[Federal Register Volume 75, Number 248 (Tuesday, December 28, 2010)]
[Notices]
[Pages 81681-81682]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32518]
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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 17a-6, SEC File No. 270-506, OMB Control No. 3235-
0564.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501), 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 (the ``Act'')
generally prohibits affiliated persons of a registered investment
company (``fund'') from borrowing money or other property from, or
selling or buying
[[Page 81682]]
securities or other property to or from, the fund or any company that
the fund controls.\1\ Rule 17a-6 (17 CFR 270.17a-6) permits a fund and
a ``portfolio affiliate'' (a company that is an affiliated person of
the fund because the fund controls the company, or holds five percent
or more of the company's outstanding voting securities) to engage in
principal transactions that would otherwise be prohibited under section
17(a) of the Act under certain conditions. A fund may not rely on the
exemption in the rule to enter into a principal transaction with a
portfolio affiliate if certain prohibited participants (e.g.,
directors, officers, employees, or investment advisers of the fund)
have a financial interest in a party to the transaction. Rule 17a-6
specifies certain interests that are not ``financial interests,''
including any interest that the fund's board of directors (including a
majority of the directors who are not interested persons of the fund)
finds to be not material. A board making this finding is required to
record the basis for the finding in its meeting minutes. This
recordkeeping requirement is a collection of information under the
Paperwork Reduction Act of 1995 (``PRA'').\2\
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\1\ 15 U.S.C. 80a-17(a).
\2\ 44 U.S.C. 3501.
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The rule is designed to permit transactions between funds and their
portfolio affiliates in circumstances in which it is unlikely that the
affiliate would be in a position to take advantage of the fund. In
determining whether a financial interest is ``material,'' the board of
the fund should consider whether the nature and extent of the interest
in the transaction is sufficiently small that a reasonable person would
not believe that the interest affected the determination of whether to
enter into the transaction or arrangement or the terms of the
transaction or arrangement. The information collection requirements in
rule 17a-6 are intended to ensure that Commission staff can review, in
the course of its compliance and examination functions, the basis for a
board of director's finding that the financial interest of an otherwise
prohibited participant in a party to a transaction with a portfolio
affiliate is not material.
Based on staff discussions with fund representatives, we estimate
that funds currently do not rely on the exemption from the term
``financial interest'' with respect to any interest that the fund's
board of directors (including a majority of the directors who are not
interested persons of the fund) finds to be not material. Accordingly,
we estimate that annually there will be no principal transactions under
rule 17a-6 that will result in a collection of information.
The Commission requests authorization to maintain an inventory of
one burden hour to ease future renewals of rule 17a-6's collection of
information analysis should funds rely on this exemption to the term
``financial interest'' as defined in rule 17a-6.
The estimate of 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 necessary to obtain the benefit of relying on rule 17a-
6. 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 agency, including whether the information will
have practical utility; (b) the accuracy of the agency'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 in writing within 60
days of this publication.
Please direct your written comments to Thomas Bayer/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312; or send an
e-mail to: [email protected].
Dated: December 20, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-32518 Filed 12-27-10; 8:45 am]
BILLING CODE 8011-01-P