Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Notices 35585 

30See Rule 9561(b)(1), (3), (4) and (6); see also 

Rule 9559(n)(6). 

31The capitalized term ‘‘Associated Persons’’ is in 

Rule 4111(f)(3) (concerning requests by Previously 

Designated Restricted Firms for withdrawals from a 

Restricted Deposit Requirement), (i)(2) (defining 

‘‘Covered Pending Arbitration Claim’’), and (i)(15) 

(defining ‘‘Restricted Deposit Requirement’’). 

32The definition of ‘‘Covered Pending Arbitration 

Claim’’ in Rule 4111(i)(2) was modeled on the 

definition of the same term in Rule 1011(c), which 

is in the Rule 1000 Series (Member Application and 

Associated Person Registration). See Securities 

Exchange Act Release No. 90527 (November 27, 

2020), 85 FR 78540, 78541–42 n.10 (December 4, 

2020) (Notice of Filing of SR–FINRA–2020–041). In 

Rule 1011(c), as well as in some other provisions 

in the Rule 1000 Series, the term ‘‘Associated 

Person’’ is capitalized. The Rule 1000 Series, 

however, has a specific definition of the term 

‘‘Associated Person’’ that applies specifically to the 

Rule 1000 Series. See Rule 1011(b). 

33FINRA notes that the proposed rule change 

would impact all members, including members that 

have elected to be treated as capital acquisition 

brokers (‘‘CABs’’), given that the CAB rule set 

incorporates the impacted FINRA rules by 

reference. The proposed rule change would not 

impact, however, member firms that are funding 

portals, because the Funding Portal rule set neither 

incorporates the impacted FINRA rules by reference 

nor contains parallel rule provisions. See Funding 

Portal Rule 900(a) (excepting FINRA Rule 9561 

from the application of the FINRA Rule 9000 Series 

to funding portals). 

34 15 U.S.C. 78o–3(b)(6). 

35 15 U.S.C. 78s(b)(3)(A). 

36 17 CFR 240.19b–4(f)(6). 37 17 CFR 200.30–3(a)(12). 

Rule 9561(b)(3).30 Accordingly, for 

consistency and clarity, FINRA 

proposes to modify the second sentence 

of Rule 9561(b)(3) to use the phrase 

‘‘suspension or cancellation of 

membership.’’ 

Other Technical, Non-Substantive 

Changes 

FINRA also proposes to amend 

various provisions in Rule 4111 to 

remove the capitalization of the term 

‘‘Associated Persons.’’ 31 This would be 

consistent with how, throughout the 

FINRA Rulebook, the term ‘‘associated 

person’’ is generally not capitalized.32

FINRA has filed the proposed rule 

change for immediate effectiveness and 

has requested that the SEC waive the 

requirement that the proposed rule 

change not become operative for 30 days 

after the date of the filing, so FINRA can 

implement the proposed rule change 

immediately.33

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,34 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. The proposed rule 

change will make non-substantive, 

technical amendments that FINRA 

believes will provide greater clarity and 

consistency to its rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change brings clarity and 

consistency to FINRA rules without 

adding any burden on firms. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 35 and Rule 19b– 

4(f)(6) thereunder.36

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2022–014 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2022–014. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of FINRA. All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FINRA– 

2022–014 and should be submitted on 

or before July 1, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–12483 Filed 6–9–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–507, OMB Control No. 

3235–0563] 

Proposed Collection; Comment 

Request; Extension: Rule 17a–10 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 


jspears on DSK121TN23PROD with NOTICES1
35586 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Notices 

1 15 U.S.C. 80a–17(a). 

2 15 U.S.C. 80a–2(a)(3)(E). 

3As defined in rule 17a–10(b)(2). 17 CFR 

270.17a–10(b)(2). 

4 17 CFR 270.17a–10(a)(2). 

5 44 U.S.C. 3501. 

6Transactions of Investment Companies With 

Portfolio and Subadviser Affiliates, Investment 

Company Act Release No. 25888 (Jan. 14, 2003) [68 

FR 3153, (Jan. 22, 2003)]. We assume that funds 

formed after 2003 that intended to rely on rule 17a– 

10 would have included the required provision as 

a standard element in their initial subadvisory 

contracts. 

7Based on data from form N–CEN filings, as of 

March 2022, there are 12,468 registered funds 

(open-end funds, closed-end funds, and exchangetraded funds), 4,870 funds of which have 

subadvisory relationships (approximately 39%). 

Based on Form N–1A and Form N–2 filings, there 

were 806 new registered funds in 2020. 806 new 

funds × 39% = 314 funds. 

8This estimate is based on the following 

calculation: 3 hours ÷ 4 rules = 0.75 hours. 

9These estimates are based on the following 

calculations: (0.75 hours × 314 portfolios = 236 

burden hours); ($455 per hour × 236 hours = 

$107,380 total cost). The Commission’s estimates 

concerning the wage rates for attorney time are 

based on salary information for the securities 

industry compiled by the Securities Industry and 

Financial Markets Association. The estimated wage 

figure is based on published rates for in-house 

attorneys, modified to account for a 1,800-hour 

work-year and inflation, and multiplied by 5.35 to 

account for bonuses, firm size, employee benefits, 

and overhead, yielding an effective hourly rate of 

$455. See Securities Industry and Financial Markets 

Association, Report on Management & Professional 

Earnings in the Securities Industry 2013. 

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.) (‘‘PRA’’) the 

Securities and Exchange Commission 

(the ‘‘Commission’’) is soliciting 

comments on the collections of 

information summarized below. The 

Commission plans to submit these 

existing collections of information to the 

Office of Management and Budget 

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

Section 17(a) of the Investment 

Company Act of 1940 (15 U.S.C. 80a–1 

et seq.) (the ‘‘Act’’), generally prohibits 

affiliated persons of a registered 

investment company (‘‘fund’’) from 

borrowing money or other property 

from, or selling or buying securities or 

other property to or from, the fund or 

any company that the fund controls.1

Section 2(a)(3) of the Act defines 

‘‘affiliated person’’ of a fund to include 

its investment advisers.2 Rule 17a–10 

(17 CFR 270.17a–10) permits (i) a 

subadviser 3 of a fund to enter into 

transactions with funds the subadviser 

does not advise but that are affiliated 

persons of a fund that it does advise 

(e.g., other funds in the fund complex), 

and (ii) a subadviser (and its affiliated 

persons) to enter into transactions and 

arrangements with funds the subadviser 

does advise, but only with respect to 

discrete portions of the subadvised fund 

for which the subadviser does not 

provide investment advice. 

To qualify for the exemptions in rule 

17a–10, the subadvisory relationship 

must be the sole reason why section 

17(a) prohibits the transaction. In 

addition, the advisory contracts of the 

subadviser entering into the transaction, 

and any subadviser that is advising the 

purchasing portion of the fund, must 

prohibit the subadvisers from consulting 

with each other concerning securities 

transactions of the fund, and limit their 

responsibility to providing advice with 

respect to discrete portions of the fund’s 

portfolio.4 This requirement regarding 

the prohibitions and limitations in 

advisory contracts of subadvisers 

relying on the rule constitutes a 

collection of information under the 

PRA.5

The staff assumes that all existing 

funds with subadvisory contracts 

amended those contracts to comply with 

the adoption of rule 17a–10 in 2003, 

which conditioned certain exemptions 

upon these contractual alterations, and 

therefore there is no continuing burden 

for those funds.6 However, the staff 

assumes that all newly formed 

subadvised funds, and funds that enter 

into new contracts with subadvisers, 

will incur the one-time burden by 

amending their contracts to add the 

terms required by the rule. 

Based on an analysis of fund filings, 

the staff estimates that approximately 

314 funds enter into new subadvisory 

agreements each year.7 Based on 

discussions with industry 

representatives, the staff estimates that 

it will require approximately 3 attorney 

hours to draft and execute additional 

clauses in new subadvisory contracts in 

order for funds and subadvisers to be 

able to rely on the exemptions in rule 

17a–10. Because these additional 

clauses are identical to the clauses that 

a fund would need to insert in their 

subadvisory contracts to rely on rules 

10f–3 (17 CFR 270.10f–3), 12d3–1 (17 

CFR 270.12d3–1), and 17e–1 (17 CFR 

270.17e–1), and because we believe that 

funds that use one such rule generally 

use all of these rules, we apportion this 

3 hour time burden equally among all 

four rules. Therefore, we estimate that 

the burden allocated to rule 17a–10 for 

this contract change would be 0.75 

hours.8 Assuming that all 314 funds that 

enter into new subadvisory contracts 

each year make the modification to their 

contract required by the rule, we 

estimate that the rule’s contract 

modification requirement will result in 

236 burden hours annually, with an 

associated cost of approximately 

$107,380.9

The estimate of average burden hours 

is made solely for the purposes of the 

PRA. The estimate is not derived from 

a comprehensive or even a 

representative survey or study of the 

costs of Commission rules. Complying 

with this collection of information 

requirement is necessary to obtain the 

benefit of relying on rule 17a–10. 

Responses 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 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 August 9, 2022. 

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: 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: June 6, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–12495 Filed 6–9–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–482, OMB Control No. 

3235–0540] 

Proposed Collection; Comment 

Request; Extension: Rule 17a–25 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 


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