[Federal Register Volume 68, Number 4 (Tuesday, January 7, 2003)]
[Notices]
[Pages 816-817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-271]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

[Extension: Rule 17a-7; SEC File No. 270-238; OMB Control No. 3235-
0214.]

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

    Notice is hereby given that, pursuant to 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 (``OMB'') a request for extension of the 
previously approved collection of information described below.
    Rule 17a-7 [17 CFR 270.17a-7] under the Investment Company Act of 
1940 (the ``Act'') is entitled ``Exemption of

[[Page 817]]

certain purchase or sale transactions between an investment company and 
certain affiliated persons thereof.'' It provides an exemption from 
section 17(a) of the Act for purchases and sales of securities between 
registered investment companies, which are affiliated persons or 
affiliated persons of affiliated persons of each other, or between a 
registered investment company and an affiliated person or an affiliated 
person of an affiliated person, when the affiliation arises solely 
because of a common adviser, director, or officer. Rule 17a-7 requires 
investment companies to keep various records in connection with 
purchase or sale transactions affected by the rule. The rule requires 
the board of directors of an investment company to establish procedures 
reasonably designed to ensure that all conditions of the rule have been 
satisfied. If an investment company enters into a purchase or sale 
transaction with an affiliated person, the rule requires the investment 
company to compile and maintain written records of the transaction.\1\ 
In addition, under the rule, the board is required to determine, at 
least on a quarterly basis, that all affiliated transactions made 
during the preceding quarter were made in compliance with these 
established procedures. The Commission's examination staff uses these 
records to evaluate transactions between affiliated investment 
companies for compliance with the rule.
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    \1\ The written records are required to set forth a description 
of the security purchased or sold, the identity of the person on the 
other side of the transaction, and the information or materials upon 
which the board of directors' determination that the transaction was 
in compliance with the procedures was made.
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    The Commission estimates that approximately 1,000 investment 
companies enter into transactions affected by rule 17a-7 each year and, 
therefore, are subject to the rule's information collection 
requirements.\2\ The average annual burden for rule 17a-7 is estimated 
to be approximately two burden hours per respondent, for an annual 
total of 2,000 burden hours for all respondents.\3\ The estimates of 
burden hours are made solely for the purposes of the Paperwork 
Reduction Act, and are not derived from a comprehensive or even a 
representative survey or study of the costs of Commission rules.
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    \2\ These estimates are based on conversations with the 
examination and inspections staff of the Commission and fund 
representatives. Based on these conversations, the Commission staff 
estimates that most investment companies (4,000 of the estimated 
4,500 registered investment companies) have adopted procedures for 
compliance with rule 17a-7. Of these 4,000 investment companies, the 
Commission staff estimates that each year approximately 25% (1,000) 
enter into transactions affected by rule 17a-7.
    \3\ This estimate is based in turn on the staff's estimate that 
the approximately 1,000 funds that rely on rule 17a-7 annually 
engage in an average of 8 rule 17a-7 transactions and spend 
approximately 15 minutes per transaction on recordkeeping required 
by the rule.
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    Rule 17a-7 requires investment companies to maintain and preserve 
permanently a written copy of the procedures governing rule 17a-7 
transactions. In addition, investment companies are required to 
maintain written records of each rule 17a-7 transaction for a period of 
not less than six years from the end of the fiscal year in which the 
transaction occurred. The collection of information required by rule 
17a-7 is necessary to obtain the benefits of the rule. Responses 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.
    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, DC 
20503; and (ii) Kenneth A. Fogash, Acting Associate Executive Director, 
Office of Information Technology, Securities and Exchange Commission, 
450 5th Street, NW., Washington, DC 20549. Comments must be submitted 
to OMB within 30 days of this notice.

    Dated: December 27, 2002.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-271 Filed 1-6-03; 8:45 am]
BILLING CODE 8010-01-P