[Federal Register Volume 84, Number 136 (Tuesday, July 16, 2019)]
[Notices]
[Pages 34029-34030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15034]
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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 7d-2, SEC File No. 270-464, OMB Control No. 3235-0527
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 350l-3520), 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 for extension and approval.
In Canada, as in the United States, individuals can invest a
portion of their earnings in tax-deferred retirement savings accounts
(``Canadian retirement accounts''). These accounts, which operate in a
manner similar to individual retirement accounts in the United States,
encourage retirement savings by permitting savings on a tax-deferred
basis. Individuals who establish Canadian retirement accounts while
living and working in Canada and who later move to the United States
(``Canadian-U.S. Participants'' or ``participants'') often continue to
hold their retirement assets in their Canadian retirement accounts
rather than prematurely withdrawing (or ``cashing out'') those assets,
which would result in immediate taxation in Canada.
Once in the United States, however, these participants historically
have been unable to manage their Canadian retirement account
investments. Most investment companies (``funds'') that are ``qualified
companies'' for Canadian retirement accounts are not registered under
the U.S. securities laws. Securities of those unregistered funds,
therefore, generally cannot be publicly offered and sold in the United
States without violating the registration requirement of the Investment
Company Act of 1940 (``Investment Company Act'').\1\ As a result of
this registration requirement, Canadian-U.S. Participants previously
were not able to purchase or exchange securities for their Canadian
retirement accounts as needed to meet their changing investment goals
or income needs.
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\1\ 15 U.S.C. 80a. In addition, the offering and selling of
securities that are not registered pursuant to the Securities Act of
1933 (``Securities Act'') is generally prohibited by U.S. securities
laws. 15 U.S.C. 77.
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The Commission issued a rulemaking in 2000 that enabled Canadian-
U.S. Participants to manage the assets in their Canadian retirement
accounts by providing relief from the U.S. registration requirements
for offers of securities of foreign issuers to Canadian-U.S.
Participants and sales to Canadian retirement accounts.\2\ Rule 7d-2
under the Investment Company Act \3\ permits foreign funds to offer
securities to Canadian-U.S. Participants and sell
[[Page 34030]]
securities to Canadian retirement accounts without registering as
investment companies under the Investment Company Act.
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\2\ See Offer and Sale of Securities to Canadian Tax-Deferred
Retirement Savings Accounts, Release Nos. 33-7860, 34-42905, IC-
24491 (June 7, 2000) [65 FR 37672 (June 15, 2000)]. This rulemaking
also included new rule 237 under the Securities Act, permitting
securities of foreign issuers to be offered to Canadian-U.S.
Participants and sold to Canadian retirement accounts without being
registered under the Securities Act. 17 CFR 230.237.
\3\ 17 CFR 270.7d-2.
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Rule 7d-2 contains a ``collection of information'' requirement
within the meaning of the Paperwork Reduction Act of 1995.\4\ Rule 7d-2
requires written offering materials for securities offered or sold in
reliance on that rule to disclose prominently that those securities and
the fund issuing those securities are not registered with the
Commission, and that those securities and the fund issuing those
securities are exempt from registration under U.S. securities laws.
Rule 7d-2 does not require any documents to be filed with the
Commission.
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\4\ 44 U.S.C. 3501-3502.
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Rule 7d-2 requires written offering documents for securities
offered or sold in reliance on the rule to disclose prominently that
the securities are not registered with the Commission and may not be
offered or sold in the United States unless registered or exempt from
registration under the U.S. securities laws, and also to disclose
prominently that the fund that issued the securities is not registered
with the Commission. The burden under the rule associated with adding
this disclosure to written offering documents is minimal and is non-
recurring. The foreign issuer, underwriter, or broker-dealer can
redraft an existing prospectus or other written offering material to
add this disclosure statement, or may draft a sticker or supplement
containing this disclosure to be added to existing offering materials.
In either case, based on discussions with representatives of the
Canadian fund industry, the staff estimates that it would take an
average of 10 minutes per document to draft the requisite disclosure
statement.
The staff estimates that there are 4,086 publicly offered Canadian
funds that potentially would rely on the rule to offer securities to
participants and sell securities to their Canadian retirement accounts
without registering under the Investment Company Act.\5\ The staff
estimates that all of these funds have previously relied upon the rule
and have already made the one-time change to their offering documents
required to rely on the rule. The staff estimates that 204 (5 percent)
additional Canadian funds would newly rely on the rule each year to
offer securities to Canadian-U.S. Participants and sell securities to
their Canadian retirement accounts, thus incurring the paperwork burden
required under the rule. The staff estimates that each of those funds,
on average, distributes 3 different written offering documents
concerning those securities, for a total of 612 offering documents. The
staff therefore estimates that 204 respondents would make 612 responses
by adding the new disclosure statement to 612 written offering
documents. The staff therefore estimates that the annual burden
associated with the rule 7d-2 disclosure requirement would be 102 hours
(612 offering documents x 10 minutes per document). The total annual
cost of these burden hours is estimated to be $42,330 (102 hours x $415
per hour of attorney time).\6\
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\5\ Investment Company Institute, 2019 Investment Company Fact
Book (2019) at 258, tbl. 66.
\6\ The Commission's estimate concerning the wage rate for
attorney time is based on salary information for the securities
industry compiled by the Securities Industry and Financial Markets
Association (``SIFMA''). The $380 per hour figure for an attorney is
from SIFMA's Management & Professional Earnings in the Securities
Industry 2013, modified by Commission staff to account for an 1800-
hour work-year and inflation, and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead.
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These burden hour estimates are based upon the Commission staff's
experience and discussions with the fund industry. The estimates of
average burden hours are made solely for the purposes of the Paperwork
Reduction Act. These estimates are not derived from a comprehensive or
even a representative survey or study of the costs of Commission rules.
Compliance with the collection of information requirements of the
rule is mandatory and is necessary to comply with the requirements of
the rule in general. 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 collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burdens
of collection of information; (c) ways to enhance the quality, utility,
and clarity of the information collected; and (d) ways to minimize the
burdens 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 Charles Riddle, Acting
Director/Chief Information Officer, Securities and Exchange Commission,
C/O Candace Kenner, 100 F Street NE, Washington, DC 20549; or send an
email to: [email protected].
Dated: July 9, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-15034 Filed 7-15-19; 8:45 am]
BILLING CODE 8011-01-P