[Federal Register Volume 65, Number 247 (Friday, December 22, 2000)]
[Notices]
[Pages 80967-80968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32648]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, 
D.C. 20549.
Extension: Rule 154; SEC File No. 270-438; OMB Control No. 3235-
0495.

    Notice is hereby given that, under the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission (the 
``Commission'') has submitted to the Office of Management and Budget a 
request for extension of the previously approved collection of 
information discussed below.
    The federal securities laws generally prohibit an issuer, 
underwriter, or dealer from delivering a security for sale unless a 
prospectus meeting certain requirements accompanies or precedes the 
security for sale unless a prospectus meeting certain requirements 
accompanies or precedes the security. Rule 154 [17 CFR 230.154] under 
the Securities Act of 1933 [15 U.S.C. 77a] (the ``Securities Act'') 
permits, under certain circumstances, delivery of a single prospectus 
to investors who purchase securities from the same issuer and share the 
same address (``householding'') to satisfy the applicable prospectus 
delivery requirements.\1\ The purpose of rule 154 is to reduce the 
amount of duplicative prospectuses delivered to investors sharing the 
same address.
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    \1\ The Securities Act requires the delivery of prospectuses to 
investors who buy securities from an issuer or from underwriters or 
dealers who participate in a registered distribution of securities. 
See Securities Act sections 2(a)(10), 4(1), 4(3), 5(b) [15 U.S.C. 
77b(a)(10), 77d(1), 77d(3), 77e(b); see also rule 174 under the 
Securities Act [17 CFR 230.174] (regarding the prospectus delivery 
obligation of dealers); rule 15c2-8 under the Securities and 
Exchange Act of 1934 [17 CFR 240.15c2-8] (prospectus delivery 
obligations of brokers and dealers).
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    Under rule 154, a prospectus is considered delivered to all 
investors at a shared address, for purposes of the federal securities 
laws, if the person relying on the rule delivers the prospectus to the 
shared address and the investors consent to the delivery of a single 
prospectus. The rule applies to prospectuses and prospectus 
supplements. Currently, the rule permits householding of all 
prospectuses except those required to be delivered for business 
combinations, exchange offers, or reclassifications of securities.\2\ 
Rule 154 permits householding of prospectuses by an issuer, 
underwriter, or dealer relying on the rule if, in addition to the other 
conditions set forth in the rule, the issuer, underwriter, or dealer 
has obtained from each investor written or implied consent to 
householding.\3\ The rule requires issuers, underwriters, or dealers 
that wish to household prospectuses with implied consent to send a 
notice to each investor stating that the investors in the household 
will receive one prospectus in the future unless the investors provide 
contrary instructions. In addition, at least once year, issuers, 
underwriters, or dealers, relying on rule 154 for the householding of 
prospectuses, must explain to investors who have provided written or 
implied consent how they can revoke their consent. Preparing and 
sending the initial notice and the annual explanation of the right to 
revoke are collections of information.
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    \2\ The Commission has proposed an amendment to rule 154 that 
would permit the householding of prospectuses required to be 
delivered for business combinations, exchange offers, or 
reclassifications of securities. See Delivery of Proxy and 
Information Statement to Households, Securities Act Rel. No. 7767; 
Securities Exchange Act Rel. No. 42102; Investment Company Act Rel. 
No. 24124 (Nov. 4, 1999) [64 FR 62548 (Nov. 16, 1999)]. The proposed 
amendment has not been adopted as of the date of this notice.
    \3\ Rule 154 permits the householding of prospectuses that are 
delivered electronically to investors only if delivery is made to a 
shared electronic address and the investors give written consent to 
householding. Implied consent is not permitted in such a situation. 
See rule 154(b)(4).
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    The rule allows issuers, underwriters, or dealers to household 
prospectuses and prospectus supplement if certain conditions are met. 
Among the conditions with which a person relying on the rule must 
comply are providing notice to each investor that only one prospectus 
will be sent to the household and providing to each investor who 
consents to householding an annual explanation of the right to revoke 
consent to the delivery of a single prospectus to multiple investors 
sharing an address. The purpose of the notice and annual explanation 
requirements of the rule is to ensure that investors who wish to 
receive individual copies of shareholder reports are able to do so.
    Although rule 154 is not limited to investment companies, the 
Commission believes that it is used mainly by mutual funds and by 
broker-dealers that deliver mutual fund prospectuses. The Commission is 
unable to estimate the number of issuers other than mutual funds that 
rely on the rule.
    The Commission estimates that there are approximately 3000 mutual 
funds, approximately 545 of which engage in

[[Page 80968]]

direct marketing and therefore deliver their own prospectuses. The 
Commission estimates that each direct-marketed mutual fund will spend 
an average of 20 hours per year complying with the notice requirement 
of the rule, for a total of 10,900 hours. The Commission estimates that 
each direct-marketed fund will also spend 1 hour complying with the 
explanation of the right to revoke requirement of the rule, for a total 
of 545 hours. The Commission estimates that as of year-end 1998, there 
were approximately 300 broker-dealers that carry customer accounts and, 
therefore, may be required to deliver mutual fund prospectuses. The 
Commission estimates that each affected broker-dealer will spend, on 
average, approximately 20 hours complying with the notice requirement 
of the rule, for a total of 6,000 hours. Each broker-dealer will also 
spend 1 hour complying with the annual explanation of the right to 
revoke requirement, for a total of 300 hours. Therefore, the total 
number of respondents for rule 154 is 845 (545 mutual funds plus 300 
broker-dealers), and the estimated total hour burden is 17,745 hours 
(11,445 hours for mutual funds plus 6,300 hours for broker-dealers).
    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.
    Compliance with the collection of information requirements of the 
rule is necessary to obtain the benefit of relying on the rule. 
Responses to the collections of information will not be kept 
confidential. The rule does not require these records be retained for 
any specific period of time. 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.
    Please direct general comments regarding the above information to 
the following persons: (i) Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Washington, D.C. 
20503; and (ii) Michael E. Bartell, Associate Executive Director, 
Office of Information Technology, Securities and Exchange Commission, 
450 Fifth Street, N.W., Washington, D.C. 20549. Comments must be 
submitted to OMB within 30 days after this notice.

    Dated: December 12, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-32648 Filed 12-21-00; 8:45 am]
BILLING CODE 8010-01-M