27204 Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 

1Based on statistics compiled by Commission 

staff, we estimate that there are approximately 3,885 

funds that must comply with the collections of 

information under rule 17g–1. 

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’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

Rule 17g–1 (17 CFR 270.17g–1) under 

the Investment Company Act of 1940 

(the ‘‘Act’’) (15 U.S.C. 80a–17(g)) 

governs the fidelity bonding of officers 

and employees of registered 

management investment companies 

(‘‘funds’’) and their advisers. Rule 17g– 

1 requires, in part, the following: 

Independent Directors’ Approval 

The form and amount of the fidelity 

bond must be approved by a majority of 

the fund’s independent directors at least 

once annually, and the amount of any 

premium paid by the fund for any ‘‘joint 

insured bond,’’ covering multiple funds 

or certain affiliates, must be approved 

by a majority of the fund’s independent 

directors. 

Terms and Provisions of the Bond 

The amount of the bond may not be 

less than the minimum amounts of 

coverage set forth in a schedule based 

on the fund’s gross assets; the bond 

must provide that it shall not be 

cancelled, terminated, or modified 

except upon 60-day written notice to the 

affected party and to the Commission; in 

the case of a joint insured bond, 60-day 

written notice must also be given to 

each fund covered by the bond; a joint 

insured bond must provide that the 

fidelity insurance company will provide 

all funds covered by the bond with a 

copy of the agreement, a copy of any 

claim on the bond, and notification of 

the terms of the settlement of any claim 

prior to execution of that settlement; 

and a fund that is insured by a joint 

bond must enter into an agreement with 

all other parties insured by the joint 

bond regarding recovery under the 

bond. 

Filings With the Commission 

Upon the execution of a fidelity bond 

or any amendment thereto, a fund must 

file with the Commission within 10 

days a copy of the executed bond or any 

amendment to the bond, the 

independent directors’ resolution 

approving the bond, and a statement as 

to the period for which premiums have 

been paid on the bond. In the case of a 

joint insured bond, a fund must also file 

(i) a statement showing the amount the 

fund would have been required to 

maintain under the rule if it were 

insured under a single insured bond and 

(ii) the agreement between the fund and 

all other insured parties regarding 

recovery under the bond. A fund must 

also notify the Commission in writing 

within five days of any claim or 

settlement on a claim under the fidelity 

bond. 

Notices to Directors 

A fund must notify by registered mail 

each member of its board of directors of 

(i) any cancellation, termination, or 

modification of the fidelity bond at least 

45 days prior to the effective date, and 

(ii) the filing or settlement of any claim 

under the fidelity bond when 

notification is filed with the 

Commission. 

Rule 17g–1’s independent directors’ 

annual review requirements, fidelity 

bond content requirements, joint bond 

agreement requirement and the required 

notices to directors are designed to 

ensure the safety of fund assets against 

losses due to the conduct of persons 

who may obtain access to those assets. 

These requirements also facilitate 

oversight of a fund’s fidelity bond. The 

rule’s required filings with the 

Commission are designed to assist the 

Commission in monitoring funds’ 

compliance with the fidelity bond 

requirements. 

Based on conversations with 

representatives in the fund industry, the 

Commission staff estimates that for each 

of the estimated 3,885 active funds,1 the 

average annual paperwork burden 

associated with rule 17g–1’s 

requirements is two hours, one hour 

each for a compliance attorney and the 

board of directors as a whole. The time 

spent by a compliance attorney includes 

time spent filing reports with the 

Commission for any fidelity losses (if 

any) as well as paperwork associated 

with any notices to directors, and 

managing any updates to the bond and 

the joint agreement (if one exists). The 

time spent by the board of directors as 

a whole includes any time spent 

initially establishing the bond, as well 

as time spent on annual updates and 

approvals. The Commission staff 

therefore estimates the total ongoing 

paperwork burden hours per year for all 

funds required by rule 17g–1 to be 7,770 

hours (3,885 funds × 2 hours = 7,770 

hours). 

These estimates of average burden 

hours are made solely for the purposes 

of the Paperwork Reduction Act. These 

estimates are not derived from a 

comprehensive or even a representative 

survey or study of Commission rules. 

The collection of information required 

by Rule 17g–1 is mandatory and 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. 

Please direct general comments 

regarding the above information to the 

following persons: (i) Desk Officer for 

the Securities and Exchange 

Commission, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503 

or send an e-mail to Shagufta Ahmed at 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Dated: June 1, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13257 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Rule 12d1–1; SEC File No. 270–526; OMB 

Control No. 3235–0584. 

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. 

Under current law, an investment 

company (‘‘fund’’) is limited in the 

amount of securities the fund 

(‘‘acquiring fund’’) can acquire from 

another fund (‘‘acquired fund’’). In 

general under the Investment Company 

Act of 1940 (15 U.S.C. 80a) (the 

‘‘Investment Company Act’’ or ‘‘Act’’), a 

registered fund (and companies it 

controls) cannot: (i) Acquire more than 

three percent of another fund’s 

securities; (ii) invest more than five 

percent of its own assets in another 


cprice-sewell on PRODPC61 with NOTICES
Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 27205 

1See 15 U.S.C. 80a–12(d)(1)(A). If an acquiring 

fund is not registered, these limitations apply only 

with respect to the acquiring fund’s acquisition of 

registered funds. 

2See 15 U.S.C. 80a–12(d)(1)(B). 

3See Rule 12d1–1(b)(1). 

4See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d); 17 

CFR 270.17d–1. 

5An affiliated person of a fund includes any 

person directly or indirectly controlling, controlled 

by, or under common control with such other 

person. See 15 U.S.C. 80a–2(a)(3)(C) (definition of 

‘‘affiliated person’’). Most funds today are organized 

by an investment adviser that advises or provides 

administrative services to other funds in the same 

complex. Funds in a fund complex are generally 

under common control of an investment adviser or 

other person exercising a controlling influence over 

the management or policies of the funds. See 15 

U.S.C. 80a–2(a)(9). Not all advisers control funds 

they advise. The determination of whether a fund 

is under the control of its adviser, officers, or 

directors depends on all the relevant facts and 

circumstances. See Investment Company Mergers, 

Investment Company Act Release No. 25259 (Nov. 

8, 2001) [66 FR 57602 (Nov. 15, 2001)], at n.11. To 

the extent that an acquiring fund in a fund complex 

is under common control with a money market 

fund in the same complex, the funds would rely on 

the rule’s exemptions from section 17(a) and rule 

17d–1. 

6See 15 U.S.C. 80a–2(a)(3)(A), (B). 

7See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d), 15 

U.S.C. 80a–17(e), 15 U.S.C. 80a–18, 15 U.S.C. 80a– 

22(e). 

8See 17 CFR 270.31a–1(b)(2)(ii), 17 CFR 270.31a– 

1(b)(2)(iv), 17 CFR 270.31a–1(b)(9). 

9This estimate is based on the number of 

applications filed with the Commission in 2005 

(40), increased by investment in 6 new funds each 

year since 2005 (18), and rounded to the nearest 

tenth (60). This estimate may be understated 

because applicants generally do not identify the 

name or number of unregistered money market 

funds in which registered funds intend to invest, 

and each application also applies to unregistered 

money market funds to be organized in the future. 

10This estimate is based on the following 

calculation: (60 × 162) + (6 × 162) + (6 × 1) + (15 

× 1) = 10,713. 

11This estimate is based on the following 

calculation: (60 × 1,220) + (6 × 1,220) + (6 × 21) 

+ (15 × 4.5) = 80,714. 

fund; or (iii) invest more than ten 

percent of its own assets in other funds 

in the aggregate.1 In addition, a 

registered open-end fund, its principal 

underwriter, and any registered broker 

or dealer cannot sell that fund’s shares 

to another fund if, as a result: (i) The 

acquiring fund (and any companies it 

controls) owns more than three percent 

of the acquired fund’s stock; or (ii) all 

acquiring funds (and companies they 

control) in the aggregate own more than 

ten percent of the acquired fund’s 

stock.2 Rule 12d1–1 under the Act (17 

CFR 270.12d1–1) provides an 

exemption from these limitations for 

‘‘cash sweep’’ arrangements, in which a 

fund invests all or a portion of its 

available cash in a money market fund 

rather than directly in short-term 

instruments. An acquiring fund relying 

on the exemption may not pay a sales 

load, distribution fee, or service fee on 

acquired fund shares, or if it does, the 

acquiring fund’s investment adviser 

must waive a sufficient amount of its 

advisory fee to offset the cost of the 

loads or distribution fees.3 The acquired 

fund may be a fund in the same fund 

complex or in a different fund complex. 

In addition to providing an exemption 

from section 12(d)(1) of the Act, the rule 

provides exemptions from section 17(a) 

and rule 17d–1, which restrict a fund’s 

ability to enter into transactions and 

joint arrangements with affiliated 

persons.4 These provisions could 

otherwise prohibit an acquiring fund 

from investing in a money market fund 

in the same fund complex,5 or prohibit 

a fund that acquires five percent or more 

of the securities of a money market fund 

in another fund complex from making 

any additional investments in the 

money market fund.6

The rule also permits a registered 

fund to rely on the exemption to invest 

in an unregistered money market fund 

that limits its investments to those in 

which a registered money market fund 

may invest under rule 2a–7 under the 

Act (17 CFR 270.2a–7), and undertakes 

to comply with all the other provisions 

of rule 2a–7. In addition the acquiring 

fund must reasonably believe that the 

unregistered money market fund (i) 

operates in compliance with rule 2a–7, 

(ii) complies with sections 17(a), (d), (e), 

18, and 22(e) of the Act 7 as if it were 

a registered open-end fund, (iii) has 

adopted procedures designed to ensure 

that it complies with these statutory 

provisions, (iv) maintains the records 

required by rules 31a–1(b)(2)(ii), 31a– 

1(b)(2)(iv), and 31a–1(b)(9); 8 and (v) 

preserves permanently, the first two 

years in an easily accessible place, all 

books and records required to be made 

under these rules. 

Rule 2a–7 contains certain collection 

of information requirements. An 

unregistered money market fund that 

complies with rule 2a–7 would be 

subject to these collection of 

information requirements. In addition, 

the recordkeeping requirements under 

rule 31a–1 with which the acquiring 

fund reasonably believes the 

unregistered money market fund 

complies are collections of information 

for the unregistered money market fund. 

By allowing funds to invest in registered 

and unregistered money market funds, 

rule 12d1–1 is intended to provide 

funds greater options for cash 

management. In order for a registered 

fund to rely on the exemption to invest 

in an unregistered money market fund, 

the unregistered money market fund 

must comply with certain collection of 

information requirements for registered 

money market funds. These 

requirements are intended to ensure that 

the unregistered money market fund has 

established procedures for collecting the 

information necessary to make adequate 

credit reviews of securities in its 

portfolio, as well as other recordkeeping 

requirements that will assist the 

acquiring fund in overseeing the 

unregistered money market fund (and 

Commission staff in its examination of 

the unregistered money market fund’s 

adviser). 

Commission staff estimates that 

registered funds currently invest in 60 

unregistered money market funds in 

excess of the statutory limits under rule 

12d1–1, and will invest in 

approximately 6 new unregistered 

money market funds each year.9 Staff 

estimates that each of these unregistered 

money market funds spends 1,220 hours 

to perform the record of credit risk 

analysis and other determinations 

annually, and each of the 6 unregistered 

money market funds in which an 

acquiring fund invests in for the first 

time under the rule will spend 21 hours 

to implement the board procedures. 

Finally, Commission staff estimates that 

15 unregistered money market funds 

each spend 4.5 hours to review and 

amend procedures annually. The 

estimated total of annual responses 

under rule 12d1–1 is 10,713,10 and the 

estimate of burden hours associated 

with these responses is 80,714 hours.11

Commission staff estimates that 

unregistered money market funds also 

incur costs to preserve records, as 

required under rule 2a–7. These costs 

will vary significantly for individual 

funds, depending on the amount of 

assets under fund management and 

whether the fund preserves its records 

in a storage facility in hard copy or has 

developed and maintains a computer 

system to create and preserve 

compliance records. In its rule 2a–7 

Paperwork Reduction Act (‘‘PRA’’) 

submission, Commission staff estimated 

that the amount an individual money 

market fund may spend ranged from 

$100 per year to $300,000. We have no 

reason to believe the range is different 

for unregistered money market funds. 

The Commission does not have specific 

information on the amount of assets 

managed by unregistered money market 

funds. Accordingly, Commission staff 

estimates that an unregistered money 

market fund in which registered funds 

invest in reliance on rule 12d1–1 have, 

on average, $380 million in assets under 


cprice-sewell on PRODPC61 with NOTICES
27206 Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 

12This estimate is based on the average of assets 

under management of medium-sized registered 

money market funds ($50 million to $999 million). 

13This estimate was based on the following 

calculation: 60 unregistered money market funds x 

$380 million in assets under management × 

$0.0000005 = $11,400. The estimate of cost per 

dollar of assets is the same as that used for mediumsized funds in the rule 2a–7 PRA submission. 

14This estimate is based on information 

Commission staff obtained in its survey for the rule 

2a–7 PRA submission. Of the funds surveyed, no 

medium-sized funds incurred this type of capital 

cost. The funds either maintained record systems 

using a program the fund would be likely to have 

in the ordinary course of business (such as Excel) 

or the records were maintained by the fund’s 

custodian. 

1 $63/hour figure for a Compliance Clerk is from 

SIFMA’s Office Salaries in the Securities Industry 

2008, modified by Commission staff to account for 

an 1800-hour work-year and multiplied by 2.93 to 

account for bonuses, firm size, employee benefits 

and overhead. 

management.12 Based on a cost of 

$0.0000005 per dollar of assets under 

management for medium-sized funds, 

the staff estimates compliance with rule 

2–7 costs these types of unregistered 

money market funds $11,400 

annually.13 Commission staff estimates 

that unregistered money market funds 

do not incur any capital costs to create 

computer programs for maintaining and 

preserving compliance records for rule 

2a–7.14

The collections of information 

required for unregistered money market 

funds by rule 12d1–1 are necessary in 

order for acquiring funds to be able to 

obtain the benefits described above. 

Notices to the Commission 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. 

Please direct general comments 

regarding the above information to the 

following persons: (i) Desk Officer for 

the Securities and Exchange 

Commission, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503 

or send an e-mail to Shagufta Ahmed at 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

June 1, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13256 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Rule 6c–7; SEC File No. 270–269; OMB 

Control No. 3235–0276. 

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. 

Rule 6c–7 (17 CFR 270.6c–7) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a–1 et seq.) (‘‘1940 Act’’) 

provides exemption from certain 

provisions of Sections 22(e) and 27 of 

the 1940 Act for registered separate 

accounts offering variable annuity 

contracts to certain employees of Texas 

institutions of higher education 

participating in the Texas Optional 

Retirement Program. There are 

approximately 100 registrants governed 

by Rule 6c–7. The burden of compliance 

with Rule 6c–7, in connection with the 

registrants obtaining from a purchaser, 

prior to or at the time of purchase, a 

signed document acknowledging the 

restrictions on redeemability imposed 

by Texas law, is estimated to be 

approximately 3 minutes per response 

for each of approximately 3000 

purchasers annually (at an estimated 

$63 per hour),1 for a total annual burden 

of 150 hours (at a total annual cost of 

$9,450). 

Rule 6c–7 requires that the separate 

account’s registration statement under 

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

et seq.) include a representation that 

Rule 6c–7 is being relied upon and is 

being complied with. This requirement 

enhances the Commission’s ability to 

monitor utilization of and compliance 

with the rule. There are no 

recordkeeping requirements with 

respect to Rule 6c–7. 

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 or forms. The 

Commission does not include in the 

estimate of average burden hours the 

time preparing registration statements 

and sales literature disclosure regarding 

the restrictions on redeemability 

imposed by Texas law. The estimate of 

burden hours for completing the 

relevant registration statements are 

reported on the separate PRA 

submissions for those statements. (See 

the separate PRA submissions for Form 

N–3 (17 CFR 274.11b) and Form N–4 (17 

CFR 274.11c.) 

Complying with the collection of 

information requirements of the rules is 

necessary to obtain a benefit. 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. 

Please direct general comments 

regarding the above information to the 

following persons: (i) Desk Officer for 

the Securities and Exchange 

Commission, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503 

or send an email to Shagufta Ahmed at 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Dated: June 1, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13255 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Extension of Existing 

Request; Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Regulation S–P, OMB Control No. 3235– 

0537, SEC File No. 270–480. 

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’’) is soliciting comments 

on the existing collection of information 

provided for in the following rule: 


cprice-sewell on PRODPC61 with NOTICES