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10498 Federal Register / Vol. 73, No.

39 / Wednesday, February 27, 2008 / Notices

5. Governors’ Executive Session— directors (including a majority of the 17a–6. An agency may not conduct or
Discussion of prior agenda items and directors who are not interested persons sponsor, and a person is not required to
Board Governance. of the fund) finds to be not material. A respond to, a collection of information
CONTACT PERSON FOR MORE INFORMATION: board making this finding is required to unless it displays a currently valid
Wendy A. Hocking, Secretary of the record the basis for the finding in its control number.
Board, U.S. Postal Service, 475 L’Enfant meeting minutes. This recordkeeping Written comments are invited on: (a)
Plaza, SW., Washington, DC 20260– requirement is a collection of Whether the proposed collection of
1000. Telephone (202) 268–4800. information under the rule. information is necessary for the proper
The rule is designed to permit performance of the functions of the
Wendy A. Hocking, transactions between funds and their agency, including whether the
Secretary. portfolio affiliates in circumstances in information will have practical utility;
[FR Doc. 08–890 Filed 2–25–08; 3:50 pm] which it is unlikely that the affiliate (b) the accuracy of the agency’s estimate
BILLING CODE 7710–12–M would be in a position to take advantage of the burden of the collection of
of the fund. In determining whether a information; (c) ways to enhance the
financial interest is ‘‘material,’’ the quality, utility, and clarity of the
SECURITIES AND EXCHANGE board of the fund should consider information collected; and (d) ways to
COMMISSION whether the nature and extent of the minimize the burden of the collection of
interest in the transaction is sufficiently information on respondents, including
Proposed Collection; Comment small that a reasonable person would through the use of automated collection
Request not believe that the interest affected the techniques or other forms of information
determination of whether to enter into technology. Consideration will be given
Upon Written Request, Copies Available the transaction or arrangement or the
From: Securities and Exchange to comments and suggestions submitted
terms of the transaction or arrangement. in writing within 60 days of this
Commission, Office of Investor The information collection requirements
Education and Advocacy, publication.
in rule 17a–6 are intended to ensure that Please direct your written comments
Washington, DC 20549–0213 Commission staff can review, in the
Extension: to R. Corey Booth, Director/Chief
Rule 17a–6; SEC File No. 270–506; OMB course of its compliance and Information Officer, Securities and
Control No. 3235–0564 examination functions, the basis for a Exchange Commission, C/O Shirley
board of directors’ finding that the Martinson, 6432 General Green Way,
Notice is hereby given that pursuant financial interest of an otherwise
to the Paperwork Reduction Act of 1995 Alexandria, VA 22312; or send an e-
prohibited participant in a party to a mail to: PRA_Mailbox@sec.gov.
(44 U.S.C. 3501) the Securities and transaction with a portfolio affiliate is
Exchange Commission (the Dated: February 19, 2008.
not material.
‘‘Commission’’) is soliciting comments Based on analysis of past filings, Florence E. Harmon,
on the collections of information Commission staff estimates that 148 Deputy Secretary.
summarized below. The Commission funds are affiliated persons of 668 [FR Doc. E8–3621 Filed 2–26–08; 8:45 am]
plans to submit these existing issuers as a result of the fund’s BILLING CODE 8011–01–P
collections of information to the Office ownership or control of the issuer’s
of Management and Budget for voting securities, and that there are
extension and approval. approximately 1,000 such affiliate SECURITIES AND EXCHANGE
Section 17(a) of the Investment relationships. Based on staff discussions COMMISSION
Company Act of 1940 (15 U.S.C. 80a) with a limited number of fund
(the ‘‘Act’’) generally prohibits affiliated representatives, we estimate that funds Proposed Collection; Comment
persons of a registered investment currently do not rely on the exemption Request
company (‘‘fund’’) from borrowing from the term ‘‘financial interest’’ with
money or other property from, or selling Upon Written Request, Copies Available
respect to any interest that the fund’s From: Securities and Exchange
or buying securities or other property to board of directors (including a majority
or from the fund, or any company that Commission, Office of Investor
of the directors who are not interested Education and Advocacy,
the fund controls. Rule 17a–6 (17 CFR persons of the fund) finds to be not
270.17a–6) permits a fund and a Washington, DC 20549–0213.
material. Accordingly, we estimate that
‘‘portfolio affiliate’’ (a company that is annually there will be no principal Extension:
an affiliated person of the fund because transactions under rule 17a–6 that will Rule 17a–10; SEC File No. 270–507; OMB
the fund controls the company, or holds Control No. 3235–0563.
result in a collection of information.
5 percent or more of the company’s The Commission requests Notice is hereby given that pursuant
outstanding voting securities) to engage authorization to maintain an inventory to the Paperwork Reduction Act of 1995
in principal transactions that would of one burden hour to ease future (44 U.S.C. 3501, et seq.) the Securities
otherwise be prohibited under section renewals of rule 17a–6’s collection of and Exchange Commission (the
17(a) of the Act under certain information analysis should funds rely ‘‘Commission’’) is soliciting comments
conditions. A fund may not rely on the on this exemption to the term ‘‘financial on the collections of information
exemption in the rule to enter into a interest’’ as defined in rule 17a–6. summarized below. The Commission
principal transaction with a portfolio The estimate of average burden hours plans to submit these existing
affiliate if certain prohibited is made solely for the purposes of the collections of information to the Office
participants (e.g., directors, officers, Paperwork Reduction Act. The estimate of Management and Budget (‘‘OMB’’) for
employees, or investment advisers of is not derived from a comprehensive or extension and approval.
jlentini on PROD1PC65 with NOTICES

the fund) have a financial interest in a even a representative survey or study of Section 17(a) of the Investment
party to the transaction. Rule 17a–6 the costs of Commission rules. Company Act of 1940 (15 U.S.C. 80a)
specifies certain interests that are not Complying with this collection of (the ‘‘Act’’), prohibits affiliated persons
‘‘financial interests,’’ including any information requirement is necessary to of a registered investment company
interest that the fund’s board of obtain the benefit of relying on rule (‘‘fund’’) from borrowing money or other

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Federal Register / Vol. 73, No. 39 / Wednesday, February 27, 2008 / Notices 10499

property from, or selling or buying Based on discussions with industry Alexandria, VA 22312; or send an e-
securities or other property to or from representatives, the staff estimates that mail to: PRA_Mailbox@sec.gov.
the fund, or any company that the fund it will require approximately 3 attorney Dated: February 19, 2008.
controls. Section 2(a)(3) of the Act (15 hours 5 to draft and execute additional Florence E. Harmon,
U.S.C. 80a–2(a)(3)(E)) defines ‘‘affiliated clauses in new subadvisory contracts in
Deputy Secretary.
person’’ of a fund to include its order for funds and subadvisers to be
investment advisers. Rule 17a–10 (17 able to rely on the exemptions in rule [FR Doc. E8–3622 Filed 2–26–08; 8:45 am]
CFR 270.17a–10) permits (i) a 17a–10. Because these additional BILLING CODE 8011–01–P

subadviser of a fund to enter into clauses are identical to the clauses that
transactions with funds the subadviser a fund would need to insert in their
SECURITIES AND EXCHANGE
does not advise but which are affiliated subadvisory contracts to rely on rules
COMMISSION
persons of a fund that it does advise 10f–3, 12d3–1, and 17e–1, and because
(e.g., other funds in the fund complex), we believe that funds that use one such Proposed Collection; Comment
and (ii) a subadviser (and its affiliated rule generally use all of these rules, we Request
persons) to enter into transactions and apportion this 3 hour time burden
arrangements with funds the subadviser equally among all four rules. Therefore, Upon written request, copies available
does advise, but only with respect to we estimate that the burden allocated to from: Securities and Exchange
discrete portions of the subadvised fund rule 17a–10 for this contract change Commission, Office of Investor
for which the subadviser does not would be 0.75 hours.6 Assuming that all Education and Advocacy,
provide investment advice. 600 funds that enter into new Washington, DC 20549–0213
To qualify for the exemptions in rule subadvisory contracts each year make
Extension:
17a–10, the subadvisory relationship the modification to their contract Rule 206(4)–6; SEC File No. 270–513; OMB
must be the sole reason why section required by the rule, we estimate that Control No. 3235–0571
17(a) prohibits the transaction; and the the rule’s contract modification
advisory contracts of the subadviser requirement will result in 450 burden Notice is hereby given that pursuant
entering into the transaction, and any hours annually, with an associated cost to the Paperwork Reduction Act of 1995
subadviser that is advising the of approximately $131,400.7 (44 U.S.C. 3501 et seq.) the Securities
purchasing portion of the fund, must Written comments are invited on: (a) and Exchange Commission (the
prohibit the subadvisers from consulting Whether the proposed collection of ‘‘Commission’’) is soliciting comments
with each other concerning securities information is necessary for the proper on the collections of information
transactions of the fund, and limit their performance of the functions of the summarized below. The Commission
responsibility to providing advice with agency, including whether the plans to submit these existing
respect to discrete portions of the fund’s information will have practical utility; collections of information to the Office
portfolio.1 (b) the accuracy of the agency’s estimate of Management and Budget for
The Commission staff estimates that of the burden of the collection of extension and approval.
3583 portfolios of approximately 649 information; (c) ways to enhance the The title for the collection of
fund complexes use the services of one quality, utility, and clarity of the information is ‘‘Rule 206(4)–6’’ under
or more subadvisers. Based on information collected; and (d) ways to the Investment Advisers Act of 1940 (15
discussions with industry minimize the burden of the collection of U.S.C. 80b–1 et seq.) (‘‘Advisers Act’’)
representatives, the staff estimates that information on respondents, including and the collection has been approved
it requires approximately 6 hours to through the use of automated collection under OMB Control No. 3235–0571. The
draft and execute revised subadvisory techniques or other forms of information Commission adopted rule 206(4)–6 (17
contracts allowing funds and technology. Consideration will be given CFR 275.206(4)–6), the proxy voting
subadvisers to rely on the exemptions in to comments and suggestions submitted rule, to address an investment adviser’s
rule 17a–10.2 The staff assumes that all in writing within 60 days of this fiduciary obligation to clients who have
existing funds amended their advisory publication. given the adviser authority to vote their
contracts following the adoption of rule securities. Under the rule, an
Please direct your written comments
17a–10 in 2003 that conditioned certain investment adviser that exercises voting
to R. Corey Booth, Director/Chief
exemptions upon these contractual authority over client securities is
Information Officer, Securities and
alterations, and therefore there is no required to: (i) Adopt and implement
Exchange Commission, c/o Shirley
continuing burden for those funds.3 policies and procedures that are
Based on an analysis of fund filings, Martinson, 6432 General Green Way,
reasonably designed to ensure that the
the staff estimates that approximately adviser votes securities in the best
600 fund portfolios enter into new December 2005 and December 2006. Based on
information in Commission filings, we estimate that interest of clients, including procedures
subadvisory agreements each year.4 31 percent of funds are advised by subadvisers. to address any material conflict that
5 The Commission staff’s estimates concerning the
1 See
may arise between the interest of the
17 CFR 270.17a–10(a)(2). wage rates for attorney time are based on salary
2 Rules 12d3–1, 10f–3, 17a–10, and 17e–1 require information for the securities industry compiled by
adviser and the client; (ii) disclose to
virtually identical modifications to fund advisory the Securities Industry Association. The $292 per clients how they may obtain
contracts. The Commission staff assumes that funds hour figure for an attorney is from the SIA Report information on how the adviser has
would rely equally on the exemptions in these on Management & Professional Earnings in the voted with respect to their securities;
rules, and therefore the burden hours associated Securities Industry 2006, modified to account for an
with the required contract modifications should be 1800-hour work-year and multiplied by 5.35 to
and (iii) describe to clients the advisers’
apportioned equally among the four rules. account for bonuses, firm size, employee benefits proxy voting policies and procedures
3 We assume that funds formed after 2002 that and overhead. and, on request, furnish a copy of the
jlentini on PROD1PC65 with NOTICES

intended to rely on rule 17a–10 would have 6 This estimate is based on the following
policies and procedures to the
included the required provision as a standard calculation (3 hours ÷ 4 rules = .75 hours). requesting client. The rule is designed
element in their initial subadvisory contracts. 7 These estimates are based on the following
4 The use of subadvisers has grown rapidly over calculations: (0.75 hours × 600 portfolios = 450
to assure that advisers that vote proxies
the last several years, with approximately 600 burden hours); ($292 per hour × 450 hours = for their clients vote those proxies in
portfolios that use subadvisers registering between $131,400 total cost). their clients’ best interest and provide

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