60990 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices

1The 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).

2The 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.

3Rule 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).

are met. Among the conditions with

which a UIT must comply are providing

notice to each investor that only one

report will be sent to the household and

providing to each investor that consents

to householding an annual explanation

of the right to revoke consent to the

delivery of a single shareholder report to

multiple investors sharing an address.

The purpose of the notice and annual

explanation requirements associated

with the householding provisions of the

rule is to ensure that investors who wish

to receive individual copies of

shareholder reports are able to do so.

The Commission estimates that as of

December 1999, approximately 655

UITs were subject to the provisions of

rule 30d–2. The Commission further

estimates that the annual burden

associated with rule 30d–2 is 121 hours

for each UIT, including an estimated 20

hours associated with the notice

requirement for householding and an

estimated 1 hour associated with the

explanation of the right to revoke

consent to householding, for a total of

79,255 burden hours.

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.

In addition to the burden hours, the

Commission estimates that the cost of

contracting for outside services

associated with complying with rule

30d–2 is $12,000 per respondent (80

hours times $150 per hour for

independent auditor services), for a total

of $7,860,000 ($12,000 per respondent

times 655 respondents).

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 4, 2000.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26376 Filed 10–12–00; 8:45 am]

BILLING CODE 8010–01–M

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.

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.

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.

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices 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 directmarketed 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 directmarketed 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 yearend 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 brokerdealer 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 brokerdealers).

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

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 206(4)–2, SEC File No.

270–217, OMB Control No. 3235–0241.

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 a

request for extension of the previously

approved collection of information

discussed below.

Rule 206(4)–2 governs the custody or

possession of funds or securities by

Commission-registered investment

advisers. Rule 206(4)–2 makes it a

fraudulent, deceptive or manipulative

act, practice or course of business for

any investment adviser who has custody

or possession of funds or securities of its

clients to do any act or take any action

with respect to any such funds or

securities unless (1) the securities are

properly segregated and safely kept; (2)

the funds are held in one or more

specially designated client accounts

with the adviser named as trustee; (3)

the adviser promptly notifies the client

as to the place and manner of

safekeeping; (4) the adviser sends a

detailed written statement to each client

at least once every three months; and (5)

at least once each year, on an

unannounced basis, an independent

public accountant verifies by actual

examination the clients’ funds and

securities and files a certificate with the

Commission describing the

examination. The rule does not apply to

an investment adviser that is also

registered as a broker-dealer under the

Securities Exchange Act of 1934,

provided the adviser is in compliance

with Rule 15c3–1 under the Exchange

Act, or, if a member of an exchange, in

compliance with exchange requirements

with respect to financial responsibility

and the segregation of funds or

securities carried for the account of

customers.

The Commission uses the information

required by Rule 206(4)–2 in connection

with its investment adviser examination

program to ensure that advisers are in

compliance with the rule. Clients also

use the information required by

paragraphs (3) and (4) of the rule.

Without the information collected under

the rule, the Commission would be less

efficient and effective in its inspection

program and clients would not have

information valuable for monitoring an

adviser’s handling of their accounts.

The respondents to this information

collection are investment advisers

registered with the Commission (except

those that are also registered as brokerdealers) and that have custody of

clients’ funds or securities. The

Commission estimates that 173 advisers

would be subject to Rule 206(4)–2.

The number of responses under Rule

206(4)–2 will vary considerably

depending on the number of clients for

which an adviser has custody or

possession of funds or securities. It is

estimated that the average number of

responses annually, 250, and the

average time of .5 hours per response,

would remain the same. The total time

burden for each respondent is estimated

to be the same—125 hours. The annual

aggregate burden for all respondents to

the requirements of Rule 206(4)–2 is

estimated to be 21,625 hours.

This collection of information is

found at 17 CFR 275.206(4)–2 and is

mandatory Commission-registered

investment advisers are required to

maintain and preserve certain

information required under Rule

206(4)–2 for five year. The long-term

retention of these records is necessary

for the Commission’s examination

program to ascertain compliance with

the Investment Advisers Act.

The estimated average burden hours

are made solely for the purposes of

Paperwork Reduction Act and are not

derived from a comprehensive or even

representative survey or study of the

cost of Commission rules and forms.

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.

General 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, New

Executive Office Building, Washington,

DC 20503; and (ii) Michael E. Bartell,

Associate Executive Director, Office of

Information Technology, Securities and

Exchange Commission, 450 5th Street,

NW., Washington, DC 20549. Comments

must be submitted to OMB within 30

days of this notice.