[Federal Register: January 9, 2009 (Volume 74, Number 6)]
[Notices]
[Page 967-968]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja09-69]
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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 18f-3; SEC File No. 270-385; OMB Control No. 3235-0441.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget request for extension of the previously approved collection
of information discussed below.
Section 18(f)(1) \1\ of the Investment Company Act of 1940 \2\ (the
``Investment Company Act'' or ``Act'') prohibits registered open-end
management investment companies (``funds'') from issuing any senior
security. Rule 18f-3 under the Act \3\ exempts from section 18(f)(1) a
fund that issues multiple classes of shares representing interests in
the same portfolio of securities (a ``multiple class fund'') if the
fund satisfies the conditions of the rule. In general, each class must
differ in its arrangement for shareholder services or distribution or
both, and must pay the related expenses of that different arrangement.
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\1\ 15 U.S.C. 80a-18(f)(1).
\2\ 15 U.S.C. 80a.
\3\ 17 CFR 270.18f-3.
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The rule includes one requirement for the collection of
information. A multiple class fund must prepare, and fund directors
must approve, a written plan setting forth the separate arrangement and
expense allocation of each class, and any related conversion features
or exchange privileges (``rule
[[Page 968]]
18f-3 plan'').\4\ Approval of the plan must occur before the fund
issues any shares of multiple classes and whenever the fund materially
amends the plan. In approving the plan, a majority of the fund board,
including a majority of the fund's independent directors, must
determine that the plan is in the best interests of each class and the
fund as a whole.
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\4\ Rule 18f-3(d).
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The requirement that the fund prepare and directors approve a
written rule 18f-3 plan is intended to ensure that the fund compiles
information relevant to the fairness of the separate arrangement and
expense allocation for each class, and that directors review and
approve the information. Without a blueprint that highlights material
differences among classes, directors might not perceive potential
conflicts of interests when they determine whether the plan is in the
best interests of each class and the fund. In addition, the plan may be
useful to Commission staff in reviewing the fund's compliance with the
rule.
There are approximately 5,300 multiple class funds offered by 1,120
registrants.\5\ Based on a review of typical rule 18f-3 plans, the
Commission's staff estimates that the 1,120 registrants together make
an average of 560 responses each year to prepare and approve a written
rule 18f-3 plan, requiring approximately 10 hours per response and a
total of 5,600 burden hours per year in the aggregate.\6\ The staff
estimates that preparation of the rule 18f-3 plan may require 6 hours
of the services of an attorney employed by the fund, at a cost of
approximately $295 per hour for professional time,\7\ and approval of
the plan may require 4 hours of the services of the board of directors,
at a cost of approximately $2000 per hour.\8\ The staff therefore
estimates that the aggregate annual cost of complying with the
paperwork requirements of the rule is approximately $5,471,200 ((6
hours x 560 responses x $295 = $991,200) + (4 hours x 560 responses x
$2000 = 4,480,000)).
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\5\ This estimate is based on data from Form N-SAR, the semi-
annual report that funds file with the Commission. In previous
years, the staff estimated that each multiple class fund prepared
and approved a rule 18f-3 plan. However, the staff has revised this
estimate to reflect its belief that most registrants prepare and
approve a single rule 18f-3 plan for all series funds offered by the
registrants.
\6\ The estimate reflects the assumption that each registrant
prepares and approves a rule 18f-3 plan every two years when issuing
a new fund or new class or amending a plan (or that 560 of all 1,120
registrants prepare and approve a plan each year). The estimate
assumes that the time required to prepare a plan is 6 hours per plan
(or 3360 hours for 560 registrants annually), and the time required
to approve a plan is an additional 4 hours per plan (or 2240 hours
for 560 registrants annually).
\7\ This hourly rate estimate is derived from annual salaries
reported in: Securities Industry and Financial Markets Association,
Management and Professional Earnings in the Securities Industry
(2007), modified to account for an 1800-hour work year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
\8\ This hourly rate estimate is derived from fund
representatives.
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The estimated annual burden of 5,600 hours represents a decrease of
110 hours over the prior estimate of 5,710 hours. The decrease in
burden hours is attributable to a change in the estimate of the number
of responses that are submitted pursuant to the rule.
The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act. 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 mandatory. 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.
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@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.
January 5, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-159 Filed 1-8-09; 8:45 am]
BILLING CODE 8011-01-P