Upon Written Request, Copies Available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549.
Extension: Rule 206(4)-2, SEC File No. 270-217, OMB Control No. 3235-0241.
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 (“Commission”) has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below.
Rule 206(4)-2 governs the custody or possession of funds or securities by Commission-registered investment advisers. Rule 206(4)-2 makes it a fraudulent, deceptive or manipulative act, practice or course of business for any investment adviser who has custody or possession of funds or securities of its clients to do any act or take any action with respect to any such funds or securities unless (1) the securities are properly segregated and safely kept; (2) the funds are held in one or more specially designated client accounts with the adviser named as trustee; (3) the adviser promptly notifies the client as to the place and manner of safekeeping; (4) the adviser sends a detailed written statement to each client at least once every three months; and (5) at least once each year, on an unannounced basis, an independent public accountant verifies by actual examination the clients' funds and securities and files a certificate with the Commission describing the examination. The rule does not apply to an investment adviser that is also registered as a broker-dealer under the Securities Exchange Act of 1934, provided the adviser is in compliance with Rule 15c3-1 under the Exchange Act, or, if a member of an exchange, in compliance with exchange requirements with respect to financial responsibility and the segregation of funds or securities carried for the account of customers.
The Commission uses the information required by Rule 206(4)-2 in connection with its investment adviser examination program to ensure that advisers are in compliance with the rule. Clients also use the information required by paragraphs (3) and (4) of the rule. Without the information collected under the rule, the Commission would be less efficient and effective in its inspection program and clients would not have information valuable for monitoring an adviser's handling of their accounts.
The respondents to this information collection are investment advisers registered with the Commission (except those that are also registered as broker-dealers) and that have custody of clients' funds or securities. The Commission estimates that 173 advisers would be subject to Rule 206(4)-2.
The number of responses under Rule 206(4)-2 will vary considerably depending on the number of clients for which an adviser has custody or possession of funds or securities. It is estimated that the average number of responses annually, 250, and the average time of .5 hours per response, would remain the same. The total time burden for each respondent is estimated to be the same—125 hours. The annual aggregate burden for all respondents to the requirements of Rule 206(4)-2 is estimated to be 21,625 hours.
This collection of information is found at 17 CFR 275.206(4)-2 and is mandatory Commission-registered investment advisers are required to maintain and preserve certain information required under Rule 206(4)-2 for five year. The long-term retention of these records is necessary for the Commission's examination program to ascertain compliance with the Investment Advisers Act.
The estimated average burden hours are made solely for the purposes of Paperwork Reduction Act and are not derived from a comprehensive or even representative survey or study of the cost of Commission rules and forms.
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 control number.
General comments regarding the above information should be directed to the following persons: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; and (ii) Michael E. Bartell, Associate Executive Director, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549. Comments must be submitted to OMB within 30 days of this notice.Start Signature
Dated: October 5, 2000.
Margaret H. McFarland,
[FR Doc. 00-26375 Filed 10-12-00; 8:45 am]
BILLING CODE 8010-01-M