[Federal Register Volume 70, Number 116 (Friday, June 17, 2005)]
[Notices]
[Page 35316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3117]


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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, DC 
20549.

Extension:
    Rule 17a-10, SEC File No. 270-507, OMB Control No. 3235-0563.

    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'') has submitted to the Office of Management and Budget 
(``OMB'') a request for extension of the previously approved collection 
of information discussed below.
    Section 17(a) of the Investment Company Act of 1940 (the ``Act''), 
prohibits affiliated persons of a registered investment company 
(``fund'') from borrowing money or other property from, or selling or 
buying securities or other property to or from the fund, or any company 
that the fund controls. Rule 17a-10 permits (i) a subadviser of a fund 
to enter into transactions with funds the subadviser does not advise 
but which are affiliated persons of a fund that it does advise (e.g., 
other funds in the fund complex), and (ii) a subadviser (and its 
affiliated persons) to enter into transactions and arrangements with 
funds the subadviser does advise, but only with respect to discrete 
portions of the subadvised fund for which the subadviser does not 
provide investment advice.
    To qualify for the exemptions in rule 17a-10, the subadvisory 
relationship must be the sole reason why section 17(a) prohibits the 
transaction; and the advisory contracts of the subadviser entering into 
the transaction, and any subadviser that is advising the purchasing 
portion of the fund, must prohibit the subadvisers from consulting with 
each other concerning securities transactions of the fund, and limit 
their responsibility to providing advice with respect to discrete 
portions of the fund's portfolio.\1\
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    \1\ See 17 CFR 270.17a-10(a)(2).
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    The Commission staff estimates that 3,028 portfolios of 
approximately 2,126 funds use the services of one or more subadvisers. 
Based on discussions with industry representatives, the staff estimates 
that it will require approximately 6 hours to draft and execute revised 
subadvisory contracts (5 staff attorney hours, 1 supervisory attorney 
hour), in order for funds and subadvisers to be able to rely on the 
exemptions in rule 17a-10. The staff assumes that all of these funds 
amended their advisory contracts following the adoption of rule 17a-10 
in 2002 that conditioned certain exemptions upon these contractual 
alterations.\2\
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    \2\ Rules 12d3-1, 10f-3, 17a-10, and 17e-1 require virtually 
identical modifications to fund advisory contracts. The Commission 
staff assumes that funds would rely equally on the exemptions in 
these rules, and therefore the Commission has apportioned the burden 
hours associated with the required contract modifications equally 
among the four rules.
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    Based on an analysis of investment company filings, the staff 
estimates that approximately 200 new funds are registered annually. 
Assuming that the number of these funds that will use the services of 
subadvisers is proportionate to the number of funds that currently use 
the services of subadvisers, then approximately 46 new funds will enter 
into subadvisory agreements each year.\3\ The Commission staff further 
estimates, based on an analysis of investment company filings, that 10 
extant funds will employ the services of subadvisers for the first time 
each year. Thus, the staff estimates that a total of 56 funds, with a 
total of 78 portfolios,\4\ will enter into subadvisory agreements each 
year. Assuming that each of these funds enters into a contract that 
permits it to rely on the exemptions in rule 17a-10, we estimate that 
the rule's contract modification requirement will result in 117 burden 
hours annually.\5\
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    \3\ Based on information in Commission filings, we estimate that 
23 percent of funds are advised by subadvisers.
    \4\ Based on existing statistics, we assume that each fund has 
1.4 portfolios advised by a subadviser.
    \5\ This estimate is based on the following calculations: (78 
portfolios x 6 hours = 468 burden hours for rules 12d3-1, 10f-3, 
17a-10, and 17e-1; 468 total burden hours for all of the rules / 
four rules = 117 annual burden hours per rule).
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    The estimate of average 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 the 
costs of Commission rules. Complying with this collection of 
information requirement is necessary to obtain the benefit of relying 
on rule 17a-10. 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.
    General comments regarding the above information should be directed 
to the following persons: (i) Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503 or email to: [email protected]; 
and (ii) R. Corey Booth, Director/Chief Information Officer, Office of 
Information Technology, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549. Comments must be submitted to OMB 
within 30 days of this notice.

    Dated: June 6, 2005.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-3117 Filed 6-16-05; 8:45 am]
BILLING CODE 8010-01-P