[Federal Register Volume 89, Number 182 (Thursday, September 19, 2024)]
[Notices]
[Pages 76905-76906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21427]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-224, OMB Control No. 3235-0217]


Proposed Collection; Comment Request; Extension: Rule 17e-1

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.) (``Paperwork Reduction Act''), 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 (``OMB'') for extension and 
approval.
    Rule 17e-1 (17 CFR 270.17e-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) (the ``Investment Company Act'') deems a 
remuneration as ``not exceeding the usual and customary broker's 
commission'' for purposes of Section 17(e)(2)(A) of the Investment 
Company Act (15 U.S.C. 80a-17(e)(2)(A)) if, among other things, a 
registered investment company's (``fund's'') board of directors, 
including a majority of the directors who are not interested persons of 
the fund, has adopted procedures reasonably designed to provide that 
the remuneration to an affiliated broker is reasonable and fair 
compared to that received by other brokers in connection with 
comparable transactions involving similar securities being purchased or 
sold on a securities exchange during a comparable period of time and 
the board makes and approves such changes as it deems necessary. In 
addition, each quarter, the board must determine that all transactions 
effected under the rule during the preceding quarter complied with the 
established procedures (``review requirement''). Rule 17e-1 also 
requires the fund to (i) maintain permanently in an easily accessible 
place a written copy of the procedures adopted by the board for 
complying with the requirements of the rule; and (ii) maintain for a 
period of six years, the first two in an easily accessible place, a 
written record of each transaction subject to the rule, setting forth 
the amount and source of the commission, fee, or other remuneration 
received; the identity of the broker; the terms of the transaction; and 
the materials used to determine that the transactions were effected in 
compliance with the procedures adopted by the board (``recordkeeping 
requirement''). The review and recordkeeping requirements of rule 17e-1 
permit Commission staff to monitor the reasonableness and fairness of 
remuneration received by affiliated persons of the fund. Without the 
recordkeeping requirement, Commission inspectors would have difficulty 
ascertaining whether funds were complying with rule 17e-1.
    Based upon an analysis of fund filings on Form N-CEN, approximately 
1,614 funds report reliance on rule 17e-1.\1\ Based on staff experience 
and conversations with fund representatives, we estimate that the 
burden of compliance with rule 17e-1 is approximately 50 hours per fund 
per year. This time is spent, for example, reviewing the applicable 
transactions and maintaining records. Accordingly, we calculate the 
total estimated annual internal burden of complying with the review and 
recordkeeping requirements of rule 17e-1 to be approximately 80,700 
hours.\2\ We further estimate that, of these:
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    \1\ Staff estimate is based on a three-year average of funds 
reporting reliance on rule 17e-1 covering calendar years 2022-2024.
    \2\ 1,614 funds x 50 hours per fund = 80,700 hours.
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    <bullet> 60 percent (48,420 hours) are spent by senior accountants, 
at an estimated hourly wage of $266,\3\ for a total of approximately 
$12,879,720 per year; \4\
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    \3\ The Commission's estimates concerning the allocation of 
burden hours and the relevant wage rates are based on consultations 
with industry representatives and on salary information for the 
securities industry compiled by the Securities Industry and 
Financial Markets Association; the estimated wage figures are also 
based on published rates for senior accountants and in-house 
attorneys, modified to account for an 1800-hour work-year and 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits, and overhead, yielding effective hourly rates of $266 and 
$511, respectively; see Securities Industry and Financial Markets 
Association, Report on Management & Professional Earnings in the 
Securities Industry 2013.
    \4\ 48,420 hours x $266 per hour = $12,879,720.
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    <bullet> 30 percent (24,210 hours) are spent by in-house attorneys 
at an estimated hourly wage of $511, for a total of approximately 
$12,371,310 per year; \5\ and
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    \5\ 24,210 hours x $511 per hour = $12,371,310.
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    <bullet> 10 percent (8,070) are spent by the funds' board of 
directors at an hourly cost of $4,770, for a total of approximately 
$38,493,900 per year.\6\
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    \6\ 8,070 hours x $4,770 per hour = $38,493,900; the estimate 
for the cost of board time as a whole is derived from estimates made 
by the staff regarding typical board size and compensation that is 
based on information received from fund representatives and publicly 
available sources.
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    Based on these estimated wage rates, the total cost to the industry 
of the hour burden for complying with the review and recordkeeping 
requirements of rule 17e-1 is approximately $63,744,930.\7\ The 
Commission staff estimates that there is no cost burden associated with 
the information collection requirement of rule 17e-1 other than this 
cost.
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    \7\ $12,879,720 + $12,371,310 + $38,493,900 = $63,744,930.
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    Estimates of average burden hours are made solely for the purposes 
of the Paperwork Reduction Act and are not derived from a comprehensive 
or even

[[Page 76906]]

a representative survey or study of the costs of Commission rules and 
forms. The collection of information under rule 17e-1 is required to 
obtain the benefits of the rule. The information provided under rule 
17e-1 will not be kept confidential. 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 OMB control number.
    Written comments are invited on: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
estimate of the burden of the collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information collected; 
and (d) ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Consideration will 
be given to comments and suggestions submitted by November 18, 2024.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: Austin Gerig, Director/
Chief Data Officer, Securities and Exchange Commission, c/o Oluwaseun 
Ajayi, 100 F Street NE, Washington, DC 20549 or send an email to: 
<a href="/cdn-cgi/l/email-protection#17474556485a767e7b75786f5764727439707861"><span class="__cf_email__" data-cfemail="015153405e4c60686d636e79417264622f666e77">[email protected]</span></a>.

    Dated: September 16, 2024.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21427 Filed 9-18-24; 8:45 am]
BILLING CODE 8011-01-P


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