[Federal Register Volume 65, Number 149 (Wednesday, August 2, 2000)]
[Notices]
[Pages 47525-47526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19498]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; 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 206(4)-2; SEC File No. 270-217; OMB Control No. 3245-0241

    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 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.
    Rule 206(4)-2, ``Custody or Possession of Funds or Securities of 
Clients,'' governs the custody or possession of funds or securities by 
Commission-registered investment advisers. Rule 206(4)-2 makes it a 
fraudulent, deceptive or manipulative act, practice or course of 
business for any investment adviser who has custody or possession of 
funds or securities of its clients to do any act or take any action 
with respect to any such funds or securities unless (1) the securities 
are properly segregated and safely kept; (2) the funds are held in one 
or more specially designated client accounts with the adviser named as 
trustee; (3) the adviser promptly notifies the client as to the place 
and manner of safekeeping; (4) the adviser sends a detailed written 
statement to each client at least once every three months; and (5) at 
least once each year, on an unannounced basis, an independent public 
accountant verifies by actual examination the clients' funds and 
securities and files a certificate with the Commission describing the 
examination. The rule does not apply to an investment adviser that is 
also registered as a broker-dealer under the Securities Exchange Act of 
1934, provided the adviser is in compliance with Rule 15c3-1 under the 
Exchange Act, or, if a member of an exchange, is in compliance with 
exchange requirements with respect to financial responsibility and the 
segregation of funds or securities carried for the account of the 
customer.
    The information required by Rule 206(4)-2. is used by the 
Commission in connection with its investment adviser inspection program 
to ensure that advisers are in compliance with Rule 206(4)-2. The 
information required by paragraphs (3) and (4) of the rule is also used 
by clients. Without the information collected under the rule, the 
Commission would be less efficient and effective in its inspection 
program and clients would not have information valuable for monitoring 
the adviser's handling of their accounts.
    The respondents to this information collection are Commission-
registered investment advisers that have custody of clients' funds or 
securities and are not also registered as broker-dealers. The 
Commissioner estimates that 173 advisers are subject to Rule 206(4)-2. 
The number of responses under Rule 206(4)-2 varies considerably 
depending on the number of clients for which an adviser has custody or 
possession of funds or securities. We estimate that an adviser subject 
to this rule is required to provide an average of 250 responses 
annually at an average of .5 hours per response. The total time burden 
for each respondent is estimated to be 125 hours. The annual aggregate 
burden for all respondents to the requirements of Rule 206(4)-2 is 
estimated to be 21,625 hours.
    The estimated average burden hours are made solely for the purposes 
of Paperwork Reduction Act and are not derived from a comprehensive or 
even representative survey or study of the cost of Commission rules and 
forms.
    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 shall 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the proposed collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information to be 
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

[[Page 47526]]

Commission, 450 5th Street, NW., Washington, DC 20549.

    Dated: July 27, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-19498 Filed 8-1-00; 8:45 am]
BILLING CODE 8010-01-M