[Federal Register Volume 61, Number 215 (Tuesday, November 5, 1996)]
[Notices]
[Pages 56978-56979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28389]


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SECURITIES AND EXCHANGE COMMISSION

Request for Public Comment

Upon Written Request, Copies Available From:
    Securities and Exchange Commission, Office of Filings and 
Information Services, Washington, D.C. 20549

Extension:
    Rule 2a-7--SEC File No. 270-258--OMB Control No. 3235-0268
    Rule 17a-7--SEC File No. 270-238--OMB Control No. 3235-0214
    Rule 17e-1--SEC File No. 270-224--OMB Control No. 3235-0217
    Rule 19a-1--SEC File No. 270-240--OMB Control No. 3235-0216
    Rule 31a-1--SEC File No. 270-173--OMB Control No. 3235-0178

    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 (``Commission'') is publishing for public comment the 
following summary of previously approved information collection 
requirements.
    Rule 2a-7 (17 CFR 270.2a-7) under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) (``Act'') governs money market funds. 
The rule exempts money market funds from the valuation requirements of 
the Act, and, subject to certain risk-limiting conditions, permits 
money market funds to use the ``amortized cost method'' of asset 
valuation or the ``penny-rounding method'' of share pricing.
    Rule 2a-7 imposes certain recordkeeping and reporting obligations 
upon money market funds. The board of directors of a money market fund 
must establish written procedures designed to stabilize the fund's net 
asset value. These procedures typically address various aspects of the 
fund's operations. The fund must maintain and preserve for six years a 
written copy of these procedures. Additionally, the fund must maintain 
and preserve for six years a written record of the board's 
considerations and actions taken in connection with the discharge of 
its responsibilities, to be included in the board's minutes. The fund 
must also maintain and preserve for three years written records of 
certain credit risk analyses, evaluations with respect to securities 
subject to puts, and determinations with respect to adjustable rate 
securities and asset backed securities. If the board takes action with 
respect to defaulted securities, events of insolvency, or deviations in 
share price, the fund must file with the Commission an exhibit to Form 
N-SAR describing the nature and circumstances of such action. In the 
event of certain default or insolvency events, the fund must notify the 
Commission of the event and the actions the fund intends to take in 
response to the situation. As a matter of sound business practices, the 
board must develop and maintain certain additional procedures and 
records to ensure compliance with the risk-limiting conditions of Rule 
2a-7.
    It is estimated that approximately 1,345 money market funds are 
subject to the rule each year. It is further estimated that compliance 
with the rule's recordkeeping and reporting requirements imposes an 
average annual burden per money market fund of approximately 146 hours, 
so that the total annual burden for all money market funds would be 
196,371 hours.
    Rule 17a-7 (17 CFR 270.17a-7) under the Act requires registered 
investment companies to keep various records in connection with certain 
purchase or sale transactions between investment companies and certain 
of their affiliates. The annual burden of meeting this requirement is 
estimated to be about one hour for each of an estimated 500 
recordkeepers that enter into subject transactions each year, for a 
total annual burden of 500 hours.
    Rule 17e-1 (17 CFR 270.17e-1) under the Act governs the 
remuneration a broker affiliated with an investment company may receive 
in connection with securities transactions by the investment company. 
The rule requires an investment company's board of directors to 
establish, and review, as necessary, procedures reasonably designed to 
provide that the remuneration to an affiliated broker is a fair amount 
compared to that received by other brokers in connection with 
transactions in similar securities during a comparable period of time. 
Each quarter, the board must determine that all transactions effected 
pursuant to the rule during the preceding quarter complied with the 
established procedures. Rule 17e-1(c) also requires the investment 
company to (i) maintain permanently a written copy of the procedures 
adopted by the board for complying with the requirements of the rule; 
and (ii) maintain for a period of six years a written record of each 
transaction subject to the rule setting forth the amount and source of 
the commission, fee or other remuneration received; the identity of the 
broker; the terms of the transaction; and the materials used to 
determine that the transactions were effected in compliance with the 
procedures adopted by the board.
    The Commission estimates that approximately 1,462 funds rely upon 
Rule 17e-1 each year. The total average annual burden for Rule 17e-1 
per

[[Page 56979]]

respondent is estimated to be 10 hours, for a total annual burden of 
14,620 hours.
    Rule 19a-1 (17 CFR 270.19a-1) under the Act sets forth specific 
requirements for the information which must be included in statements 
made pursuant to Section 19(a) by registered management investment 
companies (funds). The rule requires that the statement indicate what 
portions of the payment are made from net income, net profits and paid-
in capital. When any part of the payment is made from net profits, Rule 
19a-1 requires that the statement disclose certain other information 
relating to the appreciation or depreciation of portfolio securities. 
If an estimated portion is subsequently determined to be significantly 
inaccurate, a correction must be made on a statement made pursuant to 
Section 19(a) or in the first report to shareholders following the 
discovery of the inaccuracy.
    It is estimated that approximately 3,000 funds are subject to the 
rule each year. It is estimated that compliance with the rule's 
requirements imposes a total annual burden per fund of approximately 30 
minutes. The total annual burden for all funds is estimated at 1,500 
hours.
    Rule 31a-1 (17 CFR 270.31a-1) under the Act requires registered 
investment companies, and every underwriter, broker, dealer or 
investment adviser which is a majority-owned subsidiary of a registered 
investment company, to maintain and keep current accounts, books and 
other documents which constitute the record forming the basis for 
financial statements required to be filed pursuant to Section 30 (15 
U.S.C. 80a-29) of the Act and of the auditor's certificates relating 
thereto. The rule lists specific records to be maintained by registered 
investment companies. The rule also requires certain underwriters, 
brokers, dealers, depositors and investment advisers to maintain such 
records as they are required to maintain under federal securities laws.
    It is estimated that Rule 31a-1 imposes an average burden of 
approximately 5,260 hours annually per investment company. It is 
further estimated that approximately 5,000 investment companies are 
subject to the rule each year, so that the total annual burden for all 
investment companies would be 26,300,000 hours. Most of the records 
required to be maintained by the rule are the type that generally would 
be maintained as a matter of good business practice and to prepare the 
investment company's financial statements.
    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 burdens 
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.
    Direct your written comments to Michael E. Bartell, Associate 
Executive Director, Office of Information Technology, Securities and 
Exchange Commission, 450 5th Street, N.W., Washington, DC 20549.

    Dated: October 15, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-28389 Filed 11-4-96; 8:45 am]
BILLING CODE 8010-01-M