[Federal Register Volume 76, Number 8 (Wednesday, January 12, 2011)]
[Notices]
[Pages 2154-2155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-449]
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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 482; SEC File No. 270-508; OMB Control No. 3235-0565.
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
collection of information summarized below. The Commission plans to
submit this existing collection of information to the Office of
Management and Budget (``OMB'') for extension and approval.
Like most issuers of securities, when an investment company \1\
(``fund'') offers its shares to the public, its promotional efforts
become subject to the advertising restrictions of the Securities Act of
1933, (15 U.S.C. 77) (the ``Securities Act''). In recognition of the
particular problems faced by funds that continually offer securities
and wish to advertise their securities, the Commission has previously
adopted advertising safe harbor rules. The most important of these is
rule 482 (17 CFR 230.482) under the Securities Act, which, under
certain circumstances, permits funds to advertise investment
performance data, as well as other information. Rule 482 advertisements
are deemed to be ``prospectuses'' under Section 10(b) of the Securities
Act.\2\
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\1\ ``Investment company'' refers to both investment companies
registered under the Investment Company Act of 1940 and business
development companies.
\2\ 15 U.S.C. 77j(b).
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Rule 482 contains certain requirements regarding the disclosure
that funds are required to provide in qualifying advertisements. These
requirements are intended to encourage the provision to investors of
information that is balanced and informative, particularly in the area
of investment performance. For example, a fund is required to include
disclosure advising investors to consider the fund's investment
objectives, risks, charges and expenses, and highlighting the
availability of the fund's prospectus. In addition, rule 482
advertisements that include performance data of open-end funds or
insurance company separate accounts offering variable annuity contracts
are required to include certain standardized performance information,
information about any sales loads or other nonrecurring fees, and a
legend warning that past performance does not guarantee future results.
Such funds including performance information in rule 482 advertisements
are also required to make available to investors month-end performance
figures via website disclosure or by a toll-free telephone number, and
to disclose the availability of the month-end performance data in the
advertisement. The rule also sets forth requirements regarding the
prominence of certain disclosures, requirements regarding
advertisements that make tax representations, requirements regarding
advertisements used prior to the effectiveness of the fund's
registration statement, requirements regarding the timeliness of
performance data, and certain required disclosures by money market
funds.
Rule 482 advertisements must be filed with the Commission or, in
the alternative, Financial Industry Regulatory Authority
(``FINRA'').\3\ This information collection differs from many other
federal information collections that are primarily for the use and
benefit of the collecting agency.
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\3\ See rule 24b-3 under the Investment Company Act (17 CFR
270.24b-3), which provides that any sales material, including rule
482 advertisements, shall be deemed filed with the Commission for
purposes of Section 24(b) of the Investment Company Act upon filing
with FINRA.
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As discussed above, rule 482 contains requirements that are
intended to encourage the provision to investors of information that is
balanced and informative, particularly in the area of investment
performance. The Commission is concerned that in the absence of such
provisions fund investors may be misled by deceptive rule 482
performance advertisements and may rely on less-than-adequate
information when determining in which funds they should invest their
money. As a result, the Commission believes it is beneficial for funds
to provide investors with balanced information in fund advertisements
in order to allow investors to make better-informed decisions.
The Commission estimates that 58,368 responses are filed annually
pursuant to rule 482 by 3,540 investment companies offering
approximately 16,225 portfolios, or approximately 3.6 responses per
portfolio annually. Respondents consist of all the investment companies
that take advantage of the safe harbor offered by the rule for their
advertisements. The burden associated with rule 482 is presently
estimated to be 5.16 hours per response. The hourly burden is therefore
approximately 301,179 hours (58,368 responses x 5.16 hours per
response).
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.
Cost burden is the cost of services purchased to comply with rule
482, such as for the services of computer programmers, outside counsel,
financial printers, and advertising agencies. The Commission attributes
no cost burden to rule 482.
The provision of information under rule 482 is necessary to obtain
the benefits of the safe harbor offered by the rule. The information
provided is not 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.
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: January 5, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-449 Filed 1-11-11; 8:45 am]
BILLING CODE 8011-01-P