[Federal Register Volume 85, Number 85 (Friday, May 1, 2020)]
[Notices]
[Pages 25499-25500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09300]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-508, OMB Control No. 3235-0565]
60 Day Notice--Proposed Collection; 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 482
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.
Like most issuers of securities, when an investment company
(``fund'') \1\ offers its shares to the public, its promotional efforts
become subject to the advertising restrictions of the Securities Act of
1933 (15 U.S.C. 77) (the ``Securities Act''). In recognition of the
particular problems faced by funds that continually offer securities
and wish to advertise their securities, the Commission has adopted
advertising safe harbor rules. The most important of these is rule 482
(17 CFR 230.482) under the Securities Act, which, under certain
circumstances, permits funds to advertise investment performance data,
as well as other information. Rule 482 advertisements are deemed to be
``prospectuses'' under Section 10(b) of the Securities Act (15 U.S.C.
77j(b)).
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\1\ ``Investment company'' refers to both investment companies
registered under the Investment Company Act of 1940 (``Investment
Company Act'') (15 U.S.C. 80a-1 et seq.) and business development
companies.
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Rule 482 contains certain requirements regarding the disclosure
that funds are required to provide in qualifying advertisements. These
requirements are intended to encourage the provision to investors of
information that is balanced and informative, particularly in the area
of investment performance. For example, a fund is required to include
disclosure advising investors to consider the fund's investment
objectives, risks, charges and expenses, and other information
described in the fund's prospectus, and highlighting the availability
of the fund's prospectus and, if applicable, its summary prospectus. In
addition, rule 482 advertisements that include performance data of
open-end funds or insurance company separate accounts offering variable
annuity contracts are required to include certain standardized
performance information, information about any sales loads or other
nonrecurring fees, and a legend warning that past performance does not
guarantee future results. Such funds including performance information
in rule 482 advertisements are also required to make available to
investors month-end performance figures via website disclosure or by a
toll-free telephone number, and to disclose the availability of the
month-end performance data in the advertisement. The rule also sets
forth requirements regarding the prominence of certain disclosures,
requirements regarding advertisements that make tax representations,
requirements regarding advertisements used prior to the effectiveness
of the fund's registration statement, requirements regarding the
timeliness of performance data, and certain required disclosures by
money market funds.
Rule 482 advertisements must be filed with the Commission or, in
the alternative, with the Financial Industry Regulatory Authority
(``FINRA'').\2\ This information collection differs from many other
federal information collections that are primarily for the use and
benefit of the collecting agency.
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\2\ See note to rule 482(h) under the Securities Act, which
states that ``these advertisements, unless filed with [FINRA], are
required to be filed in accordance with the requirements of Sec.
230.497.'' See also rule 24b-3 under the Investment Company Act (17
CFR 270.24b-3), which provides that any sales material, including
rule 482 advertisements, shall be deemed filed with the Commission
for purposes of Section 24(b) of the Investment Company Act upon
filing with FINRA.
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Rule 482 contains requirements that are intended to encourage the
provision to investors of information that is balanced and informative,
particularly
[[Page 25500]]
in the area of investment performance. The Commission is concerned that
in the absence of such provisions fund investors may be misled by
deceptive rule 482 advertisements and may rely on less-than-adequate
information when determining in which funds they should invest money.
As a result, the Commission believes it is beneficial for funds to
provide investors with balanced information in fund advertisements in
order to allow investors to make better-informed decisions.
The Commission estimates that 41,265 \3\ responses to rule 482 are
filed annually by 2,877 investment companies offering approximately
12,476 portfolios, or approximately 3.3 responses per portfolio
annually.\4\ The burden associated with rule 482 is presently estimated
to be 5.16 hours per response. The annual hourly burden is therefore
approximately 212,927 hours.\5\
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\3\ This estimated number of responses to rule 482 is composed
of 41,003 responses filed with FINRA and 262 responses filed with
the Commission in 2019.
\4\ 41,265 responses / 12,476 portfolios = 3.3 responses per
portfolio.
\5\ 41,265 responses x 5.16 hours per response = 212,927 hours.
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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. The provision of information under rule 482
is necessary to obtain the benefits of the safe harbor offered by the
rule. The information provided under rule 482 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 the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency'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 in writing within 60
days of this publication.
Please direct your written comments to David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, C/O Cynthia
Roscoe, 100 F Street NE, Washington, DC 20549; or send an email to:
[email protected].
Dated: April 28, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09300 Filed 4-30-20; 8:45 am]
BILLING CODE 8011-01-P