[Federal Register: February 15, 2008 (Volume 73, Number 32)]
[Proposed Rules]
[Page 8975-8982]
[DOCID:fr15fe08-22]

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Part III

Securities and Exchange Commission

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17 CFR Parts 249 and 274

Disclosure of Divestment by Registered Investment Companies in
Accordance With Sudan Accountability and Divestment Act of 2007;
Proposed Rule

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 249 and 274

[Release Nos. 34-57306; IC-28148; File No. S7-02-08]
RIN 3235-AK05

Disclosure of Divestment by Registered Investment Companies in
Accordance With Sudan Accountability and Divestment Act of 2007

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Securities and Exchange Commission is proposing amendments
to its forms under the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 that would require disclosure by a
registered investment company that divests, in accordance with the
Sudan Accountability and Divestment Act of 2007, from securities of
issuers that the investment company determines, using credible
information that is available to the public, conduct or have direct
investments in certain business operations in Sudan. The Sudan
Accountability and Divestment Act limits civil, criminal, and
administrative actions that may be brought against a registered
investment company that divests itself from such securities, provided
that the investment company makes disclosures in accordance with
regulations prescribed by the Commission.

DATES: Comments should be submitted on or before March 17, 2008.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml.
);     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number S7-02-08 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov
). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number S7-02-08. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments

also are available for public inspection and copying in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Devin F. Sullivan, Attorney, Office of
Disclosure Regulation, Division of Investment Management, at (202) 551-
6784, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-5720.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission
(``Commission'') is proposing for comment amendments to Form N-CSR \1\
and Form N-SAR \2\ under the Securities Exchange Act of 1934
(``Exchange Act'') \3\ and the Investment Company Act of 1940
(``Investment Company Act'').\4\
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    \1\ 17 CFR 294.331 and 274.128.
    \2\ 17 CFR 294.330 and 274.101.
    \3\ 15 U.S.C. 78a et seq.
    \4\ 15 U.S.C. 80a-1 et seq.
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I. Discussion

    We are proposing amendments to Form N-CSR and Form N-SAR that
would, if adopted, require disclosure by a registered investment
company that divests, in accordance with the Sudan Accountability and
Divestment Act of 2007 (``Sudan Divestment Act''),\5\ from securities
of issuers that the investment company determines conduct or directly
invest in certain business operations in Sudan.
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    \5\ Pub. L. 110-174, 121 Stat. 2516 (2007).
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The Sudan Divestment Act

    On December 31, 2007, the President signed the Sudan Divestment Act
into law. Among other things, the Sudan Divestment Act provides that no
person may bring any civil, criminal, or administrative action against
any registered investment company, or any employee, officer, director,
or investment adviser of the investment company, based solely upon the
investment company divesting from, or avoiding investing in, securities
issued by persons that the investment company determines, using
credible information that is available to the public, conduct or have
direct investments in certain business operations in Sudan.\6\ This
limitation on actions does not apply to a registered investment
company, or any of its employees, officers, directors, or investment
advisers, unless the investment company makes disclosures about the
divestments in accordance with regulations prescribed by the
Commission.\7\ To that end, the Sudan Divestment Act requires us to
prescribe regulations not later than 120 days after enactment that
require disclosure by each registered investment company that divests
itself of securities in accordance with the Act. The Sudan Divestment
Act states that these rules shall require this disclosure to be
included in the next periodic report filed under Section 30 of the
Investment Company Act following the divestment.\8\
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    \6\ Section 4(a) of the Sudan Divestment Act [to be codified at
15 U.S.C. 80a-13(c)(1)].
    \7\ Section 4(a) of the Sudan Divestment Act [to be codified at
15 U.S.C. 80a-13(c)(2)(B)].
    \8\ Section 4(b) of the Sudan Divestment Act.
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Proposed Amendments

    To implement the Sudan Divestment Act, we are proposing to require
each registered investment company that divests securities in
accordance with the Sudan Divestment Act to disclose the divestment on
the next Form N-CSR or Form N-SAR that it files following the
divestment. Management investment companies would provide the
disclosure on Form N-CSR, and unit investment trusts would provide the
disclosure on Form N-SAR.\9\ We are proposing to require disclosure of
information that would identify the securities divested and the
magnitude of the divestment. This would include the issuer's name;
exchange ticker symbol; Committee on Uniform Securities Identification
Procedures (``CUSIP'') number; total number of shares or, for debt
securities, principal amount divested; and dates that the securities
were divested.\10\ In addition, if the registered investment company
continues to hold any securities of the divested issuer, it would be
required to disclose the exchange ticker symbol; CUSIP number; and
total number of shares or, for debt securities, principal amount of
such securities, held on the date of filing.\11\ This requirement is

intended to provide information about whether or not a registered
investment company has a continuing position in the issuer whose
securities were divested.
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    \9\ Proposed Item 6(b) of Form N-CSR; proposed Item 133 of Form
N-SAR.
    \10\ Proposed Item 6(b)(1)-(5) of Form N-CSR; proposed Item
133.A.-E. of Form N-SAR. We are also proposing technical amendments
to Form N-SAR to change cross-references to Item 132 to reflect the
addition of Item 133.
    \11\ Proposed Item 6(b)(6) of Form N-CSR; proposed Item 133.F.
of Form N-SAR.
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    Proposed Instructions to Form N-CSR and Form N-SAR clarify that
while a registered investment company is not required to disclose
divestments of securities of an issuer that conducts or has direct
investments in certain business operations in Sudan, the limitation on
actions provided in the Sudan Divestment Act does not apply with
respect to a divestment that is not disclosed.\12\
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    \12\ Proposed Instruction 1. to proposed Item 6(b) of Form N-
CSR; proposed Instructions to Item 133 of Form N-SAR.
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    In addition, proposed Instructions to Form N-CSR and Form N-SAR
state that a registered investment company that divests securities in
accordance with the Sudan Divestment Act during the period that begins
on the fifth business day before the date of filing a Form N-CSR or
Form N-SAR and ends on the date of filing may disclose the divestment
in either that filing or an amendment thereto. The amendment would be
required to be filed not later than five business days after the date
of filing the Form N-CSR or Form N-SAR.\13\ This flexibility is
intended to lessen the compliance burdens associated with divestment
transactions that occur shortly before a registered investment company
files a Form N-CSR or Form N-SAR.
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    \13\ Proposed Instruction 2. to proposed Item 6(b) of Form N-
CSR; proposed Instructions to Item 133 of Form N-SAR.
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    Finally, the proposed Instructions provide that, for purposes of
determining when a divestment should be reported, if a registered
investment company divests its holdings in a particular security in a
related series of transactions, the company may deem the divestment to
occur at the time of the final transaction in the series.\14\ As a
result, a registrant could choose either to report each transaction in
the next Form N-CSR or Form N-SAR filed following the individual
transaction or to report the entire series of transactions in the next
Form N-CSR or Form N-SAR filed following the final transaction in the
series. This flexibility is intended to reduce opportunities for third
parties to exploit information about ongoing divestments through
predatory trading practices, such as trading ahead of, or ``front-
running,'' a registered investment company's divestment. The proposed
Instructions require a registered investment company that chooses to
report the entire series of transactions following the final
transaction to separately state each date on which securities were
divested and the total number of shares or, for debt securities,
principal amount divested, on each such date. This is intended to
ensure that that the same information will be disclosed whether the
series of transactions is reported in multiple filings after each
transaction or on a single filing after the entire related series of
transactions that comprises the divestment is complete.
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    \14\ Proposed Instruction 3. to proposed Item 6(b) of Form N-
CSR; proposed Instructions to Item 133 of Form N-SAR.
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II. Request for Comments

    The Commission requests comment on the amendments proposed in this
release, whether any further changes to our rules or forms are
necessary or appropriate to implement the objectives of our proposed
amendments, and on other matters that might have an effect on the
proposals contained in this release, including the following:
     Are Form N-CSR and Form N-SAR the appropriate locations
for disclosure? Should registered investment companies include
disclosure about divestments in accordance with the Sudan Divestment
Act in reports that are provided directly to shareholders instead of,
or in addition to, including it in Form N-CSR and Form N-SAR, which are
filed with the Commission and publicly available but not provided
directly to shareholders?
     What information should we require registered investment
companies to disclose about divestments in accordance with the Sudan
Divestment Act? Is any of the information that we propose to require
unnecessary? Should we require disclosure of any other information?
     Should we require a registered investment company to make
the proposed disclosures about securities of an issuer that it retains
after divesting other securities of that issuer?
     The provisions of the Sudan Divestment Act concerning
registered investment company divestments terminate 30 days after the
President certifies to Congress that the Government of Sudan has
undertaken certain actions.\15\ Should the proposed amendments to Form
N-CSR and Form N-SAR include a similar sunset provision? Or is this
unnecessary because, for example, following any such termination under
the Sudan Divestment Act, there could no longer be divestments in
accordance with the Sudan Divestment Act and therefore no disclosure
would be called for under the proposed amendments?
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    \15\ Section 12 of the Sudan Divestment Act.
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     Should we, as proposed, permit a registered investment
company that divests securities in accordance with the Sudan Divestment
Act during the period that begins on the fifth business day before the
date of filing a Form N-CSR or Form N-SAR and ends on the date of
filing, to disclose the divestment in either that filing or an
amendment thereto that is filed not later than five business days after
the date of filing the Form N-CSR or Form N-SAR? Should either the
period prior to filing a Form N-CSR or Form N-SAR or the period for
filing an amendment be shorter or longer, such as two business days or
10 business days?
     Should we, as proposed, permit a divestment that occurs in
a related series of transactions to be reported after the final
transaction? Should we define or limit this flexibility in any way,
e.g., by defining ``related series of transactions'' or limiting the
length of the period during which transactions may occur and be
considered ``related?''
     Should our amendments address divestments that occur after
the enactment of the Sudan Divestment Act and before the effective date
of our amendments? Should we, for example, permit a registered
investment company that makes a divestment in accordance with the Sudan
Divestment Act between December 31, 2007, and the effective date of the
amendments, and that files a Form N-CSR or Form N-SAR after the
divestment but before the effective date of the amendments, to disclose
the divestment on an amendment to that Form N-CSR or Form N-SAR filed
no later than five business days after the effective date of the
amendments? Should the period for filing the amendment be shorter or
longer, such as two business days or 10 business days after the
effective date of the amendments?

III. Paperwork Reduction Act

    The new form amendments contain ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\16\ We are submitting the proposal to the Office of
Management and Budget (``OMB'') for emergency review in accordance with
the PRA.\17\ Because the Sudan Divestment Act mandates that the
Commission prescribe regulations not later than 120 days after the date
of enactment, the Commission is requesting, pursuant to 44 U.S.C.
3507(j)(1), that OMB authorize the

collections of information no later than April 29, 2008, which is 120
days after enactment. The titles for the collections of information are
``Form N-CSR under the Investment Company Act of 1940 and Securities
Exchange Act of 1934, Certified Shareholder Report,'' and ``Form N-SAR
under the Investment Company Act of 1940, Semi-Annual Report for
Registered Investment Companies.''
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    \16\ 44 U.S.C 3501 et seq.
    \17\ 44 U.S.C. 3507(j); 5 CFR 1320.13.
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    Form N-CSR (OMB Control No. 3235-0570) under the Exchange Act and
the Investment Company Act \18\ is used by registered management
investment companies filing certified shareholder reports. Form N-SAR
(OMB Control No. 3235-0330) under the Exchange Act and the Investment
Company Act \19\ is used by registered investment companies to file
periodic reports with the Commission. 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.
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    \18\ 17 CFR 249.331 and 17 CFR 274.128.
    \19\ 17 CFR 249.330 and 17 CFR 274.101.
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A. Summary of Proposed Rules

    The Sudan Divestment Act, enacted on December 31, 2007, requires
the Commission to prescribe regulations not later than 120 days after
enactment that require disclosure by each registered investment company
that divests itself of securities in accordance with the Act.\20\ The
Sudan Divestment Act states that these rules shall require this
disclosure to be included in the next periodic report filed under
Section 30 of the Investment Company Act following the divestment.\21\
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    \20\ Section 4(b) of the Sudan Divestment Act.
    \21\ Id.
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    To implement the Sudan Divestment Act, we are proposing amendments
that would, if adopted, require each registered investment company that
divests securities in accordance with the Sudan Divestment Act to
disclose the divestment on the next Form N-CSR or Form N-SAR that it
files following the divestment. Management investment companies would
provide the disclosure on Form N-CSR, and unit investment trusts would
provide the disclosure on Form N-SAR.\22\ We are proposing to require
disclosure of information that would identify the securities divested
and the magnitude of the divestment. This would include the issuer's
name; exchange ticker symbol; CUSIP number; total number of shares or,
for debt securities, principal amount divested; and dates that the
securities were divested.\23\ In addition, if the registered investment
company continues to hold any securities of the divested issuer, it
would be required to disclose the exchange ticker symbol; CUSIP number;
and total number of shares or, for debt securities, principal amount of
such securities, held on the date of filing.\24\ Compliance with the
proposed form amendments would be necessary to obtain the benefit of
the limitation on civil, criminal, and administrative actions provided
in the Sudan Divestment Act. The information provided will not be kept
confidential.
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    \22\ Proposed Item 6(b) of Form N-CSR; proposed Item 133 of Form
N-SAR.
    \23\ Proposed Item 6(b)(1)-(5) of Form N-CSR; proposed Item
133.A.-E. of Form N-SAR.
    \24\ Proposed Item 6(b)(6) of Form N-CSR; proposed Item 133.F.
of Form N-SAR.
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B. Reporting and Cost Burden Estimates

    The compliance burden estimates for the proposed collections of
information are based on several assumptions. The compliance burden for
the proposed amendments to Form N-CSR and Form N-SAR would be the
reporting burden of collecting information necessary to make the
disclosures under new Item 6(b) of Form N-CSR and new Item 133 of Form
N-SAR. We estimate that the new collections of information would result
in an increase of one-half burden hour per filing. Further, we believe
that the number of registered investment companies that hold securities
in companies conducting or directly investing in certain business
operations in Sudan, and that will divest from these securities in
accordance with the Sudan Divestment Act, will be relatively small. We
estimate that approximately 15% of all registered investment company
portfolios have an objective of investing internationally.\25\ Based on
a conservative assumption that each of these portfolios will make a
divestment in accordance with the Sudan Divestment Act prior to each
filing it makes on Form N-CSR or Form N-SAR, we estimate that
approximately 15% of the filings on Form N-CSR and Form N-SAR will
include disclosures of divestments in accordance with the Sudan
Divestment Act. We request comment on these estimates.
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    \25\ This estimate is based on analysis done by the Division of
Investment Management staff of publicly available data.
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    Based on a burden hour estimate of one-half hour per filing for
each respondent that makes disclosures under the proposed amendments,
we estimate that registered management investment companies filing Form
N-CSR will incur approximately 510 annual burden hours,\26\ and unit
investment trusts will incur approximately 10 annual burden hours,\27\
to comply with the proposed form amendments.
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    \26\ 6,743 annual and semi-annual filings on Form N-CSR x 15% of
filings on Form N-CSR x \1/2\ burden hour = approximately 510 total
burden hours (rounded to the nearest 10).
    \27\ 90 filings on Form N-SAR x 15% of filings on Form N-SAR x
\1/2\ burden hour = approximately 10 total burden hours (rounded to
the nearest 10).
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    The total annual burden hours for Form N-CSR, revised to include
the burden hours expected from the proposed form amendments, are
estimated to be 138,662.5 burden hours, an increase of 510 burden hours
from the current annual burden of 138,152.5 hours. The total annual
burden hours for Form N-SAR, revised to include the burden hours
expected from the proposed form amendments, are estimated to be 107,213
burden hours, an increase of 10 burden hours from the current annual
burden of 107,203 hours.

C. Request for Comment

    We request comments to: (a) Evaluate whether the proposed
amendments to our existing information collections are necessary for
the proper performance of the functions of the Commission, including
whether the information will have practical utility; (b) evaluate the
accuracy of our estimates of the burden of the proposed form
amendments; (c) determine whether there are ways to enhance the
quality, utility, and clarity of the information to be collected; and
(d) evaluate whether there are ways to minimize the burden of the
proposals on those who respond, including through the use of automated
collection techniques or other forms of information technology.
    Persons submitting comments on the collection of information
requirements should direct the comments to the Office of Management and
Budget, Attention: Desk Officer for the Securities and Exchange
Commission, Office of Information and Regulatory Affairs, Washington,
DC 20503, and should send a copy to Nancy M. Morris, Secretary,
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090, with reference to File No. S7-02-08. Requests for materials
submitted to OMB by the Commission with regard to these collections of
information should be in writing, refer to File No. S7-02-08, and be
submitted to the Securities and Exchange Commission, Public Reference
Room, 100 F Street, NE., Washington, DC 20549-1520. We have requested,
pursuant to 44 U.S.C. 3507(j), that OMB authorize the collections of
information not later than April 29, 2008.

IV. Cost/Benefit Analysis

    The Commission is sensitive to the costs and benefits imposed by
its rules. Our proposed amendments to Form N-CSR and Form N-SAR would,
if adopted, require each registered investment company that divests
securities in accordance with the Sudan Divestment Act to disclose the
divestment on the next Form N-CSR or Form N-SAR that it files following
the divestment.

A. Benefits

    In proposing these form amendments, we intend to implement the
Sudan Divestment Act's mandate for rulemaking by the Commission. The
proposed amendments meet the Sudan Divestment Act's directive that the
Commission ``prescribe regulations, in the public interest and for the
protection of investors, to require disclosure by each registered
investment company that divests itself of securities in accordance with
section 13(c) of the Investment Company Act of 1940.'' \28\ Disclosure
under the proposed form amendments would make applicable to a
registered investment company, and its employees, officers, directors,
and investment advisers, the limitation on actions provided by the
Sudan Divestment Act. The proposed amendments also would make important
information about divestments in accordance with the Sudan Divestment
Act available to investors, including information identifying the
securities divested, the dates of divestment, and any securities of the
issuer that the registered investment company continues to hold.
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    \28\ Section 4(b) of the Sudan Divestment Act.
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    We request comment on these and any other potential benefits.

B. Costs

    While the proposed form amendments may lead to some additional
costs for registered investment companies, we believe that these costs
should be minimal. Our proposed amendments to Form N-CSR and Form N-SAR
would, if adopted, require each registered investment company that
divests securities in accordance with the Sudan Divestment Act to
disclose the divestment on the next Form N-CSR or Form N-SAR that it
files following the divestment. Registered investment companies retain
records of securities transactions that, we believe, would permit them
to readily identify and disclose, for divestments made in accordance
with the Sudan Divestment Act, the securities divested, the dates of
divestment, and any securities of the issuer retained by the investment
company. Further, to ease the burden of information collection and
disclosure, we have included a proposed instruction in Form N-CSR and
Form N-SAR stating that a registered investment company that divests
securities in accordance with the Sudan Divestment Act during the
period that begins on the fifth business day before the date of filing
a Form N-CSR or Form N-SAR and ends on the date of filing may disclose
the divestment in either that filing or an amendment thereto that is
filed not later than five business days after the date of filing the
Form N-CSR or Form N-SAR.\29\ We believe that this flexibility may
lessen the compliance burdens associated with reporting divestments
that occur shortly before a registered investment company files a Form
N-CSR or Form N-SAR.
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    \29\ Proposed Instruction 2. to proposed Item 6(b) of Form N-
CSR; proposed Instructions to Item 133 of Form N-SAR.
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    For purposes of the PRA, we estimate that it would take
approximately 510 annual burden hours \30\ to comply with the proposed
amendments to Form N-CSR and approximately 10 annual burden hours \31\
to comply with the proposed amendments to Form N-SAR, for an aggregate
of approximately 520 total annual burden hours to comply with the
proposed form amendments. We estimate that this additional burden would
equal total costs of approximately $145,000 annually.\32\ We believe
that the potential, incremental costs of disclosing divestments in
accordance with the Sudan Divestment Act on Form N-CSR and Form N-SAR
are justified by the fact that such disclosures would make applicable
to a registered investment company, and its employees, officers,
directors, and investment advisers, the limitation on actions provided
by the Sudan Divestment Act. These disclosures also would make
important information about divestments in accordance with the Sudan
Divestment Act available to investors, including information
identifying the securities divested, the dates of divestment, and any
securities of the issuer that the registered investment company
continues to hold.
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    \30\ See supra note 26.
    \31\ See supra note 27.
    \32\ This cost increase is estimated by multiplying the total
annual hour burden (520 hours) by the estimated hourly wage rate of
$279.50 and rounding to the nearest 1,000. The estimated wage figure
is based on published rates for compliance attorneys and senior
programmers, modified to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, yielding effective hourly rates of $270 and
$289, respectively. See Securities Industry Association, Report on
Management & Professional Earnings in the Securities Industry 2007
(Sept. 2007). The estimated wage rate is further based on the
estimate that attorneys and programmers would divide time equally,
resulting in a weighted wage rate of $279.50 (($270 x .50) + ($289 x
.50)).
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    We request comment on the magnitude of these potential costs,
including our estimates, and whether there are any other additional
potential costs.

C. Request for Comments

    We request comment on all aspects of this cost-benefit analysis,
including identification of any additional costs or benefits of, or
suggested alternatives to, the proposed form amendments. Commenters are
requested to provide empirical data and other factual support for their
views to the extent possible.

V. Consideration of Burden on Competition; Promotion of Efficiency,
Competition, and Capital Formation

    Section 23(a)(2) of the Exchange Act \33\ requires us, when
adopting rules under the Exchange Act, to consider the impact that any
new rule would have on competition. Section 23(a)(2) also prohibits us
from adopting any rule that would impose a burden on competition not
necessary or appropriate in furtherance of the purposes of the Exchange
Act. In addition, Section 2(c) of the Investment Company Act,\34\
Section 2(b) of the Securities Act of 1933,\35\ and Section 3(f) of the
Exchange Act \36\ require the Commission, when engaging in rulemaking
that requires it to consider or determine whether an action is
necessary or appropriate in the public interest, to consider, in
addition to the protection of investors, whether the action will
promote efficiency, competition, and capital formation.
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    \33\ 15 U.S.C. 78w(a)(2).
    \34\ 15 U.S.C. 80a-2(c).
    \35\ 15 U.S.C. 77b(b).
    \36\ 15 U.S.C. 78c(f).
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    The proposed form amendments are intended to implement the Sudan
Divestment Act's requirement that we prescribe regulations not later
than 120 days after enactment that require disclosure by each
registered investment company that divests itself of securities in
accordance with the Act. Disclosure provided in response to the
proposed amendments would make applicable to a registered investment
company, and its employees, officers, directors, and investment
advisers, the limitation on actions provided by the Sudan Divestment
Act. These disclosures also would make important information about
divestments in accordance with the Sudan Divestment Act available to
investors, including information identifying the securities divested,
the

dates of divestment, and any securities of the issuer that the
registered investment company continues to hold.
    These proposed amendments may improve efficiency. Disclosure
provided in response to the proposed amendments, if adopted, could
increase efficiency at registered investment companies by making
applicable to a registered investment company, and its employees,
officers, directors, and investment advisers, the limitation on actions
provided by the Sudan Divestment Act. These disclosures also could
promote efficiency because they make important information about
divestments in accordance with the Sudan Divestment Act available to
investors, including information identifying the securities divested,
the dates of divestment, and any securities of the issuer that the
registered investment company continues to hold. Making such
information available to investors may enable them to make more
informed investment decisions.
    The proposed amendments may promote competition. We anticipate that
our proposed form amendments may promote competition because they may
make it easier for registered investment companies to choose whether or
not to offer portfolios that include holdings in companies that conduct
or directly invest in certain business operations in Sudan. Thus, the
proposed form amendments may facilitate competition by making it easier
for registered investment companies to offer different types of
portfolios that appeal to different investors. We do not anticipate
that the proposed amendments will impose a measurable burden on
competition. We also do not anticipate that the proposed form
amendments will have a significant impact on capital formation.
    We request comment on whether the proposed form amendments, if
adopted, would promote efficiency, competition, and capital formation.
We also request comment on whether the proposed amendments would impose
a burden on competition. Commenters are requested to provide empirical
data and other factual support for their views if possible.

VI. Initial Regulatory Flexibility Analysis

    This Initial Regulatory Flexibility Analysis (``Analysis'') has
been prepared in accordance with the Regulatory Flexibility Act.\37\ It
relates to the Commission's proposed form amendments under the Exchange
Act and the Investment Company Act that would require each registered
investment company that divests securities in accordance with the Sudan
Divestment Act to disclose the divestment on the next Form N-CSR or
Form N-SAR that it files following the divestment.
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    \37\ 5 U.S.C. 601 et seq.
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A. Reasons for, and Objectives of, Proposed Amendments

    The purpose of the proposed form amendments is to implement the
Sudan Divestment Act's requirement that the Commission adopt rules
requiring disclosure of divestments made in accordance with the Act.
Disclosure provided in response to the proposed amendments would make
applicable to a registered investment company, and its employees,
officers, directors, and investment advisers, the limitation on actions
provided by the Sudan Divestment Act. These disclosures also would make
important information about divestments in accordance with the Sudan
Divestment Act available to investors, including information
identifying the securities divested, the dates of divestment, and any
securities of the issuer that the registered investment company
continues to hold.

B. Legal Basis

    The Commission is proposing amendments to Forms N-CSR and N-SAR
pursuant to authority set forth in Sections 10(b), 13, 15(d), 23(a),
and 36 of the Exchange Act [15 U.S.C. 78j(b), 78m, 78o(d), 78w(a), and
78mm] and Sections 8, 13(c), 24(a), 30, and 38 of the Investment
Company Act [15 U.S.C. 80a-8, 80a-13(c), 80a-24(a), 80a-29, and 80a-
37].

C. Small Entities Subject to the Rule

    The proposed form amendments would affect registered investment
companies that are small entities. For purposes of the Regulatory
Flexibility Act, an investment company is a small entity if it,
together with other investment companies in the same group of related
investment companies, has net assets of $50 million or less as of the
end of its most recent fiscal year.\38\ Approximately 160 registered
investment companies currently meet this definition.\39\
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    \38\ 17 CFR 270.0-10.
    \39\ This estimate is based on analysis by the Division of
Investment Management staff of publicly available data.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    The proposed amendments to Form N-CSR and Form N-SAR would, if
adopted, require each registered investment company that divests
securities in accordance with the Sudan Divestment Act to disclose the
divestment on the next Form N-CSR or Form N-SAR that it files following
the divestment.
    For purposes of the PRA, we estimate that it would take
approximately 510 annual burden hours to comply with the proposed
amendments to Form N-CSR and approximately 10 annual burden hours to
comply with the proposed amendments to Form N-SAR, for an aggregate of
approximately 520 total annual burden hours to comply with the proposed
form amendments. We estimate that this additional burden would equal
total costs of approximately $145,000 annually.

E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe that there are no rules that duplicate, overlap, or
conflict with the proposed amendments.

F. Agency Action to Minimize the Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant
alternatives that would accomplish our stated objective, while
minimizing any significant adverse impact on small issuers. In
connection with the proposed amendments, the Commission considered the
following alternatives: (1) The establishment of differing compliance
or reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification,
consolidation, or simplification of compliance and reporting
requirements under the proposed amendments for small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the proposed amendments, or any part thereof, for
small entities.
    The Commission believes that special compliance or reporting
requirements for small entities, or an exemption from coverage for
small entities, would not be appropriate or consistent with investor
protection or the requirements of the Sudan Divestment Act. Disclosure
provided in response to the proposed amendments would make applicable
to a registered investment company, and its employees, officers,
directors, and investment advisers, the limitation on actions provided
by the Sudan Divestment Act. These disclosures also would make
important information about divestments in accordance with the Sudan
Divestment Act available to investors, including information
identifying the securities divested, the dates of divestment, and any
securities of the issuer that the registered

investment company continues to hold. Different disclosure requirements
or different timetables for registered investment companies that are
small entities do not appear to be consistent with the requirements of
the Sudan Divestment Act. Finally, in this proposed rulemaking, we do
not consider using performance rather than design standards to be
consistent with the statutory requirement that we adopt rules for the
protection of investors.
    We have endeavored through the proposed amendments to minimize the
regulatory burden on all registered investment companies, including
small entities, while meeting the requirements of the Sudan Divestment
Act. Small entities should benefit from the Commission's reasoned
approach to the proposed amendments to the same degree as other
registered investment companies.

G. Request for Comments

    The Commission encourages the submission of written comments with
respect to any aspect of this analysis. Comment is specifically
requested on the number of small entities that would be affected by the
proposed amendments and the likely impact of the proposal on small
entities. Commenters are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. These
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed amendments are adopted, and will
be placed in the same public file as comments on the proposed
amendments themselves.

VII. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\40\ a rule is ``major'' if it results or is
likely to result in:
---------------------------------------------------------------------------

    \40\ Pub. L. No. 104-21, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment, or
innovation.
    We request comment on whether our proposal would be a ``major
rule'' for purposes of SBREFA. We solicit comment and empirical data
on:
     The potential effect on the U.S. economy on an annual
basis;
     Any potential increase in costs or prices for consumers or
individual industries; and
     Any potential effect on competition, investment, or
innovation.

VIII. Statutory Authority

    The Commission is proposing amendments to Form N-SAR and Form N-CSR
pursuant to authority set forth in Sections 10(b), 13, 15(d), 23(a),
and 36 of the Exchange Act [15 U.S.C. 78j(b), 78m, 78o(d), 78w(a), and
78mm], and Sections 8, 13(c), 24(a), 30, and 38 of the Investment
Company Act [15 U.S.C. 80a-8, 80a-13(c), 80a-24(a), 80a-29, and 80a-
37].

List of Subjects

17 CFR Part 249

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 274

    Investment companies, Reporting and recordkeeping requirements,
Securities.

Text of Proposed Form Amendments

    For the reasons set out in the preamble, the Commission proposes to
amend Title 17, Chapter II, of the Code of Federal Regulations as
follows.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    1. The authority citation for part 249 continues to read in part as
follows:

    Authority: 15 U.S.C. 78a et seq., 7202, 7233, 7241, 7262, 7264,
and 7265; and 18 U.S.C. 1350, unless otherwise noted.
* * * * *

PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

    2. The authority citation for part 274 continues to read in part as
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m,
78n, 78o(d), 80a-8, 80a-24, 80a-26, and 80a-29, unless otherwise
noted.
* * * * *
    3. Form N-SAR (referenced in Sec. Sec.  249.330 and 274.101) is
amended by:
    a. Revising the reference ``132'' in Item 6 to read ``133'';
    b. Adding new Item 133;
    c. Revising the reference ``132'' in the fifth paragraph of General
Instruction A to read ``133''; and
    d. Adding an instruction to new Item 133.
    The additions read as follows:

    Note: The text of Form N-SAR does not, and these amendments will
not, appear in the Code of Federal Regulations.

Form N-SAR

* * * * *
    133. If the Registrant has divested itself of securities in
accordance with Section 13(c) of the Investment Company Act of 1940
following the filing of its last report on Form N-SAR and before filing
of the current report, disclose the following information for each such
divested security:
    A. Name of the issuer;
    B. Exchange ticker symbol;
    C. CUSIP number;
    D. Total number of shares or, for debt securities, principal amount
divested;
    E. Date(s) that the securities were divested; and
    F. If the Registrant holds any securities of the issuer on the date
of filing, the exchange ticker symbol; CUSIP number; and the total
number of shares or, for debt securities, principal amount held on the
date of filing.
* * * * *

Instructions to Specific Items

* * * * *

Item 133: Divestment of Securities in Accordance With the Sudan
Accountability and Divestment Act of 2007

    This item may be used by a Registrant that divested itself of
securities in accordance with Section 13(c) of the Investment Company
Act, which was added by the Sudan Accountability and Divestment Act of
2007. A Registrant is not required to include disclosure under this
item; however, the limitation on civil, criminal, and administrative
actions under Section 13(c) of the Investment Company Act does not
apply with respect to a divestment that is not disclosed under this
item.
    If a Registrant divests itself of securities in accordance with
Section 13(c) of the Act during the period that begins on the fifth
business day before the date of filing a Form N-SAR and ends on the
date of filing, it may disclose the divestment in either the Form N-SAR
or an amendment thereto that is filed not later than five business days
after the date of filing the Form N-SAR.
    For purposes of determining when a divestment should be reported
under this item, if a Registrant divests its holdings in a particular
security in a related series of transactions, the Registrant may deem
the divestment to occur at the time of the final transaction in the
series. In that case, the Registrant should report each transaction in
the series on a single Form N-SAR, but should separately state each
date on which securities were divested and the total number of shares
or, for debt securities, principal amount divested, on each such date.
* * * * *

    4. Form N-CSR (referenced in Sec. Sec.  249.331 and 274.128) is
amended by:
    a. Revising the reference ``Schedule of Investments.'' in the
caption to Item 6 to read ``Investments.'';
    b. Designating the undesignated paragraph in Item 6 as paragraph
(a);
    c. Revising the reference ``Instruction.'' in Item 6 to read
``Instruction to paragraph (a).''; and
    d. Adding new paragraph (b) and new Instructions 1, 2, and 3 to
paragraph (b) to Item 6.
    The additions read as follows:

    Note: The text of Form N-CSR does not, and these amendments will
not, appear in the Code of Federal Regulations.

Form N-CSR

* * * * *

Item 6. Investments

    (a) * * *
    (b) If the registrant has divested itself of securities in
accordance with Section 13(c) of the Investment Company Act of 1940
following the filing of its last report on Form N-CSR and before filing
of the current report, disclose the following information for each such
divested security:
    (1) Name of the issuer;
    (2) Exchange ticker symbol;
    (3) Committee on Uniform Securities Identification Procedures
(``CUSIP'') number;
    (4) Total number of shares or, for debt securities, principal
amount divested;
    (5) Date(s) that the securities were divested; and
    (6) If the registrant holds any securities of the issuer on the
date of filing, the exchange ticker symbol; CUSIP number; and the total
number of shares or, for debt securities, principal amount held on the
date of filing.
    Instructions to paragraph (b).
    1. This Item may be used by a registrant that divested itself of
securities in accordance with Section 13(c) of the Investment Company
Act, which was added by the Sudan Accountability and Divestment Act of
2007. A registrant is not required to include disclosure under this
Item; however, the limitation on civil, criminal, and administrative
actions under Section 13(c) of the Investment Company Act does not
apply with respect to a divestment that is not disclosed under this
Item.
    2. If a registrant divests itself of securities in accordance with
Section 13(c) of the Act during the period that begins on the fifth
business day before the date of filing a Form N-CSR and ends on the
date of filing, it may disclose the divestment in either the Form N-CSR
or an amendment thereto that is filed not later than five business days
after the date of filing the Form N-CSR.
    3. For purposes of determining when a divestment should be reported
under this Item, if a registrant divests its holdings in a particular
security in a related series of transactions, the registrant may deem
the divestment to occur at the time of the final transaction in the
series. In that case, the registrant should report each transaction in
the series on a single Form N-CSR, but should separately state each
date on which securities were divested and the total number of shares
or, for debt securities, principal amount divested, on each such date.

    Dated: February 11, 2008.

    By the Commission.
Nancy M. Morris,
Secretary.
 [FR Doc. E8-2859 Filed 2-14-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register: November 22, 2005 (Volume 70, Number 224)]
[Notices]
[Page 70603]
[DOCID:fr22no05-56]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RP06-87-000]

Midwestern Gas Transmission Company; Notice of Annual Cashout
Report

November 15, 2005.
    Take notice that on November 10, 2005, Midwestern Gas Transmission
Company (Midwestern) tendered for filing its annual cashout report for
the September 2004 through August 2005 period.
    Midwestern states that the cashout report reflects a net cashout
gain of $1,617,676. Midwestern states that it will credit this gain to
its firm shippers in its next issuance of invoices.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the date as indicated
below. Anyone filing an intervention or protest must serve a copy of
that document on the Applicant. Anyone filing an intervention or
protest on or before the intervention or protest date need not serve
motions to intervene or protests on persons other than the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://www.ferc.gov.
 Persons unable to file electronically should submit an

original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the

``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For

TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. eastern time November 22, 2005.

Magalie R. Salas,
Secretary.
 [FR Doc. E5-6435 Filed 11-21-05; 8:45 am]

BILLING CODE 6717-01-P