[Federal Register Volume 77, Number 94 (Tuesday, May 15, 2012)]
[Rules and Regulations]
[Pages 28476-28477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11662]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 275
[Release No. IA-3403; File No. S7-36-10]
Political Contributions by Certain Investment Advisers
AGENCY: Securities and Exchange Commission.
ACTION: Final rule; technical amendment.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
making a technical amendment to the definition of ``covered associate''
in rule 206(4)-5 under the Investment Advisers Act of 1940 (``Advisers
Act'') to correct an inadvertent error in the rule as published in the
Federal Register on July 19, 2011.
DATES: Effective date: May 15, 2012.
FOR FURTHER INFORMATION CONTACT: Vanessa M. Meeks, Attorney-Adviser, or
Melissa A. Roverts, Branch Chief, at (202) 551-6787 or [email protected],
Office of Investment Adviser Regulation, Division of Investment
Management, U.S. Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-8549.
SUPPLEMENTARY INFORMATION:
I. Background
The Commission adopted rule 206(4)-5 in July 2010 to prohibit an
investment adviser from providing advisory services for compensation to
a government client for two years after the adviser or certain of its
executives or employees (``covered associates'') make a contribution to
certain elected officials or candidates.\1\ In November 2010, the
Commission proposed new rules and rule amendments under the Advisers
Act to implement provisions of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.\2\ In that release, the Commission also
proposed several amendments to rule 206(4)-5, including a minor change
to the rule's definition of a ``covered associate'' to replace the word
``individual'' with the word ``person.'' \3\ The proposed change would
have specified that a legal entity, not just a natural person, that is
a general partner or managing member of an investment adviser would
meet the definition of ``covered associate.'' \4\
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\1\ Political Contributions by Certain Investment Advisers,
Investment Advisers Act Release No. 3043 (July 1, 2010) [75 FR 41018
(July 14, 2010)].
\2\ Rules Implementing Amendments to the Investment Advisers Act
of 1940, Investment Advisers Act Release No. 3110 (Nov. 19, 2010)
[75 FR 77052 (Dec. 10, 2010)] (``Implementing Proposing Release'').
\3\ See id. at section II.D.1.
\4\ Id.
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In June 2011, the Commission adopted many of the new rules and rule
amendments set forth in the Implementing Proposing Release, including
amendments to rule 206(4)-5.\5\ The Commission specified in the
``Discussion'' section of the Implementing Adopting Release that it was
not adopting the proposed amendment to the definition of ``covered
associate,'' i.e., that the definition would continue to use the word
``individual.'' \6\ However, the text of rule 206(4)-5(f)(2)(i)
published in the ``Text of Rule and Form Amendments'' section of the
Implementing Adopting Release, and subsequently in the Federal
Register, incorrectly reflected the replacement of the word
``individual'' with the word ``person,'' as though that proposed change
had been adopted. To correct this mistake, the Commission is making a
technical amendment to rule 206(4)-5(f)(2)(i) to replace the word
``person'' with the word ``individual.''
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\5\ See Rules Implementing Amendments to the Investment Advisers
Act of 1940, Investment Advisers Act Release No. 3221 (June 22,
2011) [76 FR 42950 (July 19, 2011)] (``Implementing Adopting
Release'').
\6\ Id. at n.340 (``We are not, however, adopting an amendment
we proposed to specify that a legal entity, not just a natural
person, that is a general partner or managing member of an
investment adviser would meet the definition of ``covered
associate'' in the rule. Upon reflection, it would broaden the
application of the rule more than we intended.'').
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II. Certain Findings
Under the Administrative Procedure Act (``APA''), notice of
proposed rulemaking is not required when an agency, for good cause,
finds ``that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.'' \7\ The Commission
is making a technical amendment to rule 206(4)-5 to reflect the
Commission's stated intent in the Implementing Adopting Release. The
Commission finds that because the amendment is technical and is being
made solely to correct a mistake, publishing the amendment for comment
is unnecessary.\8\
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\7\ 5 U.S.C. 553(b).
\8\ For similar reasons, the amendment does not require analysis
under the Regulatory Flexibility Act (``RFA'') or analysis of major
rule status under the Small Business Regulatory Enforcement Fairness
Act. See 5 U.S.C. 601(2) (for purposes of RFA analysis, the term
``rule'' means any rule for which the agency publishes a general
notice of proposed rulemaking); and 5 U.S.C. 804(3)(C) (for purposes
of Congressional review of agency rulemaking, the term ``rule'' does
not include any rule of agency organization, procedure or practice
that does not substantially affect the rights or obligations of non-
agency parties).
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The APA also requires publication of a rule at least 30 days before
its effective date unless the agency finds otherwise for good cause.\9\
For the same reasons described above with respect to notice and
opportunity for comment, the Commission finds that there is good cause
for this technical amendment to take effect on May 15, 2012.
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\9\ See 5 U.S.C. 553(d)(3).
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The amendment the Commission is adopting does not make substantive
or material modifications to any collection of information requirements
as defined by the Paperwork Reduction Act of 1995, as amended.\10\
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\10\ 44 U.S.C. 3501, 3507.
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The Commission is sensitive to the costs and benefits of its rules.
The rule amendment the Commission is adopting today is technical and is
being made solely to correct a mistake and therefore will have minimal,
if any, economic effect.
III. Statutory Text and Text of Amendment
We are adopting this technical amendment to rule 206(4)-5 under the
authority set forth in sections 206(4) and 211(a) of the Advisers
Act.\11\
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\11\ 15 U.S.C. 80b-6(4) and 80b-11(a).
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[[Page 28477]]
List of Subjects in 17 CFR Part 275
Reporting and recordkeeping requirements; Securities.
Text of Amendment
For the reasons set out in the preamble, Title 17, Chapter II of
the Code of the Federal Regulations is amended as follows:
PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
0
1. The authority for part 275 continues to read in part as follows:
Authority: 15 U.S.C. 80b-2(a)(11)(H), 80b-2(a)(17), 80b-3, 80b-
4, 80b-4a, 80b-6(4), 80b-6a, and 80b-11, unless otherwise noted.
* * * * *
0
2. Section 275.206(4)-5 is amended by revising paragraph (f)(2)(i) to
read as follows:
Sec. 275.206(4)-5 Political contributions by certain investment
advisers.
* * * * *
(f) * * *
(2) * * *
(i) Any general partner, managing member or executive officer, or
other individual with a similar status or function;
* * * * *
Dated: May 8, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-11662 Filed 5-14-12; 8:45 am]
BILLING CODE 8011-01-P