[Federal Register Volume 65, Number 199 (Friday, October 13, 2000)]
[Notices]
[Pages 60991-60992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26375]


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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 broker-dealers) 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.


[[Page 60992]]


    Dated: October 5, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-26375 Filed 10-12-00; 8:45 am]
BILLING CODE 8010-01-M