[Federal Register Volume 88, Number 223 (Tuesday, November 21, 2023)]
[Notices]
[Pages 81165-81166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25724]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-385, OMB Control No. 3235-0441]


Proposed Collection; Comment Request; Extension: Rule 18f-3

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, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.) (``Paperwork Reduction Act''), 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 (``OMB'') for extension and 
approval.
    Rule 18f-3 (17 CFR 270.18f-3) under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) exempts from sections 18(f)(1) and 
18(f)(i), a fund that issues multiple classes of shares representing 
interests in the same portfolio of securities (a ``multiple class 
fund'') if the fund satisfies the conditions of the rule. In general, 
each class must differ in its arrangement for shareholder services or 
distribution or both, must pay the related expenses of that different 
arrangement, and must satisfy certain voting rights provisions.
    The rule includes one requirement for the collection of 
information. A multiple class fund must prepare, and fund directors 
must approve, a written plan setting forth the separate arrangement and 
expense allocation of each class, and any related conversion features 
or exchange privileges (``rule 18f-3 plan''). Approval of the plan must 
occur before the fund issues any shares of multiple classes and 
whenever the fund materially amends the plan. In approving the plan, 
the fund board, including a majority of the independent directors, must 
determine that the plan is in the best interests of each class and the 
fund as a whole.
    The requirement that the fund prepare, and directors approve, a 
written rule 18f-3 plan is intended to ensure that the fund compiles 
information relevant to the fairness of the separate arrangement and 
expense allocation for each class, and that directors review and 
approve the information. Without a blueprint that highlights material 
differences among classes, directors might not perceive potential 
conflicts of interests when

[[Page 81166]]

they determine whether the plan is in the best interests of each class 
and the fund. In addition, the plan may be useful to Commission staff 
in reviewing the fund's compliance with the rule.
    The following estimates of average burden hours are made solely for 
purposes of the Paperwork Reduction Act of 1995 \1\ and are not derived 
from a comprehensive or even representative survey or study of the cost 
of Commission rules and forms. Compliance with the information 
collection requirements of rule 18f-3 is necessary to obtain the 
benefit of the rule's exemption. Responses to the collection of 
information requirements will not be kept confidential.
---------------------------------------------------------------------------

    \1\ 44 U.S.C. 3501 et seq.

                                        Table 1--Rule 18f-3 PRA Estimates
----------------------------------------------------------------------------------------------------------------
                                        Internal annual burden       Wage rate \1\         Internal time costs
----------------------------------------------------------------------------------------------------------------
                                            ESTIMATES FOR RULE 18F-3
----------------------------------------------------------------------------------------------------------------
Prepare and approve a written 18f-3    6 hours \3\............
 plan \2\.
Average number of responses annually   0.5 responses \3\......
 per registrant.
Total number of hours per registrant   3 hours \3\............  $484 (in-house           $936,056 (in-house
 per year \4\.                                                   attorney).               attorney).
                                                                $4,770 (fund board of    $4,612,590 (board of
                                                                 directors) \6\.          directors).\7\
Total number of registrants..........  967 \4\................
                                      --------------------------------------------------------------------------
    Total annual hour burden.........  2,901 hours \5\........  .......................  $5,548,646.\8\
----------------------------------------------------------------------------------------------------------------
 Notes:
1. The Commission's estimates of the relevant wage rates are based on salary information for the securities
  industry compiled by the Securities Industry and Financial Markets Association's Office Salaries in the
  Securities Industry 2013. The estimated figures are modified by firm size, employee benefits, overhead, and
  adjusted to account for the effects of inflation. See Securities Industry and Financial Markets Association,
  Report on Management & Professional Earnings in the Securities Industry 2013.
2. The Commission estimates that each registrant prepares and approves a rule 18f-3 plan every two years when
  issuing a new fund fund or class or amending a plan (or that 484 of all 967 registrants prepare and approve a
  plan each year).
3. This estimate assumes that each response will take 6 hours, requiring 3 hours per registrant per year (0.5
  responses per registrant x 6 hours per response = 3 hours per registrant).
4. The Commission estimates that there are approximately 6,733 multiple class funds offered by 967 registrants.
5. 967 registrants x 3 hours = 2,901 hours.
6. The estimate for the cost of board time as a whole is derived from estimates made by the staff regarding
  typical board size and compensation that is based on information received from fund representatives and
  publicly available sources. The $4,770 per hour estimate for a fund board of directors was last adjusted for
  inflation through 2019, and assumes an average of 9 board members per board.
7. This estimate assumes that two-thirds (1,934) of the internal hours are spent by in-house attorneys to
  prepare the plan (1,934 hours x $484 estimated hourly rate = $936,056 per year) and that one-third (967) are
  spent by the fund's board of directors to approve the plan (967 hours x $4,770 per hour = $4,612,590).
8. $936,056 + $4,612,590 = $5,548,646.

    Written comments are invited on: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
estimate of the burden of the collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information collected; 
and (d) ways to minimize the burden 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 by January 22, 2024.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: David Bottom, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an 
email to: [email protected].

    Dated: November 16, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25724 Filed 11-20-23; 8:45 am]
BILLING CODE 8011-01-P