[Federal Register Volume 76, Number 8 (Wednesday, January 12, 2011)]
[Notices]
[Pages 2154-2155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-449]


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

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 482; SEC File No. 270-508; OMB Control No. 3235-0565.

    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 (the ``Commission'') is soliciting comments on the 
collection of information summarized below. The Commission plans to 
submit this existing collection of information to the Office of 
Management and Budget (``OMB'') for extension and approval.
    Like most issuers of securities, when an investment company \1\ 
(``fund'') offers its shares to the public, its promotional efforts 
become subject to the advertising restrictions of the Securities Act of 
1933, (15 U.S.C. 77) (the ``Securities Act''). In recognition of the 
particular problems faced by funds that continually offer securities 
and wish to advertise their securities, the Commission has previously 
adopted advertising safe harbor rules. The most important of these is 
rule 482 (17 CFR 230.482) under the Securities Act, which, under 
certain circumstances, permits funds to advertise investment 
performance data, as well as other information. Rule 482 advertisements 
are deemed to be ``prospectuses'' under Section 10(b) of the Securities 
Act.\2\
---------------------------------------------------------------------------

    \1\ ``Investment company'' refers to both investment companies 
registered under the Investment Company Act of 1940 and business 
development companies.
    \2\ 15 U.S.C. 77j(b).

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

[[Page 2155]]

    Rule 482 contains certain requirements regarding the disclosure 
that funds are required to provide in qualifying advertisements. These 
requirements are intended to encourage the provision to investors of 
information that is balanced and informative, particularly in the area 
of investment performance. For example, a fund is required to include 
disclosure advising investors to consider the fund's investment 
objectives, risks, charges and expenses, and highlighting the 
availability of the fund's prospectus. In addition, rule 482 
advertisements that include performance data of open-end funds or 
insurance company separate accounts offering variable annuity contracts 
are required to include certain standardized performance information, 
information about any sales loads or other nonrecurring fees, and a 
legend warning that past performance does not guarantee future results. 
Such funds including performance information in rule 482 advertisements 
are also required to make available to investors month-end performance 
figures via website disclosure or by a toll-free telephone number, and 
to disclose the availability of the month-end performance data in the 
advertisement. The rule also sets forth requirements regarding the 
prominence of certain disclosures, requirements regarding 
advertisements that make tax representations, requirements regarding 
advertisements used prior to the effectiveness of the fund's 
registration statement, requirements regarding the timeliness of 
performance data, and certain required disclosures by money market 
funds.
    Rule 482 advertisements must be filed with the Commission or, in 
the alternative, Financial Industry Regulatory Authority 
(``FINRA'').\3\ This information collection differs from many other 
federal information collections that are primarily for the use and 
benefit of the collecting agency.
---------------------------------------------------------------------------

    \3\ See rule 24b-3 under the Investment Company Act (17 CFR 
270.24b-3), which provides that any sales material, including rule 
482 advertisements, shall be deemed filed with the Commission for 
purposes of Section 24(b) of the Investment Company Act upon filing 
with FINRA.
---------------------------------------------------------------------------

    As discussed above, rule 482 contains requirements that are 
intended to encourage the provision to investors of information that is 
balanced and informative, particularly in the area of investment 
performance. The Commission is concerned that in the absence of such 
provisions fund investors may be misled by deceptive rule 482 
performance advertisements and may rely on less-than-adequate 
information when determining in which funds they should invest their 
money. As a result, the Commission believes it is beneficial for funds 
to provide investors with balanced information in fund advertisements 
in order to allow investors to make better-informed decisions.
    The Commission estimates that 58,368 responses are filed annually 
pursuant to rule 482 by 3,540 investment companies offering 
approximately 16,225 portfolios, or approximately 3.6 responses per 
portfolio annually. Respondents consist of all the investment companies 
that take advantage of the safe harbor offered by the rule for their 
advertisements. The burden associated with rule 482 is presently 
estimated to be 5.16 hours per response. The hourly burden is therefore 
approximately 301,179 hours (58,368 responses x 5.16 hours per 
response).
    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.
    Cost burden is the cost of services purchased to comply with rule 
482, such as for the services of computer programmers, outside counsel, 
financial printers, and advertising agencies. The Commission attributes 
no cost burden to rule 482.
    The provision of information under rule 482 is necessary to obtain 
the benefits of the safe harbor offered by the rule. The information 
provided is not 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.
    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 Thomas Bayer, Chief 
Information Officer, Securities and Exchange Commission, C/O Remi 
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312; or send an 
e-mail to: [email protected].

    Dated: January 5, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-449 Filed 1-11-11; 8:45 am]
BILLING CODE 8011-01-P