[Federal Register Volume 65, Number 62 (Thursday, March 30, 2000)]
[Notices]
[Pages 16978-16979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7841]


=======================================================================
-----------------------------------------------------------------------

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, 
DC 20549
Extension:
    Rule 12b-1, SEC File No. 270-188, OMB Control No. 3235-0212

    Notice is hereby given that under the Paperwork Reduction Act of 
1995 [44 U.S.C. 3501], the Securities and Exchange Commission (the 
``Commission'') is soliciting public comments on the collections of 
information summarized below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget (``OMB'').
    Rule 12b-1 [17 CFR 270.12b-1] under the Investment Company Act of 
1940 [15 U.S.C. 80a] (the ``Act'') permits a registered open-end 
investment company (``mutual fund'') to distribute its own shares and 
pay expenses of distribution provided, among other things, that the 
mutual fund adopts a written plan (``rule 12b-1 plan'') and has in 
writing any agreements relating to the implementation of the rule 12b-1 
plan. The rule in part requires that (i) the adoption or material 
amendment of a rule 12b-1 plan be approved by the mutual fund's 
directors and shareholders; (ii) the board review quarterly reports of 
amounts spent under the rule 12b-1 plan; and (iii) the board considers 
continuation of the rule 12b-1 plan at least annually. Rule 12b-1 also 
requires funds relying on the rule to preserve for six years, the first 
two years in an easily accessible place, copies of the rule 12b-1 plan, 
related agreements and reports, as well as minutes of board meetings 
that describe the factors considered and the basis for adopting or 
continuing a rule 12b-1 plan.
    The board and shareholder approval requirements of rule 12b-1 are 
designed to ensure that fund shareholders and directors receive 
adequate information to evaluate and approve a rule 12b-1 plan. The 
requirement of quarterly reporting to the board is designed to ensure 
that the rule 12b-1 plan continues to benefit the fund and its 
shareholders. The recordkeeping requirements of the rule are necessary 
to enable Commission staff to oversee compliance with the rule.
    Based on information filed with the Commission by funds, Commission 
staff estimates that there are 4,500 mutual

[[Page 16979]]

funds with rule 12b-1 plans. As discussed above, rule 12b-1 requires 
the board of each fund with a rule 12b-1 plan to (i) review quarterly 
reports of amounts spent under the plan and (ii) annually consider the 
plan's continuation (which generally is combined with the fourth 
quarterly review). This results in a total number of annual responses 
per fund of four and an estimated total number of industry responses of 
18,000 (4,500 funds  x 4 annual responses per fund=18,000 responses).
    Based on conversations with fund industry representatives, 
Commission staff estimates that for each of the 4,500 mutual funds that 
currently have a rule 12b-1 plan, the average annual burden of 
complying with the rule is 50 hours to maintain the plan. This estimate 
takes into account the time needed to prepare quarterly reports to the 
board of directors, the board's consideration of those reports, and the 
board's annual consideration of the plan's continuation. Commission 
staff therefore estimates that the total burden of the rule's paperwork 
requirements is 225,000 hours (4,500 funds  x  50 hours per fund = 
225,000 hours).
    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 Commission 
rules.
    If a currently operating fund seeks to (i) adopt a new rule 12b-1 
plan or (ii) materially increase the amount it spends for distribution 
under its rule 12b-1 plan, rule 12b-1 requires that the fund obtain 
sharehold approval. As a consequence, the funds will incur the cost of 
a proxy. Commission staff estimates that four funds per year prepare a 
proxy in connection with the adoption or material amendment of a rule 
12b-1 plan. Commission staff further estimates that the cost of each 
fund's proxy is $15,000. Thus the total annualized cost burden of rule 
12b-1 to the fund industry is $60,000 (4 funds requiring a proxy  x  
$15,000 per proxy).
    The collections of information required by rule 12b-1 are necessary 
to obtain the benefits of the rule. Notices to the Commission 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.
    Written comments are requested on: (a) Whether the collections of 
information are 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.
    Please direct your written comments to Michael E. Bartell, 
Associate Executive Director, Office of Information Technology, 
Securities and Exchange Commission, 450 5th Street, NW, Washington, DC 
20549.

    Dated: March 24, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-7841 Filed 3-29-00; 8:45 am]
BILLING CODE 8010-01-M