[Federal Register Volume 90, Number 106 (Wednesday, June 4, 2025)]
[Notices]
[Pages 23722-23723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-10096]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0769]
Proposed Collection; Comment Request; Extension: Rule 139b
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 the Securities and Exchange Commission
(the ``Commission''), in accordance with the Paperwork Reduction Act of
1995 (Pub. L. 104-13, 44 U.S.C. 3501 et seq.) (``PRA''), is soliciting
comments on the collection of information associated with the Rule 139b
(17 CFR 230.139b) under the Securities Act of 1933 (15 U.S.C. 77a et
seq.) (``Securities Act'') that was adopted by the Commission on
November 30, 2018.\1\ The Commission plans to submit this existing
collection of information to the Office of Management and Budget
(``OMB'') for extension and approval.
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\1\ See Release No. 33-10580 (Nov. 30, 2018) [83 FR 64180 (Dec.
13, 2018)] (``Adopting Release''). Rule 139b became effective on
January 14, 2019.
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As directed by the Fair Access to Investment Research Act of 2017
(Pub. L. 115-66, 131 Stat. 1196 (2017) (the ``FAIR Act''), the
Commission adopted rule 139b under the Securities Act to extend the
safe harbor under rule 139 to a ``covered investment fund research
report.'' Specifically, rule 139b provides a safe harbor to a broker-
dealer who publishes or distributes in the regular course of its
business research reports concerning one or more ``covered investment
fund(s)'' while participating in the distribution of a covered
investment fund's securities.
In the Adopting Release, the Commission adopted the provision that
rule 139b include a standardized performance disclosure requirement.
The Commission believes that standardized performance presentation is
an appropriate requirement because investors tend to consider fund
performance a significant factor in evaluating or comparing investment
companies, and the requirement addresses potential investor confusion
if a communication were not easily recognizable as research as opposed
to an advertising prospectus or supplemental sales literature. Rule
139b requires that research reports about open-end funds that include
performance information must present it in accordance with paragraphs
(d), (e), and (g) of rule 482. Rule 139b also requires that research
reports about closed-end funds that include performance information
must present it in accordance with instructions to item 4.1(g) of Form
N-2. Performance measures calculated by broker-dealers are not required
to be kept confidential and there is no mandatory retention period. The
Commission anticipates that compliance with these performance measures
for each fund discussed in a research report, and for which the
performance measures apply, would increase compliance costs for broker-
dealers seeking to publish or distribute a covered investment fund
research report.
It is difficult to provide estimates of the burdens and costs for
those broker-dealers that will include performance information in a
rule 139b research report. As discussed in the Adopting Release, this
is difficult to estimate because current data collected does not
reflect the affiliate exclusion, does not include the entire universe
of covered investment funds, and it is uncertain what percentage of
communications currently filed as rule 482 advertising prospectuses (or
rule 34b-1 supplemental sales materials) will instead be published in
reliance of rule 139b, as covered investment fund research reports.\2\
For purposes of the PRA, we estimate that 10% of the rule 482 and rule
34b-1 communications currently filed by broker-dealers with FINRA
(approximately 50,909 in 2024) could be considered as rule 139b covered
investment fund research reports. We estimate that broker-dealers will
publish annually 5,091 (10% of 50,909) covered investment fund research
reports. Moreover, we assume for purposes of the PRA that all
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estimated rule 139b research reports will include fund performance
information. We further estimate that 1,030 broker-dealers would likely
be respondents to the collection of information with a frequency of 4.9
responses per year.\3\ Additionally, we estimate that each research
report will require 3 hours of ongoing internal burden hours by a
broker-dealers' personnel to comply with the rule 139b collection of
information requirements, which for each broker-dealer is estimated to
be 14.7 internal burden hours.\4\ Accordingly, we estimate that the
standardized performance presentation requirements will result in an
average 14.7 annual hour burden per broker-dealer.
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\2\ See Adopting Release, supra note 1, n. 413 and accompanying
paragraph.
\3\ From information provided by FINRA, for the period January
1, 2024 through December 31, 2024, there were an aggregate of 50,909
filings that were coded either as Rule 482 or Rule 34b1 filings
(40,984 Rule 484 filings and 9,925 Rule 34b-1 filing); furthermore,
the Commission estimates that for the period January 1, 2024 through
December 31, 2024, there were 5,091 covered investment fund research
reports/1,030 broker-dealers = 4.9 annual responses per broker-
dealer.
\4\ 4.9 annual responses per broker-dealer x 3 internal burden
hours = 14.7 annual internal burden hours per broker-dealer.
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In sum, we estimate that rule 139b's requirements will impose a
total annual internal hour burden of 15,141 hours on broker-dealers.\5\
We do not think there is an external cost burden associated with this
collection of information.
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\5\ 14.7 annual internal burden hours * 1,030 broker-dealers.
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This information collection is subject to the PRA and responses to
this collection of information requirement would not be mandatory for
broker-dealers seeking to rely upon rule 139b, but would be necessary
for those broker-dealers that would like to provide performance
information in their covered investment fund research reports.
Responses to the information collections will not be kept confidential.
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 OMB Control Number.
Written comments are invited on: (a) whether this proposed
collection of information is necessary for the proper performance of
the functions of the SEC, including whether the information will have
practical utility; (b) the accuracy of the SEC's estimate of the burden
imposed by the proposed collection of information, including the
validity of the methodology and the assumptions used; (c) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated,
electronic collection techniques or other forms of information
technology.
Please direct your written comment to Austin Gerig, Director/Chief
Data Officer, Securities and Exchange Commission, c/o Tanya Ruttenberg,
100 F Street NE, Washington, DC 20549 and send it by email to
[email protected] by August 4, 2025.
Dated: May 29, 2025.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025-10096 Filed 6-3-25; 8:45 am]
BILLING CODE 8011-01-P