[Federal Register Volume 73, Number 220 (Thursday, November 13, 2008)]
[Notices]
[Pages 67216-67217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26956]
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SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 11a-3; SEC File No. 270-321; OMB Control No. 3235-0358.
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.
Section 11(a) of the Investment Company Act of 1940 (``Act'') (15
U.S.C. 80a-11(a)) provides that it is unlawful for a registered open-
end investment company (``fund'') or its underwriter to make an offer
to the fund's shareholders or the shareholders of any other fund to
exchange the fund's securities for securities of the same or another
fund on any basis other than the relative net asset values (``NAVs'')
of the respective securities to be exchanged, ``unless the terms of the
offer have first been submitted to and approved by the Commission or
are in accordance with such rules and regulations as the
[[Page 67217]]
Commission may have prescribed in respect of such offers.'' Section
11(a) was designed to prevent ``switching,'' the practice of inducing
shareholders of one fund to exchange their shares for the shares of
another fund for the purpose of exacting additional sales charges.
Rule 11a-3 (17 CFR 270.11a-3) under the Act is an exemptive rule
that permits open-end investment companies (``funds''), other than
insurance company separate accounts, and funds' principal underwriters,
to make certain exchange offers to fund shareholders and shareholders
of other funds in the same group of investment companies. The rule
requires a fund, among other things, (i) to disclose in its prospectus
and advertising literature the amount of any administrative or
redemption fee imposed on an exchange transaction, (ii) if the fund
imposes an administrative fee on exchange transactions, other than a
nominal one, to maintain and preserve records with respect to the
actual costs incurred in connection with exchanges for at least six
years, and (iii) give the fund's shareholders a sixty-day notice of a
termination of an exchange offer or any material amendment to the terms
of an exchange offer (unless the only material effect of an amendment
is to reduce or eliminate an administrative fee, sales load or
redemption fee payable at the time of an exchange).
The rule's requirements are designed to protect investors against
abuses associated with exchange offers, provide fund shareholders with
information necessary to evaluate exchange offers and certain material
changes in the terms of exchange offers, and enable the Commission
staff to monitor funds' use of administrative fees charged in
connection with exchange transactions.
The staff estimates that there are approximately 1958 active open-
end investment companies registered with the Commission as of September
2008. The staff estimates that 25 percent (or 490) of these funds
impose a non-nominal administrative fee on exchange transactions. The
staff estimates that the recordkeeping requirement of the rule requires
approximately 1 hour annually of clerical time per fund, for a total of
490 hours for all funds.\1\
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\1\ This estimate is based on the following calculations: (1958
funds x 0.25% = 490 funds); (490 x 1 (clerical hour) = 490 clerical
hours).
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The staff estimates that 5 percent of these 1958 funds (or 98)
terminate an exchange offer or make a material change to the terms of
their exchange offer each year, requiring the fund to comply with the
notice requirement of the rule. The staff estimates that complying with
the notice requirement of the rule requires approximately 1 hour of
attorney time and 2 hours of clerical time per fund, for a total of
approximately 294 hours for all funds to comply with the notice
requirement.\2\ The recordkeeping and notice requirements together
therefore impose a total burden of 784 hours on all funds.\3\ The total
number of respondents is 588, each responding once a year.\4\ The
burdens associated with the disclosure requirement of the rule are
accounted for in the burdens associated with the Form N-1A registration
statement for funds.
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\2\ This estimate is based on the following calculations: (1958
(funds) x 0.05% = 98 funds); (98 x 1 (attorney hour) = 98 total
attorney hours); (98 (funds) x 2 (clerical hours) = 196 total
clerical hours); (98 (attorney hours) + 196 (clerical hours) = 294
total hours).
\3\ This estimate is based on the following calculations: (294
(notice hours) + 490 (recordkeeping hours) = 784 total hours).
\4\ This estimate is based on the following calculation: (490
funds responding to recordkeeping requirement + 98 funds responding
to notice requirement = 588 total respondents).
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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 and forms.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 requested on: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burden(s)
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 in writing within 60 days of this
publication.
Please direct your written comments to Lewis W. Walker, Acting
Director/CIO, Securities and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-
mail to: [email protected].
Dated: November 5, 2008.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-26956 Filed 11-12-08; 8:45 am]
BILLING CODE 8011-01-P