Quiero saber acerca de...

30644

Federal Register / Vol. 86, No. 109 / Wednesday, June 9, 2021 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
205492736
Extension:
Rule 12d11, SEC File No. 270526, OMB
Control No. 32350584

lotter on DSK11XQN23PROD with NOTICES1

Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995
44 U.S.C. 3501 et seq., 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.
An investment company fund is generally limited in the amount of securities the fund acquiring fund can acquire from another fund acquired fund. Section 12d of the Investment Company Act of 1940 the Investment Company Act or Act 1
provides that a registered fund and companies it controls cannot:
Acquire more than three percent of another funds securities;
invest more than five percent of its own assets in another fund; or invest more than ten percent of its own assets in other funds in the aggregate.2
In addition, a registered open-end fund, its principal underwriter, and any registered broker or dealer cannot sell that funds shares to another fund if, as a result:
The acquiring fund and any companies it controls owns more than three percent of the acquired funds stock; or all acquiring funds and companies they control in the aggregate own more than ten percent of the acquired funds stock.3
Rule 12d11 under the Act provides an exemption from these limitations for cash sweep arrangements in which a fund invests all or a portion of its available cash in a money market fund rather than directly in short-term instruments.4 An acquiring fund relying on the exemption may not pay a sales load, distribution fee, or service fee on acquired fund shares, or if it does, the 1 See
15 U.S.C. 80a.
15 U.S.C. 80a12d1A. If an acquiring fund is not registered, these limitations apply only with respect to the acquiring funds acquisition of registered funds.
3 See 15 U.S.C. 80a12d1B.
4 See 17 CFR 270.12d11.
2 See
VerDate Sep<11>2014

18:13 Jun 08, 2021

Jkt 253001

acquiring funds investment adviser must waive a sufficient amount of its advisory fee to offset the cost of the loads or distribution fees.5 The acquired fund may be a fund in the same fund complex or in a different fund complex.
In addition to providing an exemption from section 12d1 of the Act, the rule provides exemptions from section 17a of the Act and rule 17d1 thereunder, which restrict a funds ability to enter into transactions and joint arrangements with affiliated persons.6 These provisions would otherwise prohibit an acquiring fund from investing in a money market fund in the same fund complex,7 and prohibit a fund that acquires five percent or more of the securities of a money market fund in another fund complex from making any additional investments in the money market fund.8
The rule also permits a registered fund to rely on the exemption to invest in an unregistered money market fund that limits its investments to those in which a registered money market fund may invest under rule 2a7 under the Act, and undertakes to comply with all the other provisions of rule 2a7.9 In addition, the acquiring fund must reasonably believe that the unregistered money market fund i operates in compliance with rule 2a7, ii complies with sections 17a, d, e, 18, and 22e of the Act 10 as if it were a registered open-end fund, iii has adopted procedures designed to ensure that it complies with these statutory provisions, iv maintains the records required by rules 31a1b1, 31a 1b2ii, 31a1b2iv, and 31a 5 See
rule 12d11b1.
15 U.S.C. 80a17a, 15 U.S.C. 80a17d; 17
CFR 270.17d1.
7 An affiliated person of a fund includes any person directly or indirectly controlling, controlled by, or under common control with such other person. See 15 U.S.C. 80a2a3 definition of affiliated person. Most funds today are organized by an investment adviser that advises or provides administrative services to other funds in the same complex. Funds in a fund complex are generally under common control of an investment adviser or other person exercising a controlling influence over the management or policies of the funds. See 15
U.S.C. 80a2a9 definition of control. Not all advisers control funds they advise. The determination of whether a fund is under the control of its adviser, officers, or directors depends on all the relevant facts and circumstances. See Investment Company Mergers, Investment Company Act Release No. 25259 Nov. 8, 2001 66
FR 57602 Nov. 15, 2001, at n.11. To the extent that an acquiring fund in a fund complex is under common control with a money market fund in the same complex, the funds would rely on the rules exemptions from section 17a and rule 17d1.
8 See 15 U.S.C. 80a2a3A, B.
9 See 17 CFR 270.2a7.
10 See 15 U.S.C. 80a17a, 15 U.S.C. 80a17d, 15 U.S.C. 80a17e, 15 U.S.C. 80a18, 15 U.S.C.
80a22e.
6 See
PO 00000

Frm 00059

Fmt 4703

Sfmt 4703

1b9; 11 and v preserves permanently, the first two years in an easily accessible place, all books and records required to be made under these rules.
Rule 2a7 contains certain collection of information requirements. An unregistered money market fund that complies with rule 2a7 would be subject to these collection of information requirements. In addition, the recordkeeping requirements under rule 31a1 with which the acquiring fund reasonably believes the unregistered money market fund complies are collections of information for the unregistered money market fund.
The adoption of procedures by unregistered money market funds to ensure that they comply with sections 17a, d, e, 18, and 22e of the Act also constitute collections of information. By allowing funds to invest in registered and unregistered money market funds, rule 12d11 is intended to provide funds greater options for cash management. In order for a registered fund to rely on the exemption to invest in an unregistered money market fund, the unregistered money market fund must comply with certain collection of information requirements for registered money market funds. These requirements are intended to ensure that the unregistered money market fund has established procedures for collecting the information necessary to make adequate credit reviews of securities in its portfolio, as well as other recordkeeping requirements that will assist the acquiring fund in overseeing the unregistered money market fund and Commission staff in its examination of the unregistered money market funds adviser.
The number of unregistered money market funds that are affected by rule 12d11 is an estimate based on the number of private liquidity funds reported on Form PF as of the fourth calendar quarter 2019.12 The hour burden estimates for the condition that an unregistered money market fund comply with rule 2a7 are based on the burden hours included in the Commissions 2019 PRA extension regarding rule 2a7.13 However, we 11 See 17 CFR 270.31a1b1, 17 CFR 270.31a 1b2ii, 17 CFR 270.31a1b2 iv, 17 CFR
270.31a1b9.
12 See the U.S. Securities and Exchange Commissions Division of Investment ManagementAnalytics Office Private Funds Statistics, Fourth Calendar Quarter Oct. 2, 2020
available at https www.sec.gov/divisions/
investment/private-funds-statistics/private-fundsstatistics-2019-q4.pdf.
13 See Securities and Exchange Commission, Request for OMB Approval of Extension for Approved Collection for Rule 2a7 under the
E:FRFM09JNN1.SGM

09JNN1