Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 3141 

1 (200 hours × 11 firms) = 2200. 

2 ((2,000 hours/3 years) × 5 firms) = 3,333. 

3 (200 hours × 5 firms) = 1,000. 

1According to Commission records, one issuer 

filed two notifications on Form 1–E, together with 

offering circulars, during 2013 and 2014. 

provided for in Rule 15c3–4 (17 CFR 

240.15c3–4) under the Securities 

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

seq.). The Commission plans to submit 

this existing collection of information to 

the Office of Management and Budget 

(‘‘OMB’’) for extension and approval. 

Rule 15c3–4 requires certain brokerdealers that are registered with the 

Commission as OTC derivatives dealers, 

or who compute their net capital 

charges under Appendix E to Rule 

15c3–1 (17 CFR 240.15c3–1) (‘‘ANC 

firms’’), to establish, document, and 

maintain a system of internal risk 

management controls. In addition, 

security-based swap dealers (‘‘SBSDs’’) 

that are subject to Rule 18a–1 (17 CFR 

240.18a–1) must comply with Rule 

15c3–4 as if they were OTC derivatives 

dealers. The Rule sets forth the basic 

elements for an OTC derivatives dealer, 

an ANC firm, or an SBSD to consider 

and include when establishing, 

documenting, and reviewing its internal 

risk management control system, which 

is designed to, among other things, 

ensure the integrity of an OTC 

derivatives dealer’s, an ANC firm’s, or 

an SBDS’s risk measurement, 

monitoring, and management process, to 

clarify accountability at the appropriate 

organizational level, and to define the 

permitted scope of the firm’s activities 

and level of risk. The Rule also requires 

that management of an OTC derivatives 

dealer, ANC firm, or SBSD must 

periodically review, in accordance with 

written procedures, the firm’s business 

activities for consistency with its risk 

management guidelines. 

The staff estimates that the average 

amount of time a new firm subject to 

Rule 15c3–4 will spend establishing and 

documenting its risk management 

control system is approximately 2,000 

hours (666.666667 hours per year when 

annualized over three years) and that, 

on average, an existing firm subject to 

Rule 15c3–4 will spend approximately 

200 hours each year to maintain (e.g., 

reviewing and updating) its risk 

management control system. Currently, 

five firms are registered with the 

Commission as OTC derivatives dealers, 

five as ANC firms, and one as an SBSD. 

The staff estimates that approximately 

two new additional entities may register 

as OTC derivatives dealers, one new 

entity may register as an ANC firm, and 

two new entities may register as SBSDs 

subject to the requirements of Rule 

15c3–4 within the next three years. 

Thus, the estimated annual burden 

would be approximately 2,200 hours for 

the eleven existing firms (five OTC 

derivatives dealers, five ANC firms, and 

one SBSD) currently required to comply 

with Rule 15c3–4 to maintain their risk 

management control systems,1 3,333 

hours for the five new firms (two new 

OTC derivatives dealers, one new ANC 

firm, and two new SBSDs) to establish 

and document their risk management 

control systems,2 and 1,000 hours for 

the five new firms (two new OTC 

derivatives dealers, one new ANC firm, 

and two new SBSDs) to maintain their 

risk management control systems.3

Accordingly, the staff estimates the total 

annual burden associated with Rule 

15c3–4 for the 16 respondents (nine 

OTC derivatives dealers, six ANC firms, 

and five SBSDs) will be approximately 

6,533 hours per year. 

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 

estimates of the burden of the proposed 

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 in 

writing within 60 days of this 

publication. 

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. 

Please direct your written comments 

to: David Bottom, Acting Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o John 

Pezzullo, 100 F Street NE, Washington, 

DC 20549, or send an email to: PRA_

Mailbox@SEC.gov. 

Dated: January 14, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01056 Filed 1–19–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–221, OMB Control No. 

3235–0232] 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Form 1–E, Regulation E 

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 (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

Form 1–E (17 CFR 239.200) under the 

Securities Act of 1933 (15 U.S.C. 77a et 

seq.) (‘‘Securities Act’’) is the form that 

a small business investment company 

(‘‘SBIC’’) or business development 

company (‘‘BDC’’) uses to notify the 

Commission that it is claiming an 

exemption under Regulation E from 

registering its securities under the 

Securities Act. Rule 605 of Regulation E 

(17 CFR 230.605) under the Securities 

Act requires an SBIC or BDC claiming 

such an exemption to file an offering 

circular with the Commission that must 

also be provided to persons to whom an 

offer is made. Form 1–E requires an 

issuer to provide the names and 

addresses of the issuer, its affiliates, 

directors, officers, and counsel; a 

description of events which would 

make the exemption unavailable; the 

jurisdictions in which the issuer intends 

to offer the securities; information about 

unregistered securities issued or sold by 

the issuer within one year before filing 

the notification on Form 1–E; 

information as to whether the issuer is 

presently offering or contemplating 

offering any other securities; and 

exhibits, including copies of the rule 

605 offering circular and any 

underwriting contracts. 

The Commission uses the information 

provided in the notification on Form 1– 

E and the offering circular to determine 

whether an offering qualifies for the 

exemption under Regulation E. The 

Commission estimates that, each year, 

one issuer files one notification on Form 

1–E, together with offering circulars, 

with the Commission.1 Based on the 

Commission’s experience with 

disclosure documents, we estimate that 

the burden from compliance with Form 

1–E and the offering circular requires 

approximately 100 hours per filing. The 

annual burden hours for compliance 

with Form 1–E and the offering circular 

would be 200 hours (2 responses × 100 

hours per response). Estimates of the 

burden hours are made solely for the 


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3142 Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 

1Status of Investment Advisory Programs Under 

the Investment Company Act of 1940, Investment 

Company Act Rel. No. 22579 (Mar. 24, 1997) [62 FR 

15098 (Mar. 31,1997)] (‘‘Adopting Release’’). In 

addition, there are no registration requirements 

under section 5 of the Securities Act of 1933 for 

programs that meet the requirements of rule 3a–4. 

See 17 CFR 270.3a–4, introductory note. 

2For purposes of rule 3a–4, the term ‘‘sponsor’’ 

refers to any person who receives compensation for 

sponsoring, organizing or administering the 

program, or for selecting, or providing advice to 

clients regarding the selection of, persons 

responsible for managing the client’s account in the 

program. 

3Clients specifically must be allowed to designate 

securities that should not be purchased for the 

account or that should be sold if held in the 

account. The rule does not require that a client be 

able to require particular securities be purchased for 

the account. 

4These estimates are based on an analysis of the 

number of individual clients from Form ADV Item 

5D(a)(1) and (b)(1) of advisers that report they 

provide portfolio management to wrap programs as 

indicated in Form ADV Item 5I(2)(b) and (c), and 

the number of individual clients of advisers that 

identify as internet advisers in Form ADV Item 

2A(11). From analysis comparing reported 

individual client assets in Form ADV Item 5D(a)(3) 

and 5D(b)(3) to reported wrap portfolio manager 

assets in Form ADV Item 5I(2)(b) and (c), we 

discount the estimated number of individual clients 

of non-internet advisers providing portfolio 

management to wrap programs by 10%. 

5These estimates are based on the number of new 

clients expected due to average year-over-year 

growth in individual clients from Form ADV Item 

5D(a)(1) and (b)(1) (about 8%) and an assumed rate 

of yearly client turnover of 10%. 

purposes of the PRA, and are not 

derived from a comprehensive or even 

a representative survey or study of the 

costs of SEC rules and forms. 

Compliance with the information 

collection requirements of the rules is 

necessary to obtain the benefit of relying 

on the rules. The information provided 

on Form 1–E and in the offering circular 

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. 

The public may view the background 

documentation for this information 

collection at the following website, 

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: 

Lindsay.M.Abate@omb.eop.gov; and (ii) 

David Bottom, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o John 

Pezzullo, 100 F Street NE, Washington, 

DC 20549 or send an email to: PRA_

Mailbox@sec.gov. Written comments 

and recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice to www.reginfo.gov/public/do/ 

PRAMain. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. 

Dated: January 14, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01052 Filed 1–19–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–401, OMB Control No. 

3235–0459] 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Rule 3a–4 

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. 

Rule 3a–4 (17 CFR 270.3a–4) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a) (‘‘Investment Company 

Act’’ or ‘‘Act’’) provides a nonexclusive 

safe harbor from the definition of 

investment company under the Act for 

certain investment advisory programs. 

These programs, which include ‘‘wrap 

fee’’ programs, generally are designed to 

provide professional portfolio 

management services on a discretionary 

basis to clients who are investing less 

than the minimum investments for 

individual accounts usually required by 

the investment adviser but more than 

the minimum account size of most 

mutual funds. Under wrap fee and 

similar programs, a client’s account is 

typically managed on a discretionary 

basis according to pre-selected 

investment objectives. Clients with 

similar investment objectives often 

receive the same investment advice and 

may hold the same or substantially 

similar securities in their accounts. 

Because of this similarity of 

management, some of these investment 

advisory programs may meet the 

definition of investment company under 

the Act. 

In 1997, the Commission adopted rule 

3a–4, which clarifies that programs 

organized and operated in accordance 

with the rule are not required to register 

under the Investment Company Act or 

comply with the Act’s requirements.1

These programs differ from investment 

companies because, among other things, 

they provide individualized investment 

advice to the client. The rule’s 

provisions have the effect of ensuring 

that clients in a program relying on the 

rule receive advice tailored to the 

client’s needs. 

For a program to be eligible for the 

rule’s safe harbor, each client’s account 

must be managed on the basis of the 

client’s financial situation and 

investment objectives and in accordance 

with any reasonable restrictions the 

client imposes on managing the 

account. When an account is opened, 

the sponsor 2 (or its designee) must 

obtain information from each client 

regarding the client’s financial situation 

and investment objectives, and must 

allow the client an opportunity to 

impose reasonable restrictions on 

managing the account.3 In addition, the 

sponsor (or its designee) must contact 

the client annually to determine 

whether the client’s financial situation 

or investment objectives have changed 

and whether the client wishes to impose 

any reasonable restrictions on the 

management of the account or 

reasonably modify existing restrictions. 

The sponsor (or its designee) must also 

notify the client quarterly, in writing, to 

contact the sponsor (or its designee) 

regarding changes to the client’s 

financial situation, investment 

objectives, or restrictions on the 

account’s management. 

Additionally, the sponsor (or its 

designee) must provide each client with 

a quarterly statement describing all 

activity in the client’s account during 

the previous quarter. The sponsor and 

personnel of the client’s account 

manager who know about the client’s 

account and its management must be 

reasonably available to consult with the 

client. Each client also must retain 

certain indicia of ownership of all 

securities and funds in the account. 

The Commission staff estimates that 

27,979,460 clients participate each year 

in investment advisory programs relying 

on rule 3a–4.4 Of that number, the staff 

estimates that 2,127,147 are new clients 

and 25,852,313 are continuing clients.5

The staff estimates that each year the 

investment advisory program sponsors’ 

staff engage in 1.5 hours per new client 

and 1 hour per continuing client to 


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