Document ID: SEC-2019-1035-0002
Agency: sec
Document Type: Notice
Title: Agency Information Collection Activities; Proposals, Submissions, and Approvals
Posted Date: 2022-06-01T04:00Z

[Federal Register Volume 87, Number 105 (Wednesday, June 1, 2022)]
[Notices]
[Pages 33222-33223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11662]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-504, OMB Control No. 3235-0561]

Proposed Collection; Comment Request; Extension: Rule 12d3-1

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.), 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.
    Rule 12d3-1 (17 CFR 270.12d3-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) (``Investment Company Act'') permits a 
fund to invest up to five percent of its assets in securities of an 
issuer deriving more than fifteen percent of its gross revenues from 
securities-related businesses (subject to certain limitations), 
notwithstanding the general prohibition in Section 12(d)(3) of the 
Investment Company Act of a registered investment company (``fund'') 
and companies controlled by the fund purchasing securities issued by a 
registered investment adviser, broker, dealer, or underwriter 
(``securities-related businesses'').
    A fund may, however, rely on an exemption in rule 12d3-1 to acquire 
securities issued by its subadvisers in circumstances in which the 
subadviser would have little ability to take advantage of the fund, 
because it is not in a position to direct the fund's securities 
purchases. This exemption in rule 12d3-1 is available if: (i) The 
subadviser is not, and is not an affiliated person of, an investment 
adviser that provides advice with respect to the portion of the fund 
that is acquiring the securities; and (ii) the advisory contracts of 
the subadviser, and any subadviser that is advising the purchasing 
portion of the fund, prohibit them from consulting with each other 
concerning securities transactions of the fund, and limit their 
responsibility in providing advice to providing advice with respect to 
discrete portions of the fund's portfolio.\1\
---------------------------------------------------------------------------

    \1\ See 17 CFR 270.270.12d3-1(c)(3).
---------------------------------------------------------------------------

    Rule 12d3-1 requires funds to amend their subadvisory contracts 
before they can rely on rule 12d3-1's exemption to ensure that the 
subadviser that engages in the transaction does not influence the 
fund's investment decision to engage in the transaction.
    Based on an analysis of fund filings, Commission staff estimates 
that approximately 285 funds enter into such new subadvisory agreements 
each year, and 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 12d3-1. 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), 17a-10 (17 CFR 270.17a-10), 
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 to all four rules. Therefore, we estimate that 
the burden allocated to rule 12d3-1 for this contract change

[[Page 33223]]

would be 0.75 hours. Assuming that all 285 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 214 burden hours annually.
    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 
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 by August 1, 2022.
    Please direct your written comments to 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: 
[email protected].

    Dated: May 25, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-11662 Filed 5-31-22; 8:45 am]
BILLING CODE 8011-01-P