplements if certain conditions are met. 
Among the conditions with which a person relying on the rule must 
comply are providing notice to each investor that only one prospectus 
will be sent to the household and providing to each investor who 
consents to householding an annual explanation of the right to revoke 
consent to the delivery of a single prospectus to multiple investors 
sharing an address. The purpose of the notice and annual explanation 
requirements of the rule is to ensure that investors who wish to 
receive individual copies of shareholder reports are able to do so.
    Although rule 154 is not limited to investment companies, the 
Commission believes that it is used mainly by mutual funds and by 
broker-dealers that deliver mutual fund prospectuses. The Commission is 
unable to estimate the number of issuers other than mutual funds that 
rely on the rule.

[[Page 60991]]

    The Commission estimates that there are approximately 3,000 mutual 
funds, approximately 545 of which engage in direct marketing and 
therefore deliver their own prospectuses. The Commission estimates that 
each direct-marketed mutual fund will spend an average of 20 hours per 
year complying with the notice requirement of the rule, for a total of 
10,900 hours. The Commission estimates that each direct-marketed fund 
will spend 1 hour complying with the explanation of the right to revoke 
requirement of the rule, for a total of 545 hours. The Commission 
estimates that as of year-end 1998, there were approximately 300 
broker-dealers that carry customer accounts and, therefore, may be 
required to deliver mutual fund prospectuses. The Commission estimates 
that each affected broker-dealer will spend, on average, approximately 
20 hours complying with the notice requirement of the rule, for a total 
of 6,000 hours. Each broker-dealer will also spend 1 hour complying 
with the annual explanation of the right to revoke requirement, for a 
total of 300 hours. Therefore, the total number of respondents for rule 
154 is 845 (5454 mutual funds plus 300 broker-dealers), and the 
estimated total hour burden is 17,745 hours (11,445 hours for mutual 
funds plus 6,300 hours for broker-dealers).
    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules and forms.
    Written comments are invited on: (a) Whether the collections of 
information are 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 collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collections of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. The Commission will consider comments 
and suggestions submitted in writing within 60 days after this 
publication.
    Please direct your written comments to Michael E. Bartell, 
Associate Executive Director, Office of Information Technology, 
Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 
20549.

    Dated: October 5, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-26377 Filed 10-12-00; 8:45 am]
BILLING CODE 8010-01-M