[Federal Register Volume 73, Number 39 (Wednesday, February 27, 2008)]
[Notices]
[Page 10498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-3621]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213
Extension:
Rule 17a-6; SEC File No. 270-506; OMB Control No. 3235-0564

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501) 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.
    Section 17(a) of the Investment Company Act of 1940 (15 U.S.C. 80a) 
(the ``Act'') generally 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-6 (17 CFR 
270.17a-6) permits a fund and a ``portfolio affiliate'' (a company that 
is an affiliated person of the fund because the fund controls the 
company, or holds 5 percent or more of the company's outstanding voting 
securities) to engage in principal transactions that would otherwise be 
prohibited under section 17(a) of the Act under certain conditions. A 
fund may not rely on the exemption in the rule to enter into a 
principal transaction with a portfolio affiliate if certain prohibited 
participants (e.g., directors, officers, employees, or investment 
advisers of the fund) have a financial interest in a party to the 
transaction. Rule 17a-6 specifies certain interests that are not 
``financial interests,'' including any interest that the fund's board 
of directors (including a majority of the directors who are not 
interested persons of the fund) finds to be not material. A board 
making this finding is required to record the basis for the finding in 
its meeting minutes. This recordkeeping requirement is a collection of 
information under the rule.
    The rule is designed to permit transactions between funds and their 
portfolio affiliates in circumstances in which it is unlikely that the 
affiliate would be in a position to take advantage of the fund. In 
determining whether a financial interest is ``material,'' the board of 
the fund should consider whether the nature and extent of the interest 
in the transaction is sufficiently small that a reasonable person would 
not believe that the interest affected the determination of whether to 
enter into the transaction or arrangement or the terms of the 
transaction or arrangement. The information collection requirements in 
rule 17a-6 are intended to ensure that Commission staff can review, in 
the course of its compliance and examination functions, the basis for a 
board of directors' finding that the financial interest of an otherwise 
prohibited participant in a party to a transaction with a portfolio 
affiliate is not material.
    Based on analysis of past filings, Commission staff estimates that 
148 funds are affiliated persons of 668 issuers as a result of the 
fund's ownership or control of the issuer's voting securities, and that 
there are approximately 1,000 such affiliate relationships. Based on 
staff discussions with a limited number of fund representatives, we 
estimate that funds currently do not rely on the exemption from the 
term ``financial interest'' with respect to any interest that the 
fund's board of directors (including a majority of the directors who 
are not interested persons of the fund) finds to be not material. 
Accordingly, we estimate that annually there will be no principal 
transactions under rule 17a-6 that will result in a collection of 
information.
    The Commission requests authorization to maintain an inventory of 
one burden hour to ease future renewals of rule 17a-6's collection of 
information analysis should funds rely on this exemption to the term 
``financial interest'' as defined in rule 17a-6.
    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-6. 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.
    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 will 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the collection of information; (c) ways to enhance the 
quality, utility, and clarity of the information 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.
    Please direct your written comments to R. Corey Booth, Director/
Chief Information Officer, Securities and Exchange Commission, C/O 
Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312; or 
send an e-mail to: [email protected].

    Dated: February 19, 2008.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-3621 Filed 2-26-08; 8:45 am]
BILLING CODE 8011-01-P