[Federal Register Volume 69, Number 9 (Wednesday, January 14, 2004)]
[Notices]
[Pages 2166-2167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-802]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

    Upon written request, copies available from: Securities and 
Exchange Commission, Office of Filings and Information Services, 
Washington, DC 20549.
    Extension: Rule 154 [17 CFR 230.154]; SEC File No. 270-438; OMB 
Control No. 3235-0495.
    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'') is soliciting comments on the 
collections of information summarized below. The Commission plans to 
submit these existing collections of information to the Office of 
Management and Budget for extension and approval.
    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. 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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 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.\2\ 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 a 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.
---------------------------------------------------------------------------

    \2\ 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).
---------------------------------------------------------------------------

    The rule allows issuers, underwriters, or dealers to household 
prospectuses and prospectus supplements 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, in the case of issuers that are 
open-end mutual funds, 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 open-end mutual funds and 
by broker-dealers that deliver prospectuses for open-end mutual funds. 
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 3,114 open-
end mutual funds, approximately 200 of which engage in 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 4,000 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 200 hours. The 
Commission estimates that there are 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 500 
(200 mutual funds plus 300 broker-dealers), and the estimated total 
hour burden is 10,500 hours (4,200 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.
    Written comments are invited 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

[[Page 2167]]

accuracy of the Commission's estimate of the burden of the collections 
of information; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collections of information on respondents, including through the 
use of automated collection techniques or other forms of information 
technology. The Commission will consider comments and suggestions 
submitted in writing within 60 days after this publication.
    Please direct your written comments to Kenneth A. Fogash, Acting 
Associate Executive Director/CIO, Office of Information Technology, 
Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 
20549.

    Dated: January 6, 2004.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 04-802 Filed 1-13-04; 8:45 am]
BILLING CODE 8010-01-P