[Federal Register Volume 79, Number 195 (Wednesday, October 8, 2014)]
[Notices]
[Pages 60872-60873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23978]


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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 FOIA Services, 100 F Street, NE., Washington, DC 
20549-2736.

Extension: Rule 19a-1.

    OMB Control No. 3235-0216, SEC File No. 270-240.

    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'') has submitted to the Office of 
Management and Budget a request for extension of the previously 
approved collection of information discussed below.
    Section 19(a) (15 U.S.C. 80a-19(a)) of the Investment Company Act 
of 1940 (the ``Act'') \1\ makes it unlawful for any registered 
investment company to pay any dividend or similar distribution from any 
source other than the company's net income, unless the payment is 
accompanied by a written statement to the company's shareholders which 
adequately discloses the sources of the payment. Section 19(a) 
authorizes the Commission to prescribe the form of such statement by 
rule.
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    \1\ 15 U.S.C. 80a.
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    Rule 19a-1 (17 CFR 270.19a-1) under the Act, entitled ``Written 
Statement to Accompany Dividend Payments by Management Companies,'' 
sets forth specific requirements for the information that must be 
included in statements made pursuant to section 19(a) by or on behalf 
of management companies.\2\ The rule requires that the statement 
indicate what portions of distribution payments are made from net 
income, net profits from the sale of a security or other property 
(``capital gains'') and paid-in capital. When any part of the payment 
is made from capital gains, rule 19a-1 also requires that the statement 
disclose certain other information relating to the appreciation or 
depreciation of portfolio securities. If an estimated portion is 
subsequently determined to be significantly inaccurate, a correction 
must be made on a statement made pursuant to section 19(a) or in the 
first report to shareholders following the discovery of the inaccuracy.
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    \2\ Section 4(3) of the Act (15 U.S.C. 80a-4(3)) defines 
``management company'' as ``any investment company other than a face 
amount certificate company or a unit investment trust.''
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    The purpose of rule 19a-1 is to afford fund shareholders adequate 
disclosure of the sources from which distribution payments are made. 
The rule is intended to prevent shareholders from confusing income 
dividends with distributions made from capital sources. Absent rule 
19a-1, shareholders might receive a false impression of fund gains.
    Based on a review of filings made with the Commission, the staff 
estimates that approximately 11,066 series of registered investment 
companies that are management companies may be subject to rule 19a-1 
each year,\3\ and that each portfolio on average mails two statements 
per year to meet the requirements of the rule.\4\ The staff further 
estimates that the time needed to make the determinations required by 
the rule and to prepare the statement required under the rule is 
approximately 1 hour per statement. The total annual burden for all 
portfolios therefore is estimated to be approximately 22,132 burden 
hours.\5\
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    \3\ This estimate is based on statistics compiled by Commission 
staff as of May 31, 2014. The number of management investment 
company portfolios that make distributions for which compliance with 
rule 19a-1 is required depends on a wide range of factors and can 
vary greatly across years. Therefore, the calculation of estimated 
burden hours is based on the total number of management investment 
company portfolios, each of which may be subject to rule 19a-1.
    \4\ A few portfolios make monthly distributions from sources 
other than net income, so the rule requires them to send out a 
statement 12 times a year. Other portfolios never make such 
distributions.
    \5\ This estimate is based on the following calculation: 11,066 
management investment company portfolios x 2 statements per year x 1 
hour per statement = 22,132 burden hours.
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    The staff estimates that approximately one-third of the total 
annual burden (7,377 hours) would be incurred by a paralegal with an 
average hourly wage rate of approximately $199 per hour,\6\ and 
approximately two-thirds of the annual burden (14,755 hours) would be 
incurred by a compliance clerk with an average hourly wage rate of $64 
per hour.\7\ The staff therefore estimates that the aggregate annual 
cost of complying with the paperwork requirements of the rule is 
approximately $2,412,343 ((7,377 hours x $199 = $1,468,023) + (14,755 
hours x $64 = $944,320)).
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    \6\ Hourly rates are derived from the Securities Industry and 
Financial Markets Association (``SIFMA''), Management and 
Professional Earnings in the Securities Industry 2013, modified to 
account for an 1800-hour work-year and multiplied by 5.35 to account 
for bonuses, firm size, employee benefits, and overhead.
    \7\ Hourly rates are derived from SIFMA's Office Salaries in the 
Securities Industry 2013, modified to account for an 1800-hour work-
year and multiplied by 2.93 to account for bonuses, firm size, 
employee benefits and overhead.
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    To comply with state law, many investment companies already must 
distinguish the different sources from which a shareholder distribution 
is paid and disclose that information to shareholders. Thus, many 
investment companies would be required to distinguish the sources of 
shareholder

[[Page 60873]]

dividends whether or not the Commission required them to do so under 
rule 19a-1.
    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. Compliance with the collection of information 
required by rule 19a-1 is mandatory for management companies that make 
statements to shareholders pursuant to section 19(a) of the Act. 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.
    The public may view the background documentation for this 
information collection at the following Web site, www.reginfo.gov. 
Comments should be directed to: (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 by sending an email to: 
[email protected]; and (ii) Thomas Bayer, Chief Information 
Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 
F Street, NE., Washington, DC 20549 or send an email to: 
[email protected]. Comments must be submitted to OMB within 30 days 
of this notice.

    Dated: October 1, 2014.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-23978 Filed 10-7-14; 8:45 am]
BILLING CODE 8011-01-P