[Federal Register Volume 84, Number 133 (Thursday, July 11, 2019)]
[Proposed Rules]
[Pages 33024-33027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14616]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Chapter II

[Release Nos. 33-10660; 34-86302; 39-2527; IA-5284; IC-33543; File No. 
S7-10-19]


List of Rules To Be Reviewed Pursuant to the Regulatory 
Flexibility Act

AGENCY: Securities and Exchange Commission.

ACTION: List of rules scheduled for review.

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SUMMARY: The Securities and Exchange Commission is publishing a list of 
rules to be reviewed pursuant to Section 610 of the Regulatory 
Flexibility Act. The list is published to provide the public with 
notice that these rules are scheduled for review by the agency and to 
invite public comment on whether the rules should be continued without 
change, or should be amended or rescinded to minimize any significant 
economic impact of the rules upon a substantial number of small 
entities.

DATES: Comments should be submitted by August 12, 2019.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/other.shtml); or
     Send an email to [email protected]. Please include 
File Number S7-10-19 on the subject line.

Paper Comments

     Send paper comments to Secretary, Securities and Exchange 
Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File No. S7-10-19. This file number 
should be included on the subject line if email is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
internet website (http://www.sec.gov/rules/other.shtml). Comments also 
are available for website viewing and printing in the Commission's 
Public Reference Room, 100 F Street NE, Washington, DC 20549 on 
official business days between the hours of 10:00 a.m. and 3:00 p.m. 
All comments received will be posted without change. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Leila Bham, Office of the General 
Counsel, 202-551-5532.

SUPPLEMENTARY INFORMATION: The Regulatory Flexibility Act (``RFA''), 
codified at 5 U.S.C. 601-612, requires an agency to review its rules 
that have a significant economic impact upon a substantial number of 
small entities within ten years of the publication of such rules as 
final rules. 5 U.S.C. 610(a). The purpose of the review is ``to 
determine whether such rules should be continued without change, or 
should be amended or rescinded . . . to minimize any significant 
economic impact of the rules upon a substantial number of such small 
entities.'' 5 U.S.C. 610(a). The RFA sets forth specific considerations 
that must be addressed in the review of each rule:
     The continued need for the rule;
     The nature of complaints or comments received concerning 
the rule from the public;
     The complexity of the rule;
     The extent to which the rule overlaps, duplicates or 
conflicts with other federal rules, and, to the extent feasible, with 
state and local governmental rules; and
     The length of time since the rule has been evaluated or 
the degree to which technology, economic conditions, or other factors 
have changed in the area affected by the rule. 5 U.S.C. 610(c).
    The Securities and Exchange Commission, as a matter of policy, 
reviews all final rules that it published for notice and comment to 
assess not only their continued compliance with the RFA, but also to 
assess generally their continued utility. When the Commission 
implemented the RFA in 1981, it stated that it ``intend[ed] to conduct 
a broader review [than that required by the RFA], with a view to 
identifying those rules in need of modification or even rescission.'' 
Securities Act Release No. 6302 (Mar. 20, 1981), 46 FR 19251 (Mar. 30, 
1981). The list below is therefore broader than that required by the 
RFA, and may include rules that do not have a significant economic 
impact on a substantial number of small entities (but excludes such 
rules that are minor amendments to previously adopted rules or rules 
that are ministerial, procedural, or technical in nature). Where the 
Commission has previously made a determination of a rule's impact on 
small businesses, the determination is noted on the list.
    The Commission particularly solicits public comment on whether the 
rules

[[Page 33025]]

listed below affect small businesses in new or different ways than when 
they were first adopted. The rules and forms listed below are scheduled 
for review by staff of the Commission.
    Title: Risk Management Controls for Brokers or Dealers with Market 
Access.
    Citation: 17 CFR 240.15c3-5.
    Authority: 15 U.S.C. 78b, 78c(b), 78k-1, 78o, 78q(a) and (b), and 
78w(a).
    Description: The Commission adopted a new rule under the Securities 
Exchange Act of 1934 (``Exchange Act'') to require broker-dealers with 
market access to establish, document, and maintain a system of risk 
management controls and supervisory procedures reasonably designed to 
manage financial, regulatory, and other risks of this business 
activity. These risk management controls and supervisory procedures are 
required to be under the direct and exclusive control of the broker-
dealer subject to the obligations (subject to certain limited 
exceptions). In addition, these risk management controls and 
supervisory procedures must be reviewed for effectiveness on at least 
an annual basis, and the broker-dealer's Chief Executive Officer (or 
equivalent officer) must certify, on an annual basis, that the broker-
dealer's controls and procedures comply with the requirements of the 
rule.
    Prior RFA Analysis: A Final Regulatory Flexibility Analysis was 
prepared in accordance with 5 U.S.C. 604 in conjunction with the 
Commission's adoption of Release No. 34-63241 (November 3, 2010). In 
the adopting release, the Commission considered comments received on 
the Initial Regulatory Flexibility Analysis included in the proposing 
release, Release No. 34-61379 (January 19, 2010).
* * * * *
    Title: Facilitating Shareholder Director Nominations.
    Citation: 17 CFR 200.82a, 17 CFR 232.13, 17 CFR 240.13a-11, 17 CFR 
240.13d-1, 17 CFR 240.13d-102, 17 CFR 240.14a-2, 17 CFR 240.14a-4, 17 
CFR 240.14a-5, 17 CFR 240.14a-6, 17 CFR 240.14a-8, 17 CFR 240.14a-9, 17 
CFR 240.14a-11, 17 CFR 240.14a-12, 17 CFR 240.14a-18, 17 CFR 240.14a-
101, 17 CFR 240.14n-1 through 14n-3, 17 CFR 240.14n-101, 17 CFR 
240.15d-11, and 17 CFR 249.308.
    Authority: 15 U.S.C. 78c(b), 78m, 78n, 78o, 78w(a), 78mm, 80a-10, 
80a-20(a), and 80a-37, and sections 971(a) and (b) of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act.
    Description: The Commission adopted changes to the federal proxy 
rules to facilitate the effective exercise of shareholders' traditional 
state law rights to nominate and elect directors to company boards of 
directors. The rules require that specified disclosures be made 
concerning nominating shareholders or groups and their nominees. In 
addition, the rules provide that companies must include in their proxy 
materials, under certain circumstances, shareholder proposals that seek 
to establish a procedure in the company's governing documents for the 
inclusion of one or more shareholder director nominees in the company's 
proxy materials. The Commission also adopted related changes to certain 
of its other rules and regulations, including the existing solicitation 
exemptions from its proxy rules and the beneficial ownership reporting 
requirements.\1\
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    \1\ 17 CFR.240.14a-11 (``Rule 14a-11'') was also adopted in this 
release. It would have required, under certain circumstances, a 
company's proxy materials to provide shareholders with information 
about, and the ability to vote for, a shareholder's, or group of 
shareholders', nominees for director. On July 22, 2011, the United 
States Court of Appeals for the D.C. Circuit issued an order 
vacating Rule 14a-11 and on September 14, 2011, the Court issued its 
mandate. The Court's order did not affect the amendment to Rule 14a-
8, which was not challenged in the litigation, or the related rules 
and amendments adopted concurrently with Rule 14a-11 and the 
amendment to Rule 14a-8.
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    Prior RFA Analysis: A Final Regulatory Flexibility Analysis was 
prepared in accordance with 5 U.S.C. 604 in conjunction with the 
Commission's adoption of Release No. 33-9136 (Aug. 25, 2010). The 
Commission solicited comment on the Initial Regulatory Flexibility 
Analysis included in the proposing release, Release No. 33-9046 (June 
10, 2009), but received no comments on that analysis. However, the 
adopting release considered other comments received that addressed 
aspects of the proposed rule that could potentially affect small 
entities.
* * * * *
    Title: Amendments to Form ADV.
    Citation: 17 CFR 275.203-1, 17 CFR 275.204-1, 17 CFR 275.204-2, 17 
CFR 275.204-3, and 17 CFR 279.1.
    Authority: 15 U.S.C. 80b-3(c)(1), 80b-4, 80b-6(4), 80b-11(a), 
77s(a), 78w(a), 78bb(e)(2), 77sss(a), and 78a-37(a).
    Description: The Commission adopted amendments to Part 2 of Form 
ADV, and related rules under the Investment Advisers Act of 1940 
(``Investment Advisers Act''), to require investment advisers 
registered with the Commission to provide new and prospective clients 
with a brochure and brochure supplements written in plain English. 
These amendments were designed to provide new and prospective advisory 
clients with clearly written, meaningful, current disclosure of the 
business practices, conflicts of interest, and background of the 
investment adviser and its advisory personnel. Advisers must file their 
brochures with the Commission electronically and the brochures are made 
available to the public through the Commission's website. The 
Commission also withdrew the Advisers Act rule requiring advisers to 
disclose certain disciplinary and financial information.
    Prior RFA Analysis: A Final Regulatory Flexibility Analysis was 
prepared in accordance with 5 U.S.C. 604 in conjunction with the 
Commission's adoption of Release No. IA-3060 (July 28, 2010). The 
Commission solicited comment on the Initial Regulatory Flexibility 
Analysis included in the proposing release, Release No. IA-2711 (Mar. 
3, 2008), but received no comments on that analysis. However, the 
adopting release considered other comments received that addressed 
aspects of the proposed rule that could potentially affect small 
entities.
* * * * *
    Title: Political Contributions by Certain Investment Advisers.
    Citation: 17 CFR 275.204-2, 17 CFR 275.206(4)-3, and 17 CFR 
275.206(4)-5.
    Authority: 15 U.S.C. 80b-4, 80b-6(4), and 80b-11(a).
    Description: The Commission adopted a new rule under the Investment 
Advisers Act that prohibits 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 make a 
contribution to certain elected officials or candidates. The rule also 
prohibits an adviser from providing or agreeing to provide, directly or 
indirectly, payment to any third party for a solicitation of advisory 
business from any government entity on behalf of such adviser, unless 
such third parties are registered broker-dealers or registered 
investment advisers, in each case themselves subject to pay to play 
restrictions. Additionally, the rule prevents an adviser from 
soliciting from others, or coordinating, contributions to certain 
elected officials or candidates or payments to political parties where 
the adviser is providing or seeking government business. The amendments 
require a registered adviser to maintain certain records of the 
political contributions made by the adviser or certain of its 
executives or employees. The rule and rule amendments address ``pay to 
play'' practices by investment advisers.
    Prior RFA Analysis: A Final Regulatory Flexibility Analysis was

[[Page 33026]]

prepared in accordance with 5 U.S.C. 604 in conjunction with the 
Commission's adoption of Release No. IA-3043 (July 1, 2010). In the 
adopting release, the Commission considered comments received on the 
Initial Regulatory Flexibility Analysis included in the proposing 
release, Release No. IA-2910 (Aug. 3, 2009).
* * * * *
    Title: Amendment to Municipal Securities Disclosure.
    Citation: 17 CFR 240.15c2-12.
    Authority: 15 U.S.C. 78b, 78c(b), 78j, 78o(c), 78o-4, and 
78w(a)(1).
    Description: The Commission adopted amendments to Rule 15c2-12 
under the Exchange Act relating to municipal securities disclosure. The 
amendments revised certain requirements regarding the information that 
the broker, dealer, or municipal securities dealer acting as an 
underwriter in a primary offering of municipal securities must 
reasonably determine that an issuer of municipal securities or an 
obligated person has undertaken, in a written agreement or contract for 
the benefit of holders of the issuer's municipal securities, to provide 
to the Municipal Securities Rulemaking Board (``MSRB''). Specifically, 
the amendments require a broker, dealer, or municipal securities dealer 
to reasonably determine that the issuer or obligated person has agreed 
to provide notice of specified events in a timely manner not in excess 
of ten business days after the event's occurrence; amend the list of 
events for which is notice is to be provided; and modify the events 
that are subject to a materiality determination before triggering a 
requirement to provide notice to the MSRB. In addition, the amendments 
revised an exemption from the Rule for certain offerings of municipal 
securities with put features. The release also provides interpretive 
guidance intended to assist municipal securities brokers, dealers, and 
municipal securities dealers in meeting their obligations under the 
antifraud provisions of the federal securities laws.
    Prior RFA Analysis: A Final Regulatory Flexibility Analysis was 
prepared in accordance with 5 U.S.C. 604 in conjunction with the 
Commission's adoption of Release No. 34-62184A (May 27, 2010). In the 
adopting release, the Commission considered comments received on the 
Initial Regulatory Flexibility Analysis included in the proposing 
release, Release No. 34-60332 (July 24, 2009).
* * * * *
    Title: Amendments to Regulation SHO.
    Citation: 17 CFR 242.200(g) and 17 CFR 242.201.
    Authority: 15 U.S.C. 78b, 78c(b), 78(f), 78i(h), 78j, 78k-1, 78o, 
78o-3, 78q, 78s, 78w(a), and 78mm.
    Description: The Commission adopted amendments to Regulation SHO 
under the Exchange Act, in particular a short sale-related circuit 
breaker that, if triggered, imposes a restriction on the prices at 
which securities may be sold short (``short sale price test'' or 
``short sale price test restriction''). Specifically, the Rule requires 
that a trading center establish, maintain, and enforce written policies 
and procedures reasonably designed to prevent the execution or display 
of a short sale order of a covered security at a price that is less 
than or equal to the current national best bid if the price of that 
covered security decreases by 10% or more from the covered security's 
closing price as determined by the listing market for the covered 
security as of the end of regular trading hours on the prior day. In 
addition, the Rule requires that the trading center establish, 
maintain, and enforce written policies and procedures reasonably 
designed to impose this short sale price test restriction for the 
remainder of the day and the following day when a national best bid for 
the covered security is calculated and disseminated on a current and 
continuing basis by a plan processor pursuant to an effective national 
market system plan. In addition, the Commission amended Regulation SHO 
to provide that a broker-dealer may mark certain qualifying sell orders 
``short exempt.'' In particular, if the broker-dealer chooses to rely 
on its own determination that it is submitting the short sale order to 
the trading center at a price that is above the current national best 
bid at the time of submission or to rely on an exception specified in 
the Rule, it must mark the order as ``short exempt.'' This ``short 
exempt'' marking requirement aids surveillance by self-regulatory 
organizations and the Commission for compliance with the provisions of 
Rule 201 of Regulation SHO.
    Prior RFA Analysis: A Final Regulatory Flexibility Analysis was 
prepared in accordance with 5 U.S.C. 604 in conjunction with the 
Commission's adoption of Release No. 34-61595 (Feb. 26, 2010). In the 
adopting release, the Commission considered comments received on the 
Initial Regulatory Flexibility Analysis included in the proposing 
release, Release No. 34-59748 (April 10, 2009).
* * * * *
    Title: Money Market Fund Reform.
    Citation: 17 CFR 270.2a-7, 17 CFR 270.17a-9, 17 CFR 270.22e-3, 17 
CFR 270.30b1-6T, 17 CFR 270.30b1-7, and 17 CFR 274.201.
    Authority: 15 U.S.C. 80a-6(c), 80a-8(b), 80a-22(c), 80a-22(e), 80a-
29(b), 80a-30(a), and 80a-37(a).
    Description: The Commission adopted amendments to certain rules 
that govern money market funds under the Investment Company Act of 
1940. The amendments tightened the risk-limiting conditions of rule 2a-
7 by, among other things, requiring funds to maintain a portion of 
their portfolios in instruments that can be readily converted to cash, 
reducing the maximum weighted average maturity of portfolio holdings, 
and improving the quality of portfolio securities; requiring money 
market funds to report their portfolio holdings monthly to the 
Commission; and permitting a money market fund that has ``broken the 
buck'' (i.e., re-priced its securities below $1.00 per share), or is at 
imminent risk of breaking the buck, to suspend redemptions to allow for 
the orderly liquidation of fund assets. The amendments were designed to 
make money market funds more resilient to certain short-term market 
risks, and to provide greater protections for investors in a money 
market fund that is unable to maintain a stable net asset value per 
share.
    Prior RFA Analysis: Pursuant to 5 U.S.C. 605(b) of the Regulatory 
Flexibility Act, the Commission certified that the rule would not have 
a significant economic impact on a substantial number of small 
entities. This certification was incorporated into the proposing 
release, Release No. IC-28807 (June 30, 2009). As stated in the 
adopting release, Release No. IC-29132 (Feb. 23, 2010), the Commission 
received no comments concerning the impact on small entities or the 
Regulatory Flexibility Act certification.
* * * * *
    Title: Amendments to Rules Requiring Internet Availability of Proxy 
Materials.
    Citation: 17 CFR 240.14a-16 and 17 CFR 230.498.
    Authority: 15 U.S.C. 77f, 77g, 77j, 77s, 78c(b), 78m, 78n, 78o, 
78w(a), 80a-8, 80a-20(a), 80a-24(a), 80a-29, and 80a-37.
    Description: The Commission adopted amendments to rules under the 
Exchange Act and the Securities Act of 1933 to clarify and provide 
additional flexibility regarding the format of the Notice of Internet 
Availability of Proxy Materials that is sent to shareholders and to 
permit issuers and other soliciting persons to better communicate

[[Page 33027]]

with shareholders by including explanatory materials regarding the 
reasons for the use of the notice and access proxy rules and the 
process of receiving and reviewing proxy materials and voting pursuant 
to the notice and access proxy rules. The amendments also revised the 
timeframe for delivering a notice to shareholders when a soliciting 
person other than the issuer relies on the notice and access proxy 
rules and permit mutual funds to accompany the Notice with a summary 
prospectus.
    Prior RFA Analysis: A Final Regulatory Flexibility Analysis was 
prepared in accordance with 5 U.S.C. 603 in conjunction with the 
Commission's adoption of Release No. 33-9108 (Feb. 22, 2010). The 
Commission solicited comment on the Initial Regulatory Flexibility 
Analysis included in the proposing release, Release No. 33-9073 (Oct. 
14, 2009), but, as stated in the adopting release, received no comments 
on that analysis.
* * * * *
    Title: Shareholder Approval of Executive Compensation of TARP 
Recipients.
    Citation: 17 CFR 240.14a-6, 17 CFR 240.14a-20, and 17 CFR 240.14a-
101.
    Authority: 12 U.S.C. 5221(e), and 15 U.S.C. 78n(a) and 78w(a).
    Description: The Commission adopted amendments to the proxy rules 
under the Exchange Act to set forth certain requirements for U.S. 
registrants subject to Section 111(e) of the Emergency Economic 
Stabilization Act of 2008 (``EESA''). Section 111(e) of EESA requires 
companies that have received financial assistance under the Troubled 
Asset Relief Program (``TARP'') to permit a separate shareholder 
advisory vote to approve the compensation of executives, as disclosed 
pursuant to the compensation disclosure rules of the Commission, during 
the period in which any obligation arising from financial assistance 
provided under the TARP remains outstanding. The amendments were 
intended to help implement this requirement by specifying and 
clarifying it in the context of the federal proxy rules.
    Prior RFA Analysis: Pursuant to 5 U.S.C. 605(b) of the Regulatory 
Flexibility Act, the Commission certified that the proposed amendment 
to the federal proxy rules would not have a significant economic impact 
on a substantial number of small entities. This certification was 
incorporated into the proposing release, Release No. 34-60218 (July 1, 
2009). As stated in the adopting release, Release No. 34-61335 (January 
12, 2010), the Commission received no comments concerning the impact on 
small entities or the Regulatory Flexibility Act certification.
* * * * *

    By the Commission.

    Dated: July 3, 2019.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2019-14616 Filed 7-10-19; 8:45 am]
BILLING CODE 8011-01-P