[Federal Register Volume 87, Number 1 (Monday, January 3, 2022)]
[Notices]
[Pages 138-139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28424]


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SECURITIES AND EXCHANGE COMMISSION

[OMB Control No. 3235-0495, SEC File No. 270-438]


Submission for OMB Review; Comment Request; Extension: Rule 154

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

    Notice is hereby given that, under 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.
    The federal securities laws generally prohibit an issuer, 
underwriter, or dealer from delivering a security for sale unless a 
prospectus meeting certain requirements accompanies or precedes the 
security. Rule 154 (17 CFR 230.154) under the Securities Act of 1933 
(15 U.S.C. 77a) (the ``Securities Act'') permits, under certain 
circumstances, delivery of a single prospectus to investors who 
purchase securities from the same issuer and share the same address 
(``householding'') to satisfy the applicable prospectus delivery 
requirements.\1\ The purpose of rule 154 is to reduce the amount of 
duplicative prospectuses delivered to investors sharing the same 
address.
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    \1\ The Securities Act requires the delivery of prospectuses to 
investors who buy securities from an issuer or from underwriters or 
dealers who participate in a registered distribution of securities. 
See Securities Act sections 2(a)(10), 4(1), 4(3), 5(b) (15 U.S.C. 
77b(a)(10), 77d(1), 77d(3), 77e(b)); see also rule 174 under the 
Securities Act (17 CFR 230.174) (regarding the prospectus delivery 
obligation of dealers); rule 15c2-8 under the Securities Exchange 
Act of 1934 (17 CFR 240.15c2-8) (prospectus delivery obligations of 
brokers and dealers).
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    Under rule 154, a prospectus is considered delivered to all 
investors at a shared address, for purposes of the federal securities 
laws, if the person relying on the rule delivers the prospectus to the 
shared address, addresses the prospectus to the investors as a group or 
to each of the investors individually, and the investors consent to the 
delivery of a single prospectus. The rule applies to prospectuses and 
prospectus supplements. Currently, the rule permits householding of all 
prospectuses by an issuer, underwriter, or dealer relying on the rule 
if, in addition to the other conditions set forth in the rule, the 
issuer, underwriter, or dealer has obtained from each investor written 
or implied consent to householding.\2\ The rule requires issuers, 
underwriters, or dealers that wish to household prospectuses with 
implied consent to send a notice to each investor stating that the 
investors in the household will receive one prospectus in the future 
unless the investors provide contrary instructions. In

[[Page 139]]

addition, at least once a year, issuers, underwriters, or dealers, 
relying on rule 154 for the householding of prospectuses relating to 
open-end management investment companies that are registered under the 
Investment Company Act of 1940 (``mutual funds'') and each series 
thereof must explain to investors who have provided written or implied 
consent how they can revoke their consent.\3\ Preparing and sending the 
notice and the annual explanation of the right to revoke are 
collections of information.
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    \2\ Rule 154 permits the householding of prospectuses that are 
delivered electronically to investors only if delivery is made to a 
shared electronic address and the investors give written consent to 
householding. Implied consent is not permitted in such a situation. 
See rule d 154(b)(4).
    \3\ See Rule 154(c).
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    The rule allows issuers, underwriters, or dealers to household 
prospectuses if certain conditions are met. Among the conditions with 
which a person relying on the rule must comply are providing notice to 
each investor that only one prospectus will be sent to the household 
and, in the case of issuers that are mutual funds and any series 
thereof, providing to each investor who consents to householding an 
annual explanation of the right to revoke consent to the delivery of a 
single prospectus to multiple investors sharing an address. The purpose 
of the notice and annual explanation requirements of the rule is to 
ensure that investors who wish to receive individual copies of 
prospectuses are able to do so.
    Although rule 154 is not limited to mutual funds, the Commission 
believes that it is used mainly by mutual funds and by broker-dealers 
that deliver mutual fund prospectuses. The Commission is unable to 
estimate the number of issuers other than mutual funds that rely on the 
rule.
    The Commission estimates that, as of June 30, 2021, there are 
approximately 13,182 mutual fund series registered on Form N-1A, 
approximately 1,279 of which are directly sold and therefore deliver 
their own prospectuses. Of these, the Commission estimates that 
approximately half (640 mutual fund series): (i) Do not send the 
implied consent notice requirement because they obtain affirmative 
written consent to household prospectuses in the fund's account opening 
documentation; or (ii) do not take advantage of the householding 
provision because of electronic delivery options which lessen the 
economic and operational benefits of rule 154 when compared with the 
costs of compliance. Therefore, the Commission estimates that each of 
the 640 directly sold mutual fund series will spend an average of 20 
hours per year complying with the notice requirement of the rule, for a 
total of 12,800 burden hours. In addition, of the approximately 1,279 
mutual fund series that are directly sold, the Commission estimates 
that approximately 75% (or 960) will each spend 1 hour complying with 
the annual explanation of the right to revoke requirement of the rule, 
for a total of 960 hours.
    The Commission estimates that as of December 31, 2020, there were 
approximately 462 broker-dealers that have customer accounts with 
mutual funds, and therefore may be required to deliver mutual fund 
prospectuses. The Commission estimates that each affected broker-dealer 
will spend, on average, 20 hours complying with the notice requirement 
of the rule, for a total of 9,240 hours. In addition, each broker-
dealer will also spend one hour complying with the annual explanation 
of the right to revoke requirement, for a total of 462 hours. 
Therefore, the total number of respondents for rule 154 is 1,422 (960 
\4\ mutual fund series plus 462 broker-dealers), and the estimated 
total hour burden is approximately 23,462 hours (13,760 hours for 
mutual fund series, plus 9,702 hours for broker-dealers).
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    \4\ The Commission estimates that 640 mutual funds prepare both 
the implied consent notice and the annual explanation of the right 
to revoke consent + 320 mutual funds that prepare only the annual 
explanation of the right to revoke.
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    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.
    Compliance with the collection of information requirements of the 
rule is necessary to obtain the benefit of relying on the rule. 
Responses to the collections of information will not be kept 
confidential. The rule does not require these records be retained for 
any specific period of time. 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 website, 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) David Bottom, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o John R. 
Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to: 
[email protected]. Written comments and recommendations for the 
proposed information collection should be sent within 30 days of 
publication of this notice to www.reginfo.gov/public/do/PRAMain. Find 
this particular information collection by selecting ``Currently under 
30-day Review--Open for Public Comments'' or by using the search 
function.

    Dated: December 28, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28424 Filed 12-30-21; 8:45 am]
BILLING CODE 8011-01-P