\570\ See ABA Committees Letter (``We expect that most [exempt
reporting advisers] will already have most of the information
requested by Form ADV Part 1 readily available.''); Merkl
Implementing Letter (confirming that the disclosure requirements
would not impose a significant burden on advisers). See also, with
respect to private fund reporting under Item 7.B. specifically,
Katten Foreign Advisers Letter (``Virtually all of the requested
information would already have been provided to investors in the
fund through an offering document or follow up status reports.'')
and NRS Letter (arguing that the expanded private fund disclosures
on Schedule D would ``replicate the due diligence questionnaire
information * * * '').
    \571\ See, e.g., Shearman Letter.
    \572\ See IAA General Letter.
    \573\ See supra note 300 and accompanying text.
    \574\ Indeed, one commenter that urged us to substantially
reduce the amount of information these advisers are required to
report did not advocate to eliminate disciplinary reporting. Village
Ventures Letter.
    \575\ See supra note 570.
    \576\ See supra section II.C.1. We are adopting Form ADV with
several other changes from the proposal, some of which will affect
the reporting by exempt reporting advisers. See section II.C. for
details concerning these changes to Form ADV.
    \577\ AIMA Letter; Avoca Letter; BCLBE Letter; Shearman Letter;
Village Ventures Letter. A broader discussion about the costs
associated with Section 7.B.(1) appears below. See infra section
V.C.3.
---------------------------------------------------------------------------

    For purposes of the PRA, we estimate that exempt reporting
advisers, in the aggregate, will spend 16,000 hours to prepare and
submit their initial reports on Form ADV.\578\ Based on this estimate,
we expect that exempt reporting advisers will incur costs of
approximately $4,064,000 to prepare and submit their initial report on
Form ADV.\579\ Additionally, for PRA purposes, we estimate that exempt
reporting advisers in the aggregate will spend 2,200 hours per year on
amendments to their filings and on final filings.\580\ Based on this
estimate, we expect that exempt reporting advisers will incur costs of
approximately $558,800 to prepare and submit annual amendments to their
reports on Form ADV and final filings.\581\ One commenter argued that
these estimates should include costs of retaining outside counsel to
review the disclosures.\582\ We disagree. Exempt reporting advisers are
only required to complete a limited subset of Part 1A of Form ADV. As
noted above, this part of the form generally calls for readily
available information to be reported as approximate numerical
responses, as short answers, or by checking a box. Unlike Part 2 of
Form ADV, which requires free-form narrative responses, we do not
believe that advisers will require outside legal advice in order to
provide the factual information that Part 1A requires.\583\ Commenters
who asserted that our estimates were too low did not provide empirical
data by which to recalculate our estimates, making it difficult to
evaluate these assertions or determine the magnitude by which their
estimates would differ from ours.\584\ The changes we are making from
the proposal will reduce the amount of information that advisers must
file and

result in decreased burdens for advisers from the proposal. However, in
light of the general comments we received about burdens we are not
reducing our burden estimates.\585\
---------------------------------------------------------------------------

    \578\ See infra note 738; infra section VI.B.1.b.
    \579\ We expect that the performance of this function would most
likely be equally allocated between a senior compliance examiner and
a compliance manager, or persons performing similar functions. Data
from the SIFMA Management and Earnings Report, modified to account
for an 1,800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead, suggest that
costs for these positions are $235 and $273 per hour, respectively.
(8,000 hours x $235 = $1,880,000) + (8,000 hours x $273 =
$2,184,000) = $4,064,000. For an exempt reporting adviser that does
not already have a senior compliance examiner or a compliance
manager, we expect that a person performing a similar function would
have similar hourly costs.
    \580\ See infra note 744.
    \581\ (1,100 hours x $235 = $258,500) + (1,100 hours x $273 =
$300,300) = $558,800.
    \582\ See BCLBE Letter.
    \583\ Certain items in Part 1A of Form ADV call for information
about which an adviser may consult with outside legal counsel, such
as the exemption on which the adviser relies (Item 2.B.) or the
exemption on which the adviser's private fund relies (Section
7.B.(1) of Schedule D, question 4). These determinations, however,
are part of the adviser's compliance burdens associated with and
accounted for as a part of other regulatory requirements (e.g., rule
203(m)-1) and are not, therefore, costs associated with the
reporting requirements we are adopting today.
    \584\ See, e.g., Village Ventures Letter (asserting that the
Commission's ``relatively modest cost estimates * * * understate the
true costs that will be required to assure compliance * * *''); AV
Letter; Avoca Letter; Debevoise Letter.
    \585\ See supra notes 246, 247, 262, 300, 302 and accompanying
text for a discussion of these modifications. Some of the estimates
provided in this section differ from those provided in the
Implementing Proposing Release, but these differences reflect
updated information regarding employment costs and the number of
advisers subject to the reporting, not a change in the estimated
time an adviser would spend on the reporting or the out-of-pocket
costs an adviser would incur.
---------------------------------------------------------------------------

    In the Implementing Proposing Release we discussed that the
reporting requirements we are adopting may result in other non-
quantifiable additional costs for exempt reporting advisers. For
example, the new disclosure requirements could influence the business
or other decisions of exempt reporting advisers, such as whether to
form additional private funds or manage private funds at all. In
addition, some of the information made available to the public, such as
the identification of owners of the adviser or disciplinary
information, may impose costs on the advisers and, in some cases their
supervised persons or owners, including the potential loss of business
to competitors, as this information was not typically made available to
others previously. Commenters neither agreed nor disagreed with these
costs.\586\
---------------------------------------------------------------------------

    \586\ Several commenters argued that while the reporting may be
valuable to the Commission, making the information publicly
available would provide little benefit to investors, and they
asserted that the benefits were insufficient to justify the costs.
See BCLBE Letter; NRS Letter; Seward Letter.
---------------------------------------------------------------------------

    Several commenters argued that public reporting would be
inconsistent with the intent of the Dodd-Frank Act exemptions for these
advisers.\587\ They did not, however, identify any specific costs
associated with these concerns. As discussed above, we do not believe
public reporting is inconsistent with the intent of the Dodd-Frank Act.
Congress sought to protect only certain proprietary or sensitive
information submitted by advisers about their private funds in reports
for the assessment of systemic risk.\588\
---------------------------------------------------------------------------

    \587\ Avoca Letter; ABA Committees Letter; Shearman Letter.
    \588\ See supra notes 196-197 and accompanying text.
---------------------------------------------------------------------------

    Some commenters expressed concern that certain of the information
we proposed be publicly reported also could include proprietary or
competitively sensitive information regarding private funds.\589\ One
such commenter's competitive concerns related to such things as access
to human resource talent among venture capital fund advisers, and
composition of a venture capital fund's investor base, control persons
and strategic relationships.\590\ These commenters, however, did not
identify any specific costs associated with these concerns. As
discussed elsewhere in this Release, we have responded to these
concerns by declining to adopt questions we had proposed that
commenters found most burdensome and persuaded us may likely be
proprietary or competitively sensitive.\591\
---------------------------------------------------------------------------

    \589\ See, e.g., MFA Letter; NVCA Letter; O'Melveny Letter.
Another commenter, however, refuted these competitive concerns,
stating that none of the items that exempt reporting advisers would
complete would require the disclosure of proprietary or
competitively sensitive information. Merkl Implementing Letter.
    \590\ NVCA Letter. As noted above, while this information could
result in competitive effects among these advisers, the effects are
not unique to these advisers, and they may result in benefits. See
supra note 200.
    \591\ See supra notes 238-247 and accompanying text.
---------------------------------------------------------------------------

    Finally, some commenters expressed concern that access to this
information by the general public may cause confusion because an exempt
reporting adviser's information would be displayed using the same
search function in the IAPD that is used to search registered
advisers.\592\ These commenters, however, did not identify any specific
costs associated with these concerns. We are working with FINRA, our
IARD contractor, to ensure that the IAPD search results distinguish
between an exempt reporting adviser and a registered adviser.
---------------------------------------------------------------------------

    \592\ Shearman Letter; Seward Letter. See also supra note 172
and accompanying text.
---------------------------------------------------------------------------

    Completing and filing Form ADV-H and Form ADV-NR will also impose
costs on exempt reporting advisers. In the Implementing Proposing
Release, we estimated that approximately two exempt reporting advisers
would file Form ADV-H annually and that it would impose an average
burden per response of one hour, for an increase in the total annual
hour burden associated with Form ADV-H of two hours.\593\ We did not
receive comments on these estimates and continue to believe they are
appropriate. We further estimate that for each hour required by the
form, professional staff time will comprise 0.625 hours, and clerical
staff time will comprise 0.375 hours. We estimate the hourly wage for a
compliance manager to be $273 per hour,\594\ and the hourly wage for
general clerks to be $50 per hour.\595\ Accordingly, we estimate the
average cost per response imposed on exempt reporting advisers by rule
204-4 and amended Form ADV-H will be $189,\596\ for a total annual cost
of $378.\597\ This represents a decrease of $28 from our estimate in
the Implementing Proposing Release, which is attributable to updated
wage and salary information.
---------------------------------------------------------------------------

    \593\ See Implementing Proposing Release, supra note 7, at
sections IV.B, V.F. 2 responses x 1 hour = 2 hours.
    \594\ Data from the SIFMA Management and Earnings Report,
modified to account for an 1,800-hour work-year and multiplied by
5.35 to account for bonuses, firm size, employee benefits and
overhead, suggest that the cost for a compliance manager is
approximately $273 per hour.
    \595\ Data from the SIFMA Office Salaries Report, modified to
account for an 1,800-hour work-year and multiplied by 2.93 to
account for bonuses, firm size, employee benefits and overhead,
suggest that the cost for a general clerk is approximately $50 per
hour.
    \596\ (0.625 hours x $273) + (0.375 hours x $50) = approximately
$189.
    \597\ $189 per response x 2 responses annually = $378.
---------------------------------------------------------------------------

    With regard to Form ADV-NR, we continue to estimate that exempt
reporting advisers will file Form ADV-NR at the same annual rate (0.17
percent) as advisers registered with us.\598\ Thus, we estimate that
the amendments will be filed by approximately three exempt reporting
advisers annually,\599\ imposing an annual burden of approximately
three hours.\600\ We further estimate that for each hour required by
the form, compliance clerk time will comprise 0.75 hours and general
clerk time will comprise 0.25 hours.\601\ Therefore, we estimate that
the amendments to Form ADV-NR will impose approximately $188 in total
additional annual costs for exempt reporting advisers.\602\ This
represents an increase from our estimate in the Implementing Proposing
Release, which is attributable to updated wage and salary information.
---------------------------------------------------------------------------

    \598\ See infra text accompanying note 776.
    \599\ 0.17% (rate of filing) x 2,000 estimated exempt reporting
advisers = 3 exempt reporting advisers filing Form ADV-NR.
    \600\ 3 exempt reporting advisers filing Form ADV-NR x 1 hour
per Form ADV-NR = approximately 3 hours. In calculating the costs of
our amendments to Form ADV-NR in the Implementing Proposing Release,
we subtracted cost savings resulting from the Dodd-Frank Act's
reduction in the number of total registered advisers (and the
commensurate reduction in Form ADV-NR filings) from the total costs
associated with completing and filing Form ADV-NR. See Implementing
Proposing Release, supra note 7, at section IV.B. We now believe,
however, that it is more accurate to calculate the costs of our
amendments to Form ADV-NR without subtracting these savings directly
attributable to the Dodd-Frank Act.
    \601\ Data from the SIFMA Office Salaries Report, modified to
account for an 1,800-hour work-year and multiplied by 2.93 to
account for bonuses, firm size, employee benefits and overhead,
suggest that the cost for a General Clerk is approximately $50 per
hour and cost for a Compliance Clerk is approximately $67 per hour.
    \602\ 3 hours x ((0.75 hours x $67) + (0.25 hours x $50)) =
approximately $188.

---------------------------------------------------------------------------

3. Form ADV Amendments
    The costs of completing these new and amended items will vary among
advisers.\603\ One-time monetary costs we expect certain current
registrants to incur to complete the amendments we are adopting to Form
ADV in connection with the transition filing are discussed above, but
that discussion does not take into account costs we expect to be borne
by (1) 7,600 current registrants with a December 31 fiscal year end
that we expect to remain registered with us,\604\ or (2) 700 \605\
advisers we expect will register with us within the next year as a
result of normal annual growth of our population of registered
advisers.\606\ We estimate these 8,300 advisers will spend, on average,
4.5 hours to respond to the new and amended questions we are adopting
today (other than the private fund reporting, which is discussed
below),\607\ at an aggregate cost of $9,486,900.\608\
---------------------------------------------------------------------------

    \603\ We note that we do not estimate there to be costs
associated with the technical amendment we are making to Form ADV-E
to reflect the obligation that the accountant's report be filed
electronically because those costs were addressed in the 2009
Custody Release. Staff notified advisers in November 2010 that the
IARD system had been programmed to accept Form ADV-E. See 2009
Custody Release, supra note 310 at n.53 and accompanying text
(establishing the requirement for Form ADV-E to be filed
electronically, explaining that accountants performing surprise
examinations should continue paper filing of Form ADV-E until the
IARD system is programmed to accept Form ADV-E, and noting that
advisers would be informed when that programming was completed).
    \604\ See supra note 511.
    \605\ See infra note 691.
    \606\ Of the 9,750 advisers we estimate will remain registered
or will be newly registered with us after the transition filing, the
one-time monetary costs of filing Form ADV that we estimate will be
borne by approximately 700 advisers with a fiscal year end other
than December 31 are discussed above in section V.B.1. The one-time
monetary costs that we estimate will be borne by the remaining 9,050
advisers are discussed here (8,300 discussed in this paragraph + 750
discussed in the next). For a discussion of our PRA estimate of
9,750 advisers, see note 655 below and section VI.B.2.a.i. below.
    \607\ See infra section VI.B.1.a. We are calculating costs only
of the increased burden because we have previously assessed the
costs of the other items of Form ADV for registered advisers and for
new advisers attributed to annual growth. The amendments we are
adopting today would neither increase the burden associated with the
other items on Form ADV, nor would they increase the external costs
associated with certain Part 2 requirements.
    \608\ We expect that the performance of this function would most
likely be equally allocated between a senior compliance examiner and
a compliance manager, or persons performing similar functions. Data
from the SIFMA Management and Earnings Report, modified to account
for an 1,800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead, suggest that
costs for these positions are $235 and $273 per hour, respectively.
8,300 advisers x 4.5 hours = 37,350 hours. (18,675 hours x $235 =
$4,388,625) + (18,675 hours x $273 = $5,098,275) = $9,486,900.
---------------------------------------------------------------------------

    In our PRA analysis, we also project that 750 new advisers will
register with us as a result of the Dodd-Frank Act's elimination of the
private adviser exemption.\609\ Because this group of advisers was not
formerly required to register with us, we have not previously accounted
for the costs to them of completing and submitting Form ADV. As a
result, rather than the incremental burden of 4.5 hours per adviser
used in our estimates above, we expect that these advisers will spend
the full 40.74 hours per adviser filing their initial reports on Form
ADV (other than the private fund reporting, which is discussed
separately below).\610\ These advisers will also spend time preparing
and filing interim updating amendments to the form, preparing brochure
supplements and delivering codes of ethics to clients. In the
aggregate, we expect that these 750 private fund advisers will spend
37,905 hours on these activities,\611\ for a total cost of
$9,627,871.\612\
---------------------------------------------------------------------------

    \609\ See Implementing Proposing Release, supra note 7, at n.375
and accompanying text.
    \610\ See infra IV.B.1. of this Release.
    \611\ 750 advisers x (40.74 hours per adviser to complete entire
form (except private fund reporting requirements) + (1 annual
updating amendment x 6.0 hours) + (1 interim updating amendment per
year x 0.5 hours) + 1 hour on new brochure supplements + 1 hour on
interim amendments to brochure supplements + 1.3 hours delivering
codes of ethics to clients) = 37,905 hours. See infra notes 679,
709, 710 and accompanying text.
    \612\ (18,952.5 hours x $235 = $4,453,838) + (18,952.5 hours x
$273 = $5,174,033) = $9,627,871. As noted above, we expect that the
performance of this function will most likely be equally allocated
between a senior compliance examiner and a compliance manager. See
supra note 608.
---------------------------------------------------------------------------

    Commenters that addressed burdens associated with amendments to
Form ADV (other than private fund reporting discussed separately below)
focused on costs associated with gathering information necessary to
complete proposed Item 5.D. and Section 7.A. of Schedule D.\613\ These
commenters did not specifically address our estimates or provide
empirical data by which to recalculate these estimates. We are making
changes from the proposal that will reduce the amount of information
that advisers must file and result in decreased burdens for advisers
from the proposal.\614\ However, in light of the general comments we
received about burdens we are not reducing our burden estimates.
---------------------------------------------------------------------------

    \613\ See, e.g., IAA General Letter; Shearman Letter.
    \614\ See supra sections II.C.2 and II.C.3.
---------------------------------------------------------------------------

    In addition to the costs to complete Form ADV for which we account
above, some registered advisers will be required to file information
regarding the private funds they advise. Specifically, filings will be
required by: (i) 2,850 of the 7,600 current registrants with a December
31 fiscal year end that we expect to remain registered with us; \615\
(ii) 200 of the 700 advisers we expect will register with us within the
next year as a result of normal annual growth of our population of
registered advisers; \616\ and (iii) 750 private fund advisers
registering as a result of the elimination of the private adviser
exemption. We estimate this will take 33,500 hours \617\ for a total
cost of $8,509,000.\618\ Most of the commenters that addressed Form ADV
costs focused on these private fund reporting requirements,
particularly where valuation or ownership information would be
required.\619\ Several commenters wrote that the burden of the proposed
reporting would be significant.\620\ As a whole, these commenters
suggested that the costs of the proposed amendments would outweigh the
benefits, but only a few disagreed with the Commission's estimates of
those costs, which they considered too low.\621\ Although we believe,
as noted above, that the information an adviser needs to complete
Section 7.B.(1) is readily available in fund offering documents, we
acknowledge that this Section of Form ADV could be time-consuming to
complete, particularly for an adviser's initial filing, depending on
the number of funds the adviser manages. The primarily check-the-box
and short-answer style of Section 7.B.(1), as well as some of the
features of the IARD (such as drop-down boxes for common responses and
ability to pre-populate responses) should help to decrease the average
completion time for these advisers. Based on views expressed by some
commenters,\622\ we expect these factors will alleviate concerns of
other commenters, who argued that the reports require too much
information or that the requirements would impose

significant burdens.\623\ In addition, as discussed above, we are
adopting Section 7.B.(1) with several changes (including the removal of
some of the questions that commenters persuaded us may likely be
proprietary or competitively sensitive) that reduce the amount of
information required in respect of private funds.\624\
---------------------------------------------------------------------------

    \615\ See infra note 696.
    \616\ See infra note 699.
    \617\ See infra note 703.
    \618\ (16,750 hours x $235 = $3,936,250) + (16,750 hours x $273
= $4,572,750) = $8,509,000. As noted above, we expect that the
performance of this function will most likely be equally allocated
between a senior compliance examiner and a compliance manager. See
supra note 608.
    \619\ See AIMA Letter; Avoca Letter; BCLBE Letter; Shearman
Letter; Village Ventures Letter.
    \620\ See, e.g., AIMA Letter; AV Letter; BCLBE Letter; Debevoise
Letter; Dechert Foreign Adviser Letter; Gunderson Letter; Katten
Foreign Adviser Letter; NRS Letter; Seward Letter; Shearman Letter;
VVL Letter. Several of these commenters were writing with respect to
exempt reporting adviser reporting, but some of their comments would
apply equally to registered advisers. See supra Section V.B.2. for a
discussion of the estimated costs of reporting for exempt reporting
advisers.
    \621\ Id.
    \622\ See supra note 570.
    \623\ AIMA Letter; Avoca Letter; BCLBE Letter; Shearman Letter;
Village Ventures Letter.
    \624\ See section II.C.1.
---------------------------------------------------------------------------

    Based on the foregoing estimates, we expect that the total costs
associated with the completion and submission of all of the amendments
we are adopting to Form ADV, other than estimated costs above related
to the transition described below,\625\ therefore, are
$27,623,771.\626\
---------------------------------------------------------------------------

    \625\ See section V.B.1.
    \626\ $9,486,900 in one-time monetary costs of complying with
amendments we are adopting today for current registrants and newly
registering advisers as a result of normal growth + $9,627,871 in
costs of completing and filing Form ADV (other than private fund
reporting) for the 750 newly registering private fund advisers as a
result of the elimination of the private adviser exemption +
$8,509,000 in aggregate private fund reporting costs attributable to
the foregoing filers = $27,623,771.
---------------------------------------------------------------------------

    In addition, we estimate for purposes of the PRA that approximately
a quarter (or 350) of the 1,450 advisers estimated to register with us
as a result of normal annual growth and as a result of the elimination
of the private adviser exemption will use outside legal services, and
half (or 725) will use outside compliance consulting services, to
assist them in preparing their Part 2 brochures, for a total cost of
$1,540,000, and $3,625,000, respectively, resulting in a total non-
labor cost among all these newly registering advisers of
$5,165,000.\627\
---------------------------------------------------------------------------

    \627\ See infra note 732 an accompanying text. The currently
approved burden associated with Form ADV already accounts for
similar estimated costs to be incurred by current registrants, and
it already accounts for a percentage of annual growth in our
population of registered advisers. See also infra section VI.B.2.iv.
---------------------------------------------------------------------------

    A few commenters objected to the amount of information required by
Form ADV as a result of the amendments we proposed and suggested
streamlining the form or eliminating what they saw as duplicative
reporting.\628\ We acknowledge some overlap in information required to
be reported, but note that the two parts of Form ADV serve different
purposes and that overlap in some cases may be necessary so that
investors receiving a brochure are provided with full information about
a practice or conflict, and that we are able to collect data on the
matter for regulatory purposes. We believe that the information
required by most of these items should be readily available to any
adviser, and several commenters confirmed our belief.\629\ The check-
the-box style of most of these items, as well as some of the features
of the IARD (such as drop-down boxes for common responses) should also
help minimize costs by reducing the average completion time. The
changes we are making from the proposal will, as a whole, reduce the
amount of information that advisers must file and result in decreased
burdens for advisers.\630\ However, in light of the general comments we
receive about burdens we are not reducing our burden estimates.
---------------------------------------------------------------------------

    \628\ See IAA General Letter (citing page 48 of the Implementing
Proposing Release and stating that it ``do[es] not agree that the
new requirements `should impose few additional regulatory burdens.'
''). See also NRS Letter and Seward Letter, arguing that parts of
the proposed amendments would result in duplicative reporting.
    \629\ See, e.g., supra note 570.
    \630\ See supra notes 245-247, 262, 286, 300, 302 and
accompanying text for a discussion of these modifications. Some of
the estimates provided in this section differ from those provided in
the Implementing Proposing Release, but these differences reflect
updated information regarding employment costs and the number of
advisers subject to the reporting, not a change from the proposed
estimate of time an adviser would spend on the reporting or the out
of pocket costs an adviser would incur.
---------------------------------------------------------------------------

    The amendments to Form ADV that we are adopting will also result in
other costs, none of which commenters specifically addressed. For
instance, changes to the instructions on calculating regulatory assets
under management, and rule 203A-3(d), will cause some advisers to
report greater assets under management than they do today and preclude
some advisers from excluding certain assets from their calculation in
order to remain below the new asset threshold for registration with the
Commission. The impact of these changes may result in a limited number
of state-registered advisers that report assets under management of
less than $30 million under the current Form ADV reporting requirements
to register with us if, under the revised instructions, they would
report $100 million or more in assets under management.\631\
---------------------------------------------------------------------------

    \631\ A registered investment adviser that reports more than $30
million in assets under management under the current instructions to
Item 5 of Form ADV would be required to register with the
Commission. These advisers would not have additional costs
associated with registration as they would already be incurring
those costs.
---------------------------------------------------------------------------

    We are also amending Form ADV to require advisers to private funds
to use the market value of private fund assets, or the fair value of
private fund assets where market value is unavailable, for determining
regulatory assets under management.\632\ Advisers to private funds that
do not use fair value methodologies will likely incur costs to comply
with the requirement to report the fair value of those assets on Form
ADV, which could (but is not required to) include reliance on a third
party or outside valuation service. We anticipate that these costs will
vary, but we understand that private fund advisers, including those
that may not use fair value methodologies for reporting purposes,
perform administrative services, including valuing assets, internally
as a matter of business practice.\633\ Based on registered advisers'
responses to Items 5.D., 7.B., and 9.C. of Form ADV,\634\ we estimate
that approximately 3% of registered advisers have at least one private
fund client that may not be audited.\635\ These advisers therefore may
incur costs to fair value their private fund assets.\636\ We estimate
that approximately 4,270 registered advisers have, or after registering
with us will have, at least one private fund client.\637\ We therefore
estimate that approximately 130

registered advisers may incur costs as a result of the fair value
requirement.\638\ We estimated in the Implementing Proposing Release
that an adviser without the internal capacity to value specific
illiquid assets would obtain pricing or valuation services from an
outside administrator or other service provider at a cost ranging from
$250 to $75,000 annually.\639\ Commenters did not address these
estimates and for reasons discussed above, we continue to believe they
are accurate.\640\ Accordingly, we estimate that the 130 advisers would
incur costs of $37,625 each on an annual basis, which is the middle of
the range of estimated fair value costs, for an aggregate annual cost
of $4,891,250.\641\
---------------------------------------------------------------------------

    \632\ See Form ADV: Instructions for Part 1A, inst. 5.b.(4).
    \633\ For example, an adviser to a hedge fund may value fund
assets for purposes of allowing new investments in the fund or
redemptions by existing investors, which may be permitted on a
regular basis after an initial lock-up period. An adviser to a
private equity fund may obtain valuation of portfolio companies in
which the fund invests in connection with financing obtained by
those companies. Advisers to private funds also may value portfolio
companies each time the fund makes (or considers making) a follow-on
investment in the company. Private fund advisers could use these
valuations as a basis for complying with the fair valuation
requirement with respect to private fund assets.
    \634\ Item 5.D. asks advisers to identify the types of clients
they have, including clients that are pooled investment vehicles.
Item 7.B. asks if the adviser or its related person is a general
partner in an investment-related limited partnership or manager of
an investment-related limited liability company, or if the adviser
advises any other ``private fund.'' Item 9.C. asks whether an
independent public accountant audits annually the pooled investment
vehicles that the adviser manages and if audited financial
statements are distributed to investors in the pools.
    \635\ A fund that is relying on the audit provision in our
custody rule will have provided the fair value of its assets in its
audited financial statements that are prepared in accordance with
GAAP.
    \636\ We note, however, that at least some of these advisers may
currently fair value private fund assets. For instance, funds that
do not prepare financial statements in accordance with GAAP (which
is required to rely on an exception in our custody rule) may
nonetheless use a fair value standard other than that specified in
GAAP and thus may not incur any additional costs. See supra notes
98-99 and accompanying text (explaining that while many advisers
will calculate fair value in accordance with GAAP or another
international accounting standard, other advisers acting
consistently and in good faith may utilize another fair valuation
standard).
    \637\ Based on IARD data as of April 7, 2011. 3,320 current SEC-
registered advisers to private funds remaining registered with the
SEC + 750 newly registering private fund advisers as a result of the
elimination of the private adviser exemption + 200 additional
advisers to private funds each year = 4,270 advisers.
    \638\ 4,270 x 0.03 = 128.1.
    \639\ See Implementing Proposing Release, supra note 7, at n.369
and accompanying text.
    \640\ See supra section II.A.3.
    \641\ 130 x $37,625 = $4,891,250.
---------------------------------------------------------------------------

    Requiring advisers to report whether they have $1 billion or more
in assets also may have costs for advisers that are not publicly traded
or otherwise do not publicly disclose the amount of their own assets.
There may also be, as discussed below, competitive effects of this
change and other of the amendments to Form ADV. We believe these
changes will have little, if any, effect on capital formation.
    In addition, some of the amendments to Form ADV could impose costs,
including potential competitive effects, as information that may not
typically be provided to others becomes publicly available. For
example, for advisers that may previously have only disclosed to
certain clients and prospective clients, or only upon request,
information such as census data about the private funds and the amount
of private fund assets that the adviser manages, disclosure of state
registrations of the adviser's employees, financial industry
affiliates, and the service providers to each private fund that the
adviser manages could be costly. As noted above, some commenters voiced
these types of concerns with respect to private fund disclosures they
consider competitively sensitive or proprietary.\642\ As also discussed
above, we have adopted certain modifications from our proposal that are
designed to address some of these concerns.\643\ The competitive
effects of Form ADV reporting requirements, however, could create
benefits as well as costs. For instance, unregistered advisers will not
incur the expense of producing and reporting publicly this information,
but clients and investors may have greater confidence in advisers that
provide more fulsome disclosure and are subject to our oversight.
---------------------------------------------------------------------------

    \642\ See supra note 238 and accompanying text.
    \643\ See supra notes 245-247 and accompanying text.
---------------------------------------------------------------------------

4. Amendment to Pay To Play Rule
    Our amendment to include registered municipal advisors in the
definition of ``regulated persons'' excepted from the pay to play
rule's ban on third-party solicitation may result in additional costs
to comply with the rule.\644\ Specifically, advisers that have created
compliance programs based on the original ``regulated person''
definition, which included only registered investment advisers and
broker-dealers, may have to make adjustments to those programs to
account for the broadened definition. But, as explained above, our
amendment will allow them greater latitude in hiring placement agents.
---------------------------------------------------------------------------

    \644\ See amended rule 206(4)-5(a)(2), (f)(9). As discussed in
section V.A.4., we believe that our amendment to rule 206(4)-5 to
make it apply to exempt reporting advisers and foreign private
advisers will not generate new costs.
---------------------------------------------------------------------------

    As discussed in section II.D.1 of this Release, we received a
number of comment letters opposing our proposal to replace the
exception for `` regulated persons'' with an exception for registered
municipal advisors.\645\ Among other things, commenters argued that the
amendment would force persons soliciting only on behalf of affiliated
investment advisers to register as municipal advisors, which they
argued would subject them to regulatory requirements unrelated to pay
to play practices and thus impose significant additional and
unnecessary costs.\646\ We are persuaded by commenters and have instead
modified the definition of ``regulated person'' to include registered
municipal advisors, which we believe is a lower-cost means to recognize
this new category of registrant in our rule.
---------------------------------------------------------------------------

    \645\ See Better Markets Letter; Debevoise Letter; Dechert
General Letter; IAA Pay to Play Letter; ICI Letter; NYSBA Letter;
SIFMA Letter; T. Rowe Price Letter. But see NRS Letter (supporting
the proposal).
    \646\ See, e.g., IAA Pay to Play Letter; SIFMA Letter. See also
supra section II.D.1.
---------------------------------------------------------------------------

5. Advisers Previously Exempt Under Section 203(b)(3)
    The transition provision in rule 203-1(e) for advisers exempt under
the private adviser exemption will impose costs. It will delay the
public disclosure of information about these advisers on Form ADV. As
such, current clients and potential clients will not have access to
this information as quickly as they would without the transition
period.\647\ In addition, rule 203-1(e) will delay the deadline for
these advisers to comply with all of our rules under the Advisers Act
applicable to registered advisers, and thus will delay the full
protection of these rules for clients and potential clients. However,
we believe that providing a short transition period to effect an
orderly transition to registration and full compliance for these
advisers is appropriate. Furthermore, notwithstanding the transition
period, these advisers continue to be subject to the Adviser's Act's
antifraud provisions.\648\
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    \647\ We note, however, that the IARD system will not be updated
to reflect our revisions to Form ADV, including the amendments
requiring additional disclosure about private funds, until November.
See infra note 759. Thus, even without regard to rule 203-1(e),
disclosure of this information would be delayed.
    \648\ See, e.g., Advisers Act section 206. They are also subject
to antifraud provisions of other Federal securities laws, including
rule 10b-5 under the Securities Exchange act of 1934. See 17 CFR
240.10b-5.
---------------------------------------------------------------------------

VI. Paperwork Reduction Act Analysis

    Certain provisions of the rules and rule amendments that the
Commission is adopting today contain ``collection of information''
requirements within the meaning of the PRA. In the Implementing
Proposing Release, the Commission solicited comment on the proposed
collection of information requirements. The Commission also submitted
the proposed collections of information to the Office of Management and
Budget (``OMB'') for review in accordance with 44 U.S.C. 3507 and 5 CFR
1320.11. The titles for the collections of information we are adopting
or amending are: (i) ``Exemption for Certain Multi-State Investment
Advisers (Rule 203A-2(d));'' \649\ (ii) ``Form ADV''; (iii) ``Rule
203A-5;'' (iv) ``Rule 0-2 and Form ADV-NR under the Investment Advisers
Act of 1940;'' (v) ``Rule 203-2 and Form ADV-W under the Investment
Advisers Act of 1940;'' (vi) ``Form ADV-H;'' \650\ and (vii) ``Rule
204-2 under the Investment Advisers Act of 1940.'' \651\

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.
---------------------------------------------------------------------------

    \649\ The current title for this collection of information is
``Exemption for Certain Multi-State Investment Advisers (Rule 203A-
2(e))'' which we are re-titling ``Exemption for Certain Multi-State
Investment Advisers (Rule 203A-2(d))'' to reflect the renumbering of
this provision.
    \650\ The current title for the collection of information on
Form ADV-H is ``Rule 203-3 and Form ADV-H under the Investment
Advisers Act of 1940'' because currently only registered advisers
file Form ADV-H under rule 203-3. However, because we are proposing
to amend Form ADV-H to allow exempt reporting advisers to apply for
a temporary hardship exemption on Form ADV-H under rule 204-4, we
are re-titling the collection of information simply ``Form ADV-H.''
    \651\ We note that the PRA analysis associated with the
requirement that an accountant's report be filed electronically was
included in our adoption of substantive amendments to that form.
Today, we are making only a technical amendment to Form ADV-E to
conform to that prior rulemaking. See 2009 Custody Release, supra
note 310 at section IV.C.
---------------------------------------------------------------------------

    While our new rules and rule amendments will impose new collection
of information burdens for certain advisers and change existing burdens
on advisers under our rules, the Dodd-Frank Act also will impact our
total burden estimates for certain of our rules, principally by
changing the number of advisers subject to these rules. Specifically,
we estimate the Dodd-Frank Act's amendments to section 203A to
reallocate regulatory responsibility over numerous registered advisers
to the states will result in approximately 3,200 registered advisers
switching from Commission to state registration.\652\ At the same time,
we estimate that the Dodd-Frank Act's elimination of the private
adviser exemption in section 203(b)(3) of the Advisers Act will result
in approximately 750 additional private fund advisers registering with
the Commission.\653\ Based on IARD data as of April 7, 2011, we
estimate that approximately 11,500 advisers are currently registered
with the Commission. We further estimate that approximately 700
additional advisers register with the Commission each year.\654\
Therefore, for purposes of calculating the burdens of our proposed
rules and amendments under the PRA, we estimate that the number of
advisers registering with the Commission after the Dodd-Frank Act's
amendments to sections 203A and 203(b)(3) become effective will be
approximately 9,750.\655\
---------------------------------------------------------------------------

    \652\ See supra section II.A. (discussing the Dodd-Frank Act's
amendments to section 203A). Based on IARD data as of April 7, 2011,
we estimate that approximately 3,200 will switch to state
registration because they have assets under management of less than
$90 million. This estimate includes approximately 5 advisers that
will switch to state registration because they are relying on the
registration of an affiliated adviser with the same principal office
and place of business that will be switching to state registration.
See supra note 422.
    \653\ See Exemptions Adopting Release at section I. (discussing
elimination of the private adviser exemption in section 203(b)(3)).
    \654\ Over the past several years, approximately 1,000 new
advisers have registered with us annually. Due to the Dodd-Frank
Act's reallocation of regulatory responsibility for advisers with
assets under management of less than $100 million, we estimate that
approximately 700 new advisers will register with us annually based
on reducing the current growth rates by the gross reduction in the
number of advisers due to the Dodd-Frank Act. (3,200 (SEC advisers
withdrawing)/11,500 (total SEC advisers)) x 1000 (number of new
advisers each year) = 0.28 x 1000 = 280 (number of additional new
advisers registering with the states, not the SEC). 1000-280 = 720.
We have rounded this number to 700 for purposes of our analysis.
    \655\ 11,500 (total SEC advisers)-3,200 (SEC advisers
withdrawing) + 750 (private advisers registering with the SEC) + 700
(new SEC advisers each year) = 9,750.
---------------------------------------------------------------------------

A. Rule 203A-2(d)

    Rule 203A-2(d), as amended, exempts certain multi-state investment
advisers from section 203A's prohibition on registration with the
Commission. We have renumbered and amended the exemption to permit all
investment advisers who are required to register as an investment
adviser with 15 or more states to register with the Commission, rather
than 30 states, as currently required.\656\ An adviser relying on this
exemption is required to maintain in an easily accessible place a
record of the states in which the investment adviser has determined it
would, but for the exemption, be required to register for a period of
not less than five years from the filing of a Form ADV relying on the
rule.\657\ We submitted this collection of information to OMB for
review, and OMB has not yet assigned this collection a control number.
---------------------------------------------------------------------------

    \656\ See amended rule 203A-2(d).
    \657\ See amended rule 203A-2(d)(3). An investment adviser
relying on this exemption also will continue to be required to: (i)
include a representation on Schedule D of Form ADV that the
investment adviser has reviewed applicable law and concluded that it
must register as an investment adviser with 15 or more states; and
(ii) undertake on Schedule D to withdraw from registration with the
Commission if the adviser indicates on an annual updating amendment
to Form ADV that the investment adviser will be required by the laws
of fewer than 15 states to register as an investment adviser with
the state. See amended rule 203A-2(d)(2). The increase in the PRA
burden for Form ADV reflects these requirements. See infra section
VI.B.
---------------------------------------------------------------------------

    Respondents to this collection of information will be investment
advisers who would be required to register in 15 or more states absent
the exemption (that rely on amended rule 203A-2(d) to register with the
Commission). This collection of information is mandatory for those
advisers. The records kept by investment advisers in compliance with
the rule are necessary for the Commission staff to use in its
examination and oversight program, and the information in these records
generally will be kept confidential.\658\
---------------------------------------------------------------------------

    \658\ See section 210(b) of the Advisers Act.
---------------------------------------------------------------------------

    The amendments to the rule that we are adopting today do not differ
from our proposed amendments. Commenters did not discuss the rule's
collection of information requirements, but generally agreed with our
proposal to align our multi-state exemption for small advisers with the
statutory exemption for mid-sized advisers.\659\ A few, however,
recommended a lower threshold of required state registrations for
eligibility for the multi-state exemption,\660\ but we have determined
not to lower the threshold further in light of the Congressional
determination to set the threshold at 15 states and our stated purpose
to align the rule with the Dodd-Frank Act.\661\
---------------------------------------------------------------------------

    \659\ See NASAA Letter; NEA Letter; NRS Letter; Pickard Letter;
Seward Letter; Shearman Letter.
    \660\ See NEA Letter; Seward Letter; Shearman Letter.
    \661\ See supra note 136.
---------------------------------------------------------------------------

    In the Implementing Proposing Release, the Commission estimated
that approximately 150 advisers would rely on the exemption.\662\ As of
April 7, 2011, there were approximately 40 advisers relying on the
multi-state exemption.\663\ Although it is difficult to determine a
precise number of advisers that will rely on the exemption as amended
because such reliance is entirely voluntary, we estimate that
approximately 155 advisers will rely on the exemption.\664\ These
advisers will incur an average one-time initial burden of approximately
8 hours, and an average ongoing burden of approximately 8 hours per
year, to keep records sufficient to demonstrate that they meet the 15-
state threshold. These estimates are based on an estimate that each
year an investment adviser will spend approximately 0.5 hours creating
a record of its determination whether it must register as an investment
adviser with each of the 15 states required to rely on the exemption,
and approximately 0.5 hours to maintain

these records.\665\ Accordingly, the revised total initial and annual
burden of the recordkeeping requirements of rule 203A-2(d) will be
1,240 hours (an additional 920 hours).\666\
---------------------------------------------------------------------------

    \662\ See Implementing Proposing Release, supra note 7, at
n.382.
    \663\ Based on IARD data as of April 7, 2011, of the
approximately 11,500 SEC-registered advisers, 40 checked Item
2.A.(9) of Part 1A of Form ADV to indicate their basis for SEC
registration under the multi-state advisers rule.
    \664\ Based on IARD data as of April 7, 2011, 100 of the
advisers that have less than $90 million of assets under management
currently file notice filings with 15 or more states. This number
may overestimate the number of advisers required to be registered
with 15 or more states, and therefore eligible for the amended
multi-state exemption, because notice filing requirements may differ
from registration requirements. In addition, we are unable to
determine the number of advisers currently registered with the
states that are registered with 15 or more states that may rely on
the exemption and register with us. We expect this number to be
small based on the scope of business of an adviser that has less
than $25 million in assets under management and because section
222(d) of the Advisers Act provides a de minimis exemption for
limited state operations without registration. For purposes of this
analysis, we estimate the number is 15. As a result, we estimate
that approximately 155 advisers will rely on the exemption (40
currently relying on it + estimated 100 eligible based on IARD data
+ 15 advisers required to be registered in 15 or more states that
are not registered with us today).
    \665\ 0.5 hours x 15 states = 7.5 hours + 0.5 hours = 8 hours.
    \666\ 155 advisers relying on the exemption x 8 hours = 1,240
hours. 1,240 new burden hours-320 current burden hours = 920
additional burden hours.
---------------------------------------------------------------------------

B. Form ADV

    Form ADV (OMB Control No. 3235-0049) is the two-part investment
adviser registration and exempt adviser reporting form. Part 1 of Form
ADV contains information designed for use by Commission staff, and Part
2 is the client brochure. We use the information collected on Form ADV
to determine eligibility for registration with us and to manage our
regulatory and examination programs. Clients use certain of the
information to determine whether to hire or retain an adviser. Rule
203-1 requires every person applying for investment adviser
registration with the Commission to file Form ADV. Rule 204-4 requires
exempt reporting advisers to file reports with the Commission by
completing a limited subset of items on Form ADV. Rule 204-1 requires
each registered and exempt reporting adviser to file amendments to Form
ADV at least annually, and requires advisers to submit electronic
filings through the IARD. These collections of information are found at
17 CFR 275.203-1, 275.204-1, 275.204-4, and 279.1 and are mandatory.
The paperwork burdens associated with rules 203-1 and 204-1 are, and
the paperwork burdens associated with rule 204-4 will be, included in
the approved annual burden associated with Form ADV and, thus, do not
entail separate collections of information. Responses are not kept
confidential. The respondents to this information collection are
investment advisers registered or applying for registration with us and
exempt reporting advisers.
    As discussed above, in order to give effect to provisions in Title
IV of the Dodd-Frank Act, we are amending Part 1A of Form ADV to
reflect the new statutory threshold for registration with the
Commission and to accommodate filings by exempt reporting advisers. In
addition, to enhance our ability to oversee investment advisers, we are
amending Part 1A of Form ADV to require advisers to provide us
additional information regarding: (i) The private funds they advise;
(ii) their advisory business and business practices that may present
significant conflicts of interest; and (iii) their non-advisory
activities and financial industry affiliations.\667\ We are also
adopting certain additional amendments intended to improve our ability
to assess compliance risks and to enable us to identify the advisers
that are covered by section 956 of the Dodd-Frank Act, which addresses
certain incentive-based compensation arrangements.
---------------------------------------------------------------------------

    \667\ See supra section II.C. In addition, we are adopting
several clarifying or minor amendments based on frequently asked
questions we receive from advisers and our experience administering
the form.
---------------------------------------------------------------------------

    The currently approved total annual burden of completing, amending,
and filing Parts 1 and 2 of Form ADV is 268,457 hours.\668\ The
currently approved burden is based on an average total hour burden of
36.24 hours per adviser for the first year that an adviser completes
Form ADV. The currently approved total annual cost burden for Form ADV
is $22,775,400, consisting of costs for outside legal and consulting
services associated with initial preparation of Part 2.\669\
---------------------------------------------------------------------------

    \668\ See section VI of the Part 2 Release at notes 341 and 342
and accompanying text. The approved burden is comprised of 12,658
advisers preparing an initial filing of Form ADV at 36.24 hours,
which is amortized over a three-year period (the estimated period
that advisers are expected to use Form ADV) for an annual burden of
152,909 hours. The burden also includes two amendments to Form ADV
annually, one annual amendment and one other-than-annual amendment,
for an annual burden of 87,435 hours; an annual burden of 11,658
hours to account for new brochure supplements that advisers are
required to prepare; and 16,455 hours attributable to the obligation
to deliver to clients codes of ethics upon request.
    \669\ These costs are expected to vary based on the size of the
adviser, and we have assumed that fewer than all advisers will use
these services in connection with preparing their initial Part 2
brochures. For outside legal services, ($4,400 x 535 medium
advisers) + ($3,200 x 2,370 small advisers)) + ($10,400 x 36 large
advisers) = $10,312,400. For compliance consulting services, ($3,000
x 2,371 small advisers) + ($5,000 x 1,070 medium advisers) =
$12,463,000. $10,312,400 + $12,463,000 = $22,775,400. See Part 2
Release, supra note 668, for a discussion of these estimates.
---------------------------------------------------------------------------

    The amendments we are adopting will increase the information
requested in Part 1A of Form ADV, and we expect that this will
correspondingly increase the average burden to an adviser filing Form
ADV. As we explained in the Implementing Proposing Release, however, we
expect that the total annual burden associated with Form ADV will
experience a net decrease because the reduction in burden resulting
from the decrease in the number of respondents that are registered
advisers will have a greater effect on the total burden than the
increase resulting from the use of the form by exempt reporting
advisers and the additional information required by the amendments to
the form.\670\ We provided initial estimates of the revised burdens and
requested comment on these estimates and our initial PRA analysis in
the Implementing Proposing Release.\671\ As discussed in detail in
sections II.B., II.C., V.A.2., V.A.3., V.B.2 and V.B.3. of this
Release, we received a number of comments that addressed whether the
amendments to the collection of information are necessary for the
proper performance of our functions, whether there are ways to enhance
the quality, utility, and clarity of the information to be collected,
and whether we could further minimize the burden. Only a few commenters
addressed the accuracy of our burden estimates for the proposed
collection of information, and suggesting in general terms that our
estimates were too low.\672\ These commenters did not provide empirical
data or suggest alternatives by which to recalculate our estimates,
making it difficult to evaluate these assertions or determine the
magnitude by which their estimates differ from ours.
---------------------------------------------------------------------------

    \670\ See Implementing Proposing Release, supra note 7, at
section V.B.
    \671\ Id.
    \672\ AIMA Letter; BCLBE Letter; Gunderson Letter; IAA General
Letter. See also supra notes 577, 584, 613, 619 and 620.
---------------------------------------------------------------------------

    To address these and other comments we received, we are adopting
Form ADV with a number of changes that improve the clarity and utility
of the information collected and reduce the amount of information
required by the amendments.\673\ Many of these changes include removing
or re-formulating proposed questions that commenters identified as most
burdensome.\674\ We continue to believe that the check-the-box style of
most of the Form ADV items, as well as some of the features of the IARD
(such as drop-down boxes for common responses and the ability to pre-
populate data), will mitigate the reporting burden, and several
commenters confirmed our assumption that much of the information
required by the amendments should be readily available to most
advisers.\675\ The changes we are making from the proposal will reduce
the amount of information that advisers must file and result in
decreased burdens for advisers from the proposal. However, in light of
the general comments we received about burdens, we are also not
reducing our burden estimates.\676\
---------------------------------------------------------------------------

    \673\ See section II.C.
    \674\ See supra notes 245-247, 262, 286, 300, 302 and
accompanying text.
    \675\ See supra note 570.
    \676\ Some of the estimates provided in this section differ from
those provided in the Implementing Proposing Release, but these
differences reflect updated information regarding employment costs
and the number of advisers subject to the reporting, not a change to
the proposed estimate of time an adviser would spend on the
reporting or the out-of-pocket costs an adviser would incur.

---------------------------------------------------------------------------

    We discuss below, in three sub-sections, the estimated revised
collection of information requirements for Form ADV: first, we provide
estimates for the revised and new burdens resulting from the amendments
to Part 1A; second, we determine how those estimates will be reflected
in the annual burdens attributable to Form ADV; and third, we calculate
the total revised burdens associated with Form ADV.
1. Changes in Average Burden Estimates and New Burden Estimates
a. Estimated Change in Burden Related to Part 1A Amendments (Not
Including Private Fund Reporting)
    We are adopting amendments to several items in Part 1A, some that
are merely technical changes or very simple in nature, and others that
will require more of an adviser's time. The paperwork burdens of filing
an amended Part 1A of Form ADV will, however, vary among advisers,
depending on factors such as the size of the adviser, the complexity of
its operations, and the number or extent of its affiliations. Although
burdens will vary among advisers, we believe that the revisions to Part
1A will impose few additional burdens on advisers in collecting
information because advisers should have ready access to all the
information necessary to respond to the revised items in their normal
course of operations. We also are working with FINRA, as our IARD
contractor, to implement measures intended to minimize the burden for
advisers filing the amended Form ADV on the IARD (e.g., pre-populating
fields and drop-down boxes for common responses). We anticipate,
moreover, that the responses to many of the questions are unlikely to
change from year to year, minimizing the ongoing reporting burden
associated with these questions.
    As we explained in the Implementing Proposing Release, in large
part, the changes we are making to Part 1A of Form ADV, including those
to account for the statutory increase in the threshold for Commission
registration, primarily refine or expand existing questions or request
information advisers already have for compliance or fund offering
purposes. For instance, some of the changes to Item 5 require advisers
to provide numerical responses to certain questions about their
employees. An adviser likely already had this information in order to
respond to those questions in the previous version of the form by
checking boxes that correspond to a range of numbers. Likewise, the
amendments to Item 8 require an adviser to expand on information it
provided in response to Item 8 in the previous version of the form,
such as whether the broker-dealers the adviser recommends or has
discretion to select for client transactions are related persons of the
adviser. Other questions expand upon existing requirements to elicit
information advisers already have available for compliance purposes,
such as whether the soft dollar benefits they reported receiving under
the previous version of Item 8 qualify for the safe harbor under
section 28(e) of the Exchange Act for eligible research or brokerage
services. As amended, Item 2 requires an adviser to report to us its
basis for registration or reporting, as already determined for
compliance purposes. Other amendments to Items 5, 6 and 7 expand lists
of information advisers already provided to us on the previous version
of Form ADV, such as types of advisory activities the advisers perform
and other types of business engaged in by advisers and their related
persons. Amendments to Item 9 better align the information required to
be reported with information advisers have for purposes of complying
with rule 206(4)-2. Finally, we believe that several of the new
questions merely require advisers to provide readily available or
easily accessible information.\677\
---------------------------------------------------------------------------

    \677\ For example, Item 1 requires advisers to provide contact
information for their Chief Compliance Officers and report whether
they have $1 billion or more in assets; Item 3 requires advisers to
indicate their form of organization. See supra section II.C.6.
---------------------------------------------------------------------------

    We anticipate that other amended questions may take longer for
advisers to complete, even with readily available information, such as
calculating regulatory assets under management according to our revised
instruction. Other new items will likely present greater burdens for
some advisers but not others, depending on the nature and complexity of
their businesses, such as the requirement to provide a list of the
Commission file numbers of investment companies they advise or
providing expanded information about related person financial industry
affiliates.\678\
---------------------------------------------------------------------------

    \678\ Advisers may, however, omit certain related persons from
their Schedule D reporting requirements in accordance with our
revised instruction. We expect this change from the proposal will
significantly reduce burdens associated with this item. See supra
note 300.
---------------------------------------------------------------------------

    We estimate that these amendments, taken as a whole, will require
an average of approximately 4.5 hours per adviser to complete. We have
arrived at this estimate, in part, by comparing the relative complexity
and availability of the information elicited by the amended items and
the nature of the response required (i.e., checking a box as opposed to
providing a narrative response) to the current form and its approved
burden. As a result, we estimate that the average total collection of
information burden will increase to 40.74 hours per adviser for the
first year that an adviser completes Form ADV (Part 1 and Part 2).\679\
---------------------------------------------------------------------------

    \679\ Current approved per adviser total (36.24) + estimated per
adviser increase (4.5) = 40.74.
---------------------------------------------------------------------------

b. New Estimated Burden Related to Private Fund Reporting Requirements
    Revised Item 7.B. and Section 7.B. of Schedule D will provide us
with basic census data on private funds and will permit us to conduct a
more robust risk assessment of private fund advisers for purposes of
targeting our examinations. As discussed in the Implementing Proposing
Release, the information will include fund data such as basic
organizational, operational, and investment characteristics of the
fund; the gross amount of assets held by the fund; and the fund's
service providers, or gatekeepers. We believe much of this information
is readily available to private fund advisers because, among other
things, it is information that private fund investors commonly seek in
their due diligence questionnaires or it is the kind of information
that is often included in a private placement memorandum offering fund
shares, and commenters confirmed our understanding.\680\
---------------------------------------------------------------------------

    \680\ See, with respect to private fund reporting under Item
7.B. specifically, Katten Foreign Advisers Letter (``Virtually all
of the requested information would already have been provided to
investors in the fund through an offering document or follow up
status reports.'') and NRS Letter (arguing that the expanded private
fund disclosures on Schedule D would ``replicate the due diligence
questionnaire information.* * *''). See also ABA Committees Letter
(``We expect that most [exempt reporting advisers] will already have
most of the information requested by Form ADV Part 1 readily
available.''); Merkl Implementing Letter (confirming that the
disclosure requirements would not impose a significant burden on
advisers). See also supra note 570.
---------------------------------------------------------------------------

    Although we understand that the required information is readily
available to private fund advisers, we expect that these amendments
could subject advisers, particularly those with many private funds, to
a significantly increased paperwork burden. For this reason, as we
explained in the Implementing Proposing Release, we have included
several measures to minimize the increased burden associated with
private fund reporting. First, an adviser will be permitted to

exclude from its reporting on Section 7.B.(1) of Schedule D any private
fund for which another adviser is filing Section 7.B.(1).\681\ Second,
an adviser managing a master-feeder arrangement will be permitted to
submit a single Schedule D for the master fund and all of the feeder
funds if separately submitted data would otherwise be substantially
identical.\682\ Finally, an adviser with a principal office and place
of business outside the United States may omit from Section 7.B.(1) of
Schedule D any private fund that, during the adviser's last fiscal
year, was not a United States person, was not offered in the United
States and was not beneficially owned by any United States person.\683\
We are also working with FINRA to implement measures in the IARD
intended to minimize the burden for advisers filing amended Form ADV,
such as the ability to automatically pre-populate private fund service
provider information provided for other funds managed by the same
adviser. In addition, although we are generally expanding the
information previously required in Section 7.B.(1), we have removed the
requirement that advisers report the funds that their related persons
manage.
---------------------------------------------------------------------------

    \681\ See supra note 223.
    \682\ See supra note 224 and accompanying text.
    \683\ See supra note 225 and accompanying text.
---------------------------------------------------------------------------

    Considering the changes to Item 7.B. and Section 7.B. of Schedule D
as a whole, as well as our efforts to mitigate the reporting burden and
to make technological upgrades to the IARD, we estimate that each
adviser managing private funds will spend, on average, 1 hour per
private fund to complete these questions.
c. New Estimated Burden Related to Exempt Reporting Adviser Reporting
Requirements
    Exempt reporting advisers are required to complete a limited number
of items in Part 1A of Form ADV (consisting of Items 1, 2.B., 3, 6, 7,
10, 11 and corresponding schedules), and are not required to complete
Part 2. We believe the information required by these items should be
readily available to any adviser, particularly the identifying data and
control person information required by Items 1, 3, and 10, and
commenters agreed.\684\ As we noted in the Implementing Proposing
Release, the check-the-box style of most of these items, as well as
some of the features of the IARD (such as drop-down boxes for common
responses) should also keep the average completion time for these
advisers to a minimum.\685\ Moreover, in our staff's experience, the
types of advisers that will meet the criteria for exempt reporting
advisers are unlikely to have significantly large numbers of
affiliations, and we do not expect that they will need to report
disciplinary events at a greater rate than currently registered
advisers.\686\ We estimate that these items, other than Item 7.B., will
take each exempt reporting adviser approximately 2 hours to complete.
We anticipate that, like registered advisers, exempt reporting advisers
will each spend 1 additional hour per private fund to complete Item
7.B. and Section 7.B of Schedule D.
---------------------------------------------------------------------------

    \684\ See supra notes 570 and 680.
    \685\ See Implementing Proposing Release, supra note 7, at
section V.B.1.c.
    \686\ As of April 7, 2011, approximately 13% of SEC-registered
investment advisers reported a disclosure in Item 11 of Form ADV.
---------------------------------------------------------------------------

2. Annual Burden Estimates
a. Estimated Annual Burden Applicable to All Registered Investment
Advisers
i. Estimated Initial Hour Burden (Not Including Burden Applicable to
Private Funds)
    As a result of the transition filing discussed above,\687\ we
expect the total number of registered advisers responding to this
collection of information will be 9,750.\688\ Approximately 11,500
investment advisers are currently registered with the Commission.\689\
We expect 3,200 will withdraw from registration.\690\ We expect about
750 advisers who currently rely on the private adviser exemption to
apply for registration with us, and we estimate that approximately 700
new advisers will register with us each year following effectiveness of
the Dodd-Frank Act amendments.\691\
---------------------------------------------------------------------------

    \687\ See supra section V.B.1.
    \688\ See supra note 655.
    \689\ Based on IARD data as of April 7, 2011.
    \690\ As a consequence of section 410 of the Dodd-Frank Act, we
estimate that approximately 3,200 advisers currently registered with
the Commission will be required to withdraw their registration and
register with one or more state securities authorities. See supra
section V.B.1.
    \691\ (3,200 (SEC advisers expected to withdraw from
registration)/11,500 (total SEC advisers)) x 1000 (average number of
new advisers registered with the Commission each year) = 0.28 x 1000
= 280 (number of additional new advisers registering with the
states, not the SEC). 1000-280 = 720. We have rounded this number to
700 for purposes of our analysis. See also supra note 609 and infra
note 734.
---------------------------------------------------------------------------

    The estimated total annual burden applicable to these registered
advisers, including new registrants, but excluding private fund
reporting requirements, is 397,215 hours.\692\ As discussed in the
Implementing Proposing Release, we believe that most of the paperwork
burden will be incurred in advisers' initial submission of the new and
amended items of Part 1A of Form ADV, and that over time this burden
will decrease substantially because advisers will generally only need
to report updating information.\693\ Amortizing this total burden over
a three-year period to reflect the anticipated average period of time
that advisers will use the revised form will result in an average
estimated burden of 132,405 hours per year,\694\ or 13.58 hours per
year for each new applicant and for each currently registered adviser
that will remain registered with the Commission.\695\
---------------------------------------------------------------------------

    \692\ 40.74 per-adviser burden x 9,750 = 397,215 hours.
    \693\ See Implementing Proposing Release, supra note 7, at
section V.B.2.a.i.
    \694\ 397,215/3 = 132,405.
    \695\ 132,405/9,750 = 13.58.
---------------------------------------------------------------------------

ii. Estimated Initial Hour Burden Applicable to All Registered Advisers
to Private Funds
    The amount of time that a registered adviser managing private funds
will incur to complete Item 7.B. and Section 7.B. of Schedule D will
vary depending on the number of private funds the adviser manages. Of
the advisers currently registered with us, we estimate that
approximately 2,850 advise private funds, will remain registered with
us following effectiveness of the Dodd-Frank Act amendments and have a
December 31 fiscal year end.\696\ Based on these advisers' Form ADV
filings, we estimate that 52% of them, or approximately 1,480,
currently advise an average of 3 private funds each; 43%, or
approximately 1,230 advisers, currently advise an average of 10 private
funds each; and the remaining 5%, or approximately 140 advisers,
currently advise an average of 79 private funds each.\697\ As we
discussed above, we estimate that private fund advisers will spend, on
average, 1 hour per private fund completing Item 7.B. and Section 7.B.
of Schedule D. As a result, the

private fund reporting requirements that will be applicable to
registered investment advisers will add 27,800 hours to the overall
annual burden applicable to registered advisers.\698\
---------------------------------------------------------------------------

    \696\ IARD data as of April 7, 2011 show that 3,700 advisers
indicate by reporting a fund in Schedule D, Section 7.B. that they,
or a related person, advise private funds or investment-related
funds. Based on IARD data, we estimate that 850 of these 3,700
advisers have a fiscal year end other than December 31 or will
switch to state registration. See supra note 529. With respect to
these 850 advisers, the burden of reporting this information is
accounted for under rule 203A-5. See infra note 768. 3,700-850 =
2,850.
    \697\ Based on IARD data as of April 7, 2011. Form ADV currently
asks for an adviser to report about investment-related partnerships
and limited liability companies advised by the adviser and its
related persons. As a result, the data we have obtained from IARD
over-estimates the average number of funds as a result of reporting
of the same fund multiple times by affiliated registered advisers.
    \698\ (1,480 advisers x 3 hours (3 funds x 1 hour per fund)) +
(1,230 advisers x 10 hours (10 funds x 1 hour per fund)) + (140
advisers x 79 hours x 1 hour per fund)) = 4,440 + 12,300 + 11,060 =
27,800.
---------------------------------------------------------------------------

    In addition to currently registered private fund advisers, we
estimate that about 200 new private fund advisers will register with us
annually \699\ and that 750 advisers will register with us that
previously relied on the private adviser exemption. We believe that
these 950 newly registering private fund advisers will, on average, be
similar to the currently registered private fund advisers. However, in
contrast to the currently registered advisers, this group is unlikely
to include any advisers managing a large number of private funds. For
example, among the 750 advisers that currently rely on the private
adviser exemption, we would not expect any of them to have more than 14
private fund clients, the most that had been allowed under the
exemption provided by section 203(b)(3) of the Advisers Act. In
addition, for the 200 new private fund advisers that we expect to
register each year, the elimination of the private adviser exemption
means that they will be subject to registration requirements even if
they have only a single private fund client as long as they are not
eligible for another exemption. As a result, we estimate that the
average newly registering private fund adviser will (like the average
currently registered private fund adviser) manage approximately 6
private funds,\700\ but we do not anticipate that any subgroup of these
new registrants will manage a large number of private funds (unlike the
5% of currently registered private fund advisers that we estimate
manage an average of 79 private funds each). Based on these estimates,
we expect that private fund reporting requirements will add 4,500 hours
attributable to the 750 advisers registering because of the elimination
of the private adviser exemption \701\ and 1,200 hours attributable to
private fund advisers registering as a result of normal growth.\702\
---------------------------------------------------------------------------

    \699\ About 30% of current registrants report that they advise
one or more private funds. (3,700 advisers to private funds/11,500
registered advisers). Applying the same proportion to the 700 new
registrants that we have estimated will register with us annually
results in approximately 200 additional advisers to private funds
each year. (700 x 0.30 = 210).
    \700\ Approximately 65% of advisers that reported a fund in
Schedule D, Section 7.B. listed five or fewer funds and 72% of
advisers that registered since April 1, 2010 and reported a fund
reported five or fewer private funds. The average number of private
funds reported by new registrants in the past year is about 6 funds.
    \701\ 750 advisers x 6 private funds on average x 1 hour/private
fund = 4,500.
    \702\ 200 advisers x 6 private funds on average x 1 hour/private
fund = 1,200.
---------------------------------------------------------------------------

    The total annual burden related to private fund reporting by
registered advisers is 33,500 hours.\703\ As we discussed in the
Implementing Proposing Release, we believe that most of the paperwork
burden will be incurred in connection with advisers' initial submission
of private fund data, and that over time this burden would decrease
substantially because the paperwork burden will be limited to updating
information.\704\ Amortizing this total burden imposed by Form ADV over
a three-year period, as we did above with respect to the initial filing
or re-filing of the rest of the form, results in an average estimated
burden of 11,167 hours per year,\705\ or 2.94 hours per year for each
new private fund adviser and for each private fund adviser currently
registered with the Commission.\706\
---------------------------------------------------------------------------

    \703\ 27,800 for existing registered advisers + 4,500 for no
longer exempt advisers + 1,200 for estimated new registrants due to
growth = 33,500.
    \704\ See Implementing Proposing Release, supra note 7, at
section V.B.2.a.ii.
    \705\ 33,500/3 = 11,167.
    \706\ 11,167/(2,850 + 200 + 750) = 2.94.
---------------------------------------------------------------------------

iii. Estimated Annual Burden Associated With Amendments, New Brochure
Supplements and Delivery Obligations
    The currently approved collection of information burden for Form
ADV has three elements not discussed above: (i) The annual burden
associated with annual and other amendments to Form ADV; (ii) the
annual burden associated with creating new Part 2 brochure supplements
for advisory employees and filing interim amendments to existing
brochure supplements throughout the year; and (iii) the annual burden
associated with delivering codes of ethics to clients as a result of
the offer of such codes contained in the brochure. Although we do not
anticipate that the amendments we are adopting to Form ADV will affect
the per adviser burden imposed by these three elements, the Dodd-Frank
Act's amendments to sections 203A and 203(b)(3) will change our
estimates of the number of advisers subject to them, which will result
in a change to the total annual burden associated with these elements
of the collection of information for Form ADV.\707\
---------------------------------------------------------------------------

    \707\ We anticipate that the clarification we are making to the
brochure supplement (Part 2B) would not affect this burden estimate.
See note 337 and accompanying text for a discussion of this
clarifying amendment.
---------------------------------------------------------------------------

    Based on IARD data, we continue to estimate that, on average, each
adviser filing Form ADV through the IARD will amend its form two times
during the year.\708\ On average, these consist of one interim updating
amendment (at an estimated 0.5 hours per amendment) and one annual
updating amendment (at an estimated 6 hours per amendment) each year.
In addition, we estimate that each adviser will, on average, spend 1
hour per year making interim amendments to brochure supplements and an
additional 1 hour per year to prepare new brochure supplements as
required by Part 2.\709\ We also expect advisers to continue to spend
an average of 1.3 hours annually to meet obligations to deliver codes
of ethics to clients.\710\ These obligations will add 95,550 hours
annually to the collection of information, consisting of 63,375 hours
attributable to annual and interim updating amendments,\711\ 9,750
hours attributable to interim amendments to brochure supplements,\712\
9,750 hours attributable to the creation of new brochure
supplements,\713\ and 12,675 hours for delivery of codes of
ethics.\714\
---------------------------------------------------------------------------

    \708\ Based on IARD data regarding the number of filings of Form
ADV amendments. See Part 2 Release, supra note 67 at n.329.
    \709\ See Part 2 Release, supra note 668 at nn.333, 336-37 and
accompanying text.
    \710\ Id.
    \711\ (9,750 advisers x 0.5 hours/other than annual amendment) +
(9,750 advisers x 6 hours/annual amendment) = 63,375.
    \712\ 9,750 advisers x 1 hour = 9,750.
    \713\ 9,750 advisers x 1 hour = 9,750.
    \714\ 9,750 advisers x 1.3 hours = 12,675.
---------------------------------------------------------------------------

iv. Estimated Annual Cost Burden
    The currently approved collection of information burden for Form
ADV has a one-time initial cost for outside legal and compliance
consulting fees in connection with the initial preparation of Part 2 of
Form ADV. Although we do not anticipate that the amendments we are
adopting to Form ADV will affect the per adviser cost burden estimates
for outside legal and compliance consulting fees, the Dodd-Frank Act's
amendments to sections 203A and 203(b)(3) of the Advisers Act will
result in a significant change to our estimates of the number of
advisers subject to these costs. We discuss this aspect of the annual
cost burden more fully below. In addition to the estimated legal and
compliance consulting fees, we also anticipate that some registered
advisers may incur additional outside costs related to the Form ADV
amendments we are adopting today that require advisers to

report the fair value of private fund assets.\715\
---------------------------------------------------------------------------

    \715\ See Form ADV: Instructions for Part 1A, instr. 5.b.(4).
---------------------------------------------------------------------------

    Advisers to private funds that do not use fair value methodologies
will likely incur costs to comply with the requirement to report the
fair value of those assets on Form ADV, which could (but is not
required to) include reliance on a third party or outside valuation
service. We anticipate that these costs will vary, but we understand
that private fund advisers, including those that may not use fair value
methodologies for reporting purposes, perform administrative services,
including valuing assets, internally as a matter of business
practice.\716\ Based on registered advisers' responses to Items 5.D.,
7.B., and 9.C. of Form ADV,\717\ we estimate that approximately 3% of
registered advisers have at least one private fund client that may not
be audited.\718\ These advisers therefore may incur costs to fair value
their private fund assets.\719\ As explained above, we estimate that
approximately 4,270 registered advisers have, or after registering with
us will have, at least one private fund client.\720\ We therefore
estimate that approximately 130 registered advisers may incur costs as
a result of the fair value requirement.\721\ We estimated in the
Implementing Proposing Release that an adviser without the internal
capacity to value specific illiquid assets would obtain pricing or
valuation services from an outside administrator or other service
provider at a cost ranging from $250 to $75,000 annually.\722\
Commenters did not address these estimates, and we continue to believe
they are accurate. Accordingly, we estimate that the 130 advisers would
incur costs of $37,625 each on an annual basis, which is the middle of
the range of estimated fair value costs, for an aggregate annual cost
of $4,891,250.\723\
---------------------------------------------------------------------------

    \716\ For example, an adviser to a hedge fund may value fund
assets for purposes of allowing new investments in the fund or
redemptions by existing investors, which may be permitted on a
regular basis after an initial lock-up period. An adviser to a
private equity fund may obtain valuation of portfolio companies in
which the fund invests in connection with financing obtained by
those companies. Advisers to private funds also may value portfolio
companies each time the fund makes (or considers making) a follow-on
investment in the company. Private fund advisers could use these
valuations as a basis for complying with the fair valuation
requirement with respect to private fund assets.
    \717\ Item 5.D. asks advisers to identify the types of clients
they have, including clients that are pooled investment vehicles.
Item 7.B. asks if the adviser or its related person is a general
partner in an investment-related limited partnership or manager of
an investment-related limited liability company, or if the adviser
advises any other ``private fund.'' Item 9.C. asks whether an
independent public accountant audits annually the pooled investment
vehicles that the adviser manages and if audited financial
statements are distributed to investors in the pools.
    \718\ A fund that is relying on the audit provision in our
custody rule will have provided the fair value of its assets in its
audited financial statements that are prepared in accordance with
GAAP.
    \719\ We note, however, that at least some of these advisers may
currently fair value private fund assets. For instance, funds that
do not prepare financial statements in accordance with GAAP (which
is required to rely on an exception in our custody rule) may
nonetheless use a fair value standard other than that specified in
GAAP and thus may not incur any additional costs. See supra notes
98-100 and accompanying text (explaining that an adviser may adopt a
fair valuation standard other than GAAP or another international
accounting standard that will satisfy the requirement, if developed
and applied in good faith).
    \720\ See supra note 637.
    \721\ 4,270 x 0.03 = 128.1.
    \722\ See Implementing Proposing Release, supra note 7, at n.369
and accompanying text.
    \723\ 130 x $37,625 = $4,891,250.
---------------------------------------------------------------------------

    With respect to outside legal assistance or outside consulting
services, the currently approved collection of information burden is
based on an estimate that some, but not all, registered advisers will
elect to obtain these services on a one-time basis to draft the new
narrative brochure for a total cost of $22,775,400.\724\ By the time
the amendments to Form ADV that we are adopting today become effective,
substantially all registered advisers will have completed their initial
filing of the narrative brochure required by our recent amendments to
Part 2 of Form ADV and will have already incurred these estimated one-
time costs.\725\ As a result, the only respondents that we expect will
incur legal and consulting costs for the initial drafting of Part 2 of
Form ADV, subsequent to the effective date of the amendments to Form
ADV we are adopting today, will consist of the estimated 700 new
advisers that we expect to register annually and the estimated 750
advisers that will have to register as a result of the elimination of
the private adviser exemption.\726\
---------------------------------------------------------------------------

    \724\ See Part 2 Release, supra note 67, at text accompanying
n.328. We estimated that a total of 2,941 advisers would elect to
obtain outside legal assistance and that 3,441 advisers would elect
to obtain outside consulting services.
    \725\ See id. at section V.
    \726\ See supra note 691 and text following note 699.
---------------------------------------------------------------------------

    For purposes of estimating the currently approved amount of this
one-time cost, we divided advisers into three groups--small, medium and
large--based on their number of employees. Different costs per adviser
were assigned based on the group to which the adviser belongs.\727\ We
expect that the 750 newly registering private fund advisers and 700 new
advisers registering annually will be medium-sized.\728\ In the Part 2
Release, we estimated that the initial cost related to preparation of
Part 2 of Form ADV would be $4,400 for legal services and $5,000 for
compliance consulting services, in each case, for those medium-sized
advisers who engaged legal counsel or consultants.\729\ The currently
approved burden anticipates that a quarter of medium-sized advisers
would seek the help of outside legal services and half would seek the
help of compliance consulting services. Accordingly, we estimate that
350 of these advisers would use outside legal services, for a total
cost burden of $1,540,000,\730\ and 725 advisers would use outside
compliance consulting services, for a total cost burden of
$3,625,000,\731\ resulting in a total cost burden among all respondents
of $5,165,000 for outside legal and compliance consulting fees related
to drafting narrative brochures.\732\
---------------------------------------------------------------------------

    \727\ For purposes of this estimate, we categorize small
advisers as advisers with 10 or fewer employees, medium advisers as
having between 11 and 1,000 employees, and large advisers as those
with 1,000 or more employees. See Part 2 Release, supra note 668, at
nn.301 and 324.
    \728\ We would not expect these advisers to be large in this
sense because advisers are likely to have become subject to
registration obligations before engaging 1,000 or more employees.
Some of these advisers may be small, but the increase in the
threshold for registration with the Commission will limit the number
of small advisers registering with us.
    \729\ See Part 2 Release, supra note 67, at text accompanying
nn.324 and 325.
    \730\ 25% x (750 private fund advisers + 700 new advisers
registering annually) = approximately 350 advisers. $4,400 for legal
services x 350 advisers = $1,540,000.
    \731\ 50% x (750 private fund advisers + 700 new advisers
registering annually) = 725 advisers. $5,000 for consulting services
x 725 advisers = $3,625,000.
    \732\ $1,540,000 + $3,625,000 = $5,165,000.
---------------------------------------------------------------------------

    Together, we estimate that the total cost burden among all
respondents for outside legal and compliance consulting fees related to
drafting narrative brochures and for third party or outside valuation
services to be $10,056,250.\733\
---------------------------------------------------------------------------

    \733\ $5,165,000 (legal and consulting services) + $4,891,250
(third party fair valuation services) = $10,056,250
---------------------------------------------------------------------------

b. Estimated Annual Burden Applicable to Exempt Reporting Advisers
i. Estimated Initial Hour Burden
    Based on publications, reports, and general information publicly
available from trade organizations, financial research companies, and
news organizations as well as safe harbor filings with the SEC, we
expect approximately 2,000 investment advisers will qualify for an
exemption from registration but will be required to

submit reports to us on Form ADV.\734\ As we explained in the
Implementing Proposing Release, the paperwork burden applicable to
these new exempt reporting advisers will consist of the burden
attributable to completing a limited number of items in Part 1A as well
as the burden attributable to the private fund reporting requirements
of Item 7.B. and Section 7.B. of Schedule D.\735\ We estimated the
burden to complete the subset of items in Part 1A applicable to exempt
reporting advisers to be 2 hours, which would result in an annual
burden of approximately 4,000 hours.
---------------------------------------------------------------------------

    \734\ This estimate was collectively derived from various
sources including the National Venture Capital Association's 2010
Yearbook (http://www.nvca.org), First Research reports (http://www.firstresearch.com), Preqin reports (http://www.preqin.com),
Bloomberg (http://www.bloomberg.com), the Managed Funds Association
(http://www.managedfunds.org), PerTrac data (http://www.pertrac.com), and Form D data. Specific data relevant to the
number or types of advisers that would be exempt reporting advisers
were not available, but the information located did inform the staff
to the probable number of exempt reporting advisers.
    \735\ See Implementing Proposing Release, supra note 7, at
section V.B.2.b.i.
---------------------------------------------------------------------------

    As discussed above, we estimate the private fund reporting
requirements of the form to be 1 hour per private fund. We assume that
each exempt reporting adviser currently relies on the private adviser
exemption and, therefore, has 14 or fewer private fund clients. Based
on reporting by registered advisers to private funds and industry
publications and reports, we expect each of these advisers, on average,
advises 6 private funds.\736\ Accordingly, we attribute an additional
12,000 burden hours to exempt reporting advisers' private fund
reporting requirements.\737\
---------------------------------------------------------------------------

    \736\ Id. Based upon the reported general number of private
funds and the estimated number of advisers to these private funds,
it is estimated that each adviser advises 6 private funds on
average. Approximately 2,000 exempt reporting advisers x 6 private
funds/adviser = 12,000 private funds. This represents an increase
from our estimate of 10,000 private funds in the Implementing
Proposing Release, which is attributable to updated IARD data that
indicate each private fund adviser now advises approximately 6
funds, instead of 5. Compare supra note 700 with Implementing
Proposing Release, supra note 7, at n.406.
    \737\ 2,000 exempt reporting advisers x 6 private funds/adviser
x 1 hour/private fund = 12,000.
---------------------------------------------------------------------------

    The estimated total annual hour burden applicable to exempt
reporting advisers is 16,000 hours.\738\ We believe that most of the
paperwork burden will be incurred in respect of the initial submission
of Form ADV, and that over time this burden will decrease substantially
because the paperwork burden will be limited to updating information.
Amortizing this total burden imposed by Form ADV over a three-year
period, as we did above with respect to the initial filing for
registered advisers, results in an average burden of an estimated 5,330
hours per year,\739\ or 2.67 hours per year, on average, for each
exempt reporting adviser.\740\
---------------------------------------------------------------------------

    \738\ 4,000 hours attributable to the portions of Form ADV that
these advisers are required to file other than the private fund
reporting + 12,000 hours attributable to private fund reporting =
16,000 hours.
    \739\ 16,000/3 = 5,330.
    \740\ 5,330/2,000 = 2.67.
---------------------------------------------------------------------------

ii. Estimated Annual Burden Associated With Amendments and Final
Filings

    In addition to the burdens associated with initial completion and
filing of the portion of the form that exempt reporting advisers will
be required to prepare, as in the Implementing Proposing Release, we
estimate that, on average: (i) Each exempt reporting adviser will
prepare an annual updating amendment; (ii) 20% of these advisers will
file an interim updating amendment; \741\ and (iii) 5% of these
advisers will file a final filing.\742\
---------------------------------------------------------------------------

    \741\ Approximately 20% of advisers with a fiscal year end of
December that filed an other-than-annual amendment changed Item 1 or
11 between April 1, 2009, and December 31, 2009 (period between
annual amendment filing time).
    \742\ Approximately 5% of advisers withdrew their SEC
registrations in 2010 and did not switch to state registration,
based on IARD data. We are assuming the same percentage of exempt
reporting advisers will submit final reports and not simultaneously
apply for registration with the Commission. Exempt reporting
advisers filing a final report because they are applying for
registration are not included in this count because there is no
independent burden associated with making this type of final filing;
they are, therefore, included in the number of advisers expected to
register each year as a result of normal annual growth. See supra
note 691.
---------------------------------------------------------------------------

    With respect to an exempt reporting adviser's annual updating
amendment of Form ADV, we expect that advisers will not need to spend a
significant amount of time entering responses into the electronic
version of the form to file their annual updating amendments because
the IARD will automatically pre-populate their prior responses. Based
on this consideration, we estimate that the average exempt reporting
adviser will spend 1 hour per year completing its annual updating
amendment to Form ADV. This estimate is based on our estimate for
registered advisers, but it is 85% shorter because exempt reporting
advisers will be required to complete and update only a limited number
of items in Part 1A of the form. We also estimate that 20% of the
exempt reporting advisers will file an interim updating amendment to
Items 1, 3, 10 or 11 of Form ADV,\743\ and we estimate that each such
amendment will require 0.5 hours. Based on the foregoing estimates, the
total paperwork burden of amendments to Form ADV and final filings on
Form ADV will be 2,200 hours per year for all exempt reporting
advisers.\744\
---------------------------------------------------------------------------

    \743\ See amended Form ADV: General Instruction 4.
    \744\ 2,000 advisers x 1 hour = 2,000 hours per year for annual
amendments. (2,000 advisers x 20%) x 0.5 hours = 200 hours per year
for interim amendments. 200 + 2,000 = 2,200 hours. Exempt reporting
advisers are not required to complete Part 2 of Form ADV and so will
not incur an hour burden to prepare new brochure supplements or the
cost burden that registered advisers will incur with respect to that
part of the form. Exempt reporting advisers also will not be
required to meet obligations to deliver codes of ethics to clients,
as is required of registered advisers.
---------------------------------------------------------------------------

3. Total Revised Burdens
    The revised total annual collection of information burden for
registered advisers to file and complete the revised Form ADV (Parts 1
and 2), including the initial burden for both existing and anticipated
new registrants, including private fund advisers, plus the burden
associated with amendments to the form, preparing brochure supplements,
and delivering codes of ethics to clients is estimated to be
approximately 239,122 hours per year.\745\ This represents a decrease
of 29,335 hours from the currently approved burden.\746\ This decrease
is primarily attributable to the anticipated withdrawal of 3,200
advisers from SEC registration.
---------------------------------------------------------------------------

    \745\ 132,405 hours per year attributable to initial preparation
of Form ADV + 11,167 hours per year attributable to initial private
fund reporting requirements + 63,375 hours per year for amendments
to Form ADV + 9,750 hours per year for brochure supplements for new
employees + 9,750 hours per year for brochure interim amendments +
12,675 hours per year to meet code of ethics delivery obligations =
239,122 hours.
    \746\ Current approved burden of 268,457 hours-revised burden
239,122 hours = 29,335 decrease in hours.
---------------------------------------------------------------------------

    Registered investment advisers are also expected to incur an annual
cost burden of $10,056,250, a reduction from the current approved cost
burden of $22,775,400. The decrease in annual cost burden is
attributable to the nature of the costs, which are one-time initial
costs to draft the narrative brochure. The transition to the narrative
brochure will have substantially been completed, so the newly incurred
one-time costs arise solely from new registrants.
    We further estimate that the total annual collection of information
burden for exempt reporting advisers to file and complete the required
items of Part 1A of Form ADV, including the burden associated with
amendments to the form and final filings, will be 7,530 hours.\747\
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    \747\ 5,330 hours per year attributable to initial preparation
of Form ADV + 2,200 hours per year for amendments = 7,530 hours.
---------------------------------------------------------------------------

    Based on the foregoing, the total annual hour burden for Form ADV
will

decrease by 21,805 hours to 246,652.\748\ Accordingly, we estimate that
the blended average per adviser amortized burden for Form ADV will be
20.99 hours,\749\ consisting of an average annual amortized burden of
24.52 hours for the estimated 9,750 registered advisers and 3.77 hours
for the estimated 2,000 exempt reporting advisers.\750\
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    \748\ 239,122 + 7,530 = 246,652.
    \749\ 246,652/11,750 = 20.99.
    \750\ Registered advisers (239,122/9,750 = 24.52), exempt
reporting advisers (7,530/2,000 = 3.77).
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C. Rule 203A-5

    Rule 203A-5 requires each investment adviser registered with us on
January 1, 2012 to file an amendment to its Form ADV no later than
March 30, 2012, and withdraw from Commission registration by June 28,
2012, if no longer eligible.\751\ The amendments to Form ADV will,
among other things, require each adviser to declare whether it remains
eligible for Commission registration and to report the market value of
its assets under management determined within 90 days of the
filing.\752\ The respondents to this information collection are all
investment advisers registered with the Commission on January 1, 2012.
Compliance with this collection of information is mandatory, and the
information collected on Form ADV is not kept confidential.
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    \751\ New rule 203A-5(b)-(c). See supra section II.A.1. Advisers
registered with us on July 21, 2011 that have at least $25 million
in assets under management will be exempt from the new prohibition
on Commission registration for mid-sized advisers until 2012, when
the rule will require them to switch to state registration and
withdraw their registration with us. See new rule 203A-5(a); supra
section II.A.1., note 28.
    \752\ See supra sections II.A.1. and II.A.2.
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    Rule 203A-5 that we are adopting today differs from our proposed
rule in several respects. First, the transition period begins on
January 1, 2012, not the July 21, 2011 effective date of the Dodd-Frank
Act, as proposed.\753\ Second, advisers will be required to file an
amended Form ADV by March 30, 2012 (instead of August 20, 2011, as
proposed), and mid-sized advisers no longer eligible for Commission
registration will be required to withdraw by June 28, 2012 (instead of
October 19, 2011, as proposed), which provides 180 days instead of the
90 days we proposed.\754\ Third, we are providing additional
flexibility for an adviser to choose the date by which it must
calculate its assets under management that it reports on Form ADV by
requiring the same 90 day period as in Form ADV today, instead of 30
days, as proposed.\755\
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    \753\ See proposed rule 203A-5(a)-(b); supra section II.A.1.
    \754\ See proposed rule 203A-5(b)-(c); supra section II.A.1.
    \755\ See new rule 203A-5(b); amended Form ADV: Instructions for
Part 1A, instr. 5.b.(4); supra section II.A.1.
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    As noted above, we requested comment on the PRA analysis contained
in the Implementing Proposing Release. Several commenters expressed
general concerns about the paperwork burdens of requiring all advisers
to make an additional one-time filing of Form ADV.\756\ Some commenters
argued that we should decrease the paperwork burden by exempting
advisers unaffected by the statutory changes from the Form ADV filing
requirement,\757\ or only requiring advisers to report their assets
under management.\758\ Several commenters agreed with us that the
transition should be delayed until the IARD is able to accept filings
of reviewed Form ADV, instead of implementing an alternative, such as
requiring interim paper filings that would increase the paperwork
burdens.\759\
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    \756\ See, e.g., ICI Letter; MFA Letter; NYSBA Committee Letter;
Shearman Letter.
    \757\ ICI Letter (recommending exempting advisers that do not
rely on assets under management to register with the SEC); MFA
Letter (recommending exempting private fund advisers that file an
initial Form ADV by July 21); NYSBA Committee Letter (recommending
exempting advisers who will continue to be eligible for Commission
registration and advisers relying on the section 203(b)(3) exemption
that we proposed would have to register with the Commission by July
21, 2011).
    \758\ Shearman Letter.
    \759\ See NASAA Letter (``the benefits of electronic filing,
including easy public access to the documents, are significant and
would outweigh any disadvantages imposed by a delay in filing
deadlines.''); NRS Letter (urging Commission not to ``regress to
paper filings'' which would be ``a huge step into the past'' and
``appears to be counter to Dodd-Frank Act purposes of transparency
and consistency.''). See also Dezellem Letter (the IARD is efficient
and reduces risks of misplacing paper documents and possible filing
errors); NYSBA Committee Letter (the IARD is the ``most efficient
mechanism for advisers and exempt reporting advisers to meet their
filing obligations and make such filings to the public.''). FINRA
informed us that the IARD will be updated to reflect the revisions
to Form ADV that we are adopting today beginning in November. See
supra section II.A.1.
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    Changing the deadline under rule 203A-5 for advisers to re-file
amended Form ADV to March 30, 2012, which coincides with most advisers'
required annual updating amendment, significantly reduces the paperwork
burden of rule 203A-5 by eliminating the requirement that these
advisers incur the costs associated with a special one-time filing
requirement.\760\ This deadline also coincides with the filing deadline
for newly registering private fund advisers, which, as one commenter
points out results in ``a single, comprehensive Form ADV filing to
register with the Commission'' instead of requiring two filings that
``would be costly, inefficient and potentially confusing.'' \761\
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    \760\ See supra note 511. See also CMC Letter (suggesting
``timing of the transition from Federal to state registration could
be centered around renewals for 2012'').
    \761\ See MFA Letter.
---------------------------------------------------------------------------

    We estimate that there will be approximately 3,900 respondents to
this collection of information filing an amendment to Form ADV.\762\
Each respondent will respond once. For purposes of the collection of
information burden for Form ADV, we estimate that the amendment will
take each adviser approximately 6 hours per amendment, on average,\763\
and that the proposed amendments to Part 1A of Form ADV will take each
adviser approximately 4.5 hours, on average, to complete.\764\ We
estimated that the total one-time burden for completing the proposed
Form ADV amendments to be 124,425 hours, plus an additional 33,350
hours for private fund reporting, for a total of 157,775 hours.\765\ As
discussed above, however, the number of advisers that we estimate will
complete an additional Form ADV amendment will be lower than under
proposed rule 203A-5. We estimate that 700 advisers that will remain
registered with the Commission after the switch will file an other-
than-annual amendment, and 3,200 mid-sized advisers will file a Form
ADV amendment with us before they switch to state registration.\766\ In
addition, of these 3,900 registered advisers, we estimate that 850
advise one or more private funds and will have to complete the private
fund reporting requirements.\767\ We expect this will take 8,373 hours,
and we estimate that the total one-time burden for completing

the Form ADV amendments to be 49,323 hours.\768\
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    \762\ See supra note 511. The PRA burden for filing Form ADV-W
is part of the PRA burden submitted for Form ADV-W. See infra
section VI.E. The Implementing Proposing Release erroneously
included Form ADV-W both in the PRA burden for proposed rule 203A-5
and for Form ADV-W. See sections V.C. and V.E. of the Implementing
Proposing Release.
    \763\ We anticipate that the hour burden for the refiling of
Form ADV for purposes of new rule 203A-5 will be the same as an
adviser's annual amendment filing, which has an approved burden of 6
hours. See supra section VI.B.2.a.iii.
    \764\ See supra sectionsVI.B.1.a.
    \765\ See Implementing Proposing Release, supra note 7, at nn.
403, 444.
    \766\ See supra note 511.
    \767\ Based on IARD data as of April 7, 2011, 839 advisers out
of the estimated 3,700 current SEC-registered advisers that advise
private funds do not have a December fiscal year end or are expected
to switch to state registration. We have rounded this number to 850
for purposes of this analysis.
    \768\ See supra notes 520-522, 528-532. ((6 hours (annual
amendment) + 4.5 hours (new items)) x 3,900) + ((442 advisers x 3
funds x 1 burden hour per fund) + (365 x 10 funds x 1 burden hour
per fund) + (43 advisers x 79 funds x 1 burden hour per fund)) =
44,100 (burden hours for Form ADV filing excluding private fund
reporting + 8,373 (burden hours for private fund reporting) = 49,323
total burden hours for Form ADV filing.
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D. Form ADV-NR

    We are making minor amendments to Form ADV-NR (OMB Control No.:
3235-0238), the form used to appoint the Secretary of the Commission as
an agent for service of process for certain non-resident advisers.\769\
Non-resident general partners or managing agents of SEC-registered
investment advisers must make a one-time filing of Form ADV-NR with the
Commission. Form ADV-NR requires these non-resident general partners or
managing agents to furnish us with a written irrevocable consent and
power of attorney that designates the Commission as an agent for
service of process, and that stipulates and agrees that any civil suit
or action against such person may be commenced by service of process on
the Commission. The amendments we are adopting reflect that exempt
reporting advisers will be filing reports on the IARD, and that they
will use Form ADV-NR in the same way and for the same purpose as it is
currently used by registered investment advisers. The collection of
information is necessary for us to obtain appropriate consent to permit
the Commission and other parties to bring actions against non-resident
partners or agents for violations of the Federal securities laws. This
collection of information is found at 17 CFR 279.4. The collection of
information is mandatory, and the information provided in response to
the collection is not kept confidential. The currently approved
collection of information in Form ADV-NR is 18 hours.
---------------------------------------------------------------------------

    \769\ See amended Form ADV-NR; Form ADV: General Instruction 16.
---------------------------------------------------------------------------

    In the Implementing Proposing Release, we estimated that
approximately 9,150\770\ investment advisers would be registered with
the Commission after the Dodd-Frank Act amendments to the Advisers Act
take effect and that approximately 2,000\771\ exempt reporting advisers
would file reports with the Commission, and that these advisers would
file Form ADV-NR at the same annual rate (0.17 percent) as advisers
registered with us.\772\ Accordingly, we estimated that the annual
aggregate information collection burden for Form ADV-NR would be 19
hours, an increase of one hour over the currently approved burden.\773\
We did not receive comments on these estimates. Based on updated IARD
data, we now estimate that approximately 9,750 \774\ investment
advisers will be registered with the Commission and continue to
estimate that approximately 2,000 \775\ exempt reporting advisers will
file reports with the Commission, and that these advisers will file
Form ADV-NR at an annual rate of 0.17 percent,\776\ for a total of
approximately 20 filings annually.\777\ We continue to estimate that
ADV-NR requires an average of one hour to complete. Accordingly, we
estimate that as a result of the amendments to Form ADV-NR and the
change in the number of filers after the effectiveness of the Dodd-
Frank Act, the annual aggregate information collection burden for Form
ADV-NR will be 20 hours, an increase of two hours over the currently
approved burden of 18 hours.\778\
---------------------------------------------------------------------------

    \770\ See Implementing Proposing Release, supra note 7, at
section V.D.
    \771\ See id.
    \772\ See id.
    \773\ See id.
    \774\ See supra note 655 and accompanying text.
    \775\ See supra note 734 and accompanying text.
    \776\ See Implementing Proposing Release, supra note 7, at
n.450.
    \777\ 0.17% (rate of filing) x (9,750 estimated registered
investment advisers + 2,000 estimated exempt reporting advisers) =
approximately 20 Form ADV-NR filings.
    \778\ 20 ADV-NR filings x 1 hour per filing = 20 hours. 20
hours-18 hours = 2 hours.
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E. Rule 203-2 and Form ADV-W

    We are amending rule 203A-2(b), the exemption from the prohibition
on registration for certain pension consultants. The amendments will
increase the minimum value of plan assets which an adviser must consult
from $50 to $200 million annually.\779\ An investment adviser will have
to be a pension consultant with respect to assets of plans having an
aggregate value of $200 million or more to be able to register with the
Commission. Those pension consultants providing consulting services to
plans of less than $200 million will be required to file a notice of
withdrawal of their registration in accordance with rule 203-2 on Form
ADV-W (OMB Control No. 3235-0313). The collection of information on
Form ADV-W is mandatory and is not kept confidential. The currently
approved collection of information for Form ADV-W is 500 hours for
1,000 responses.
---------------------------------------------------------------------------

    \779\ See amended rule 203A-2(a)(1).
---------------------------------------------------------------------------

    The amendments to the rule that we are adopting today do not differ
from our proposed amendments. Commenters supported our proposal and did
not discuss the proposal's collection of information estimates.\780\ In
the Implementing Proposing Release, we estimated that approximately 50
of the current advisers relying on this exemption from the prohibition
on registration would no longer be eligible to rely on the exemption if
adopted as proposed, and approximately 4,100 advisers also would have
to withdraw their Commission registration as a result of the Dodd-Frank
Act.\781\ We have lowered our estimate of advisers withdrawing from
Commission registration to 3,200 based on more current IARD data,\782\
but we continue to estimate that 50 of the current advisers relying on
this exemption from the prohibition on registration will no longer be
eligible to rely on the exemption as adopted.\783\
---------------------------------------------------------------------------

    \780\ NRS Letter; Pickard Letter.
    \781\ See Implementing Proposing Release, supra note 7, at n.453
and accompanying and following text.
    \782\ See supra note 510.
    \783\ Based on IARD data as of April 7, 2011, there are 322
advisers relying on the pension consultant exemption from
registration, and we estimate that approximately 15 percent will no
longer be eligible to rely on the exemption as adopted. This
estimate is based on our understanding that a typical pension
consultant will have plan assets far in excess of the higher
threshold, in light of the fact that most pension plans contain a
significant amount of assets.
---------------------------------------------------------------------------

    The estimated 50 advisers no longer eligible to rely on the
exemption, however, will have to file a notice of withdrawal on Form
ADV-W in accordance with rule 203-2 under the Advisers Act and withdraw
their registration based on the amendment to rule 203A-2(b).\784\ In
addition, as noted above, we estimate that approximately 3,200 advisers
also will have to withdraw their Commission registration as a result of
the Dodd-Frank Act. Because these advisers are registered today, we
further anticipate that these advisers will be switching from SEC to
state registration, and as a result will be filing a ``partial'' Form
ADV-W. We have estimated for purposes of our current approved burden
under the PRA for rule 203-2 and Form ADV-W, that a partial withdrawal
imposes an average burden of approximately 0.25 hours for an
adviser.\785\ Thus, we estimate that the amendment to rule 203A-2(b)
associated with filing Form ADV-W will generate a burden of
approximately

813 additional hours \786\ in addition to the approved burden of 500
hours for a total of 1,313 hours.
---------------------------------------------------------------------------

    \784\ See supra note 549 (discussing the fact that advisers
filing Form ADV-W due to our amendment to rule 203A-2(b) will likely
file partial withdrawals).
    \785\ See supra note 533.
    \786\ (3,200 + 50) responses on Form ADV-W x 0.25 hours = 812.5
hours.
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F. Form ADV-H

    Rule 204-4(e) provides a temporary hardship exemption for an exempt
reporting adviser having unanticipated technical difficulties that
prevent submission of a filing to the IARD system.\787\ Rule 203-3(a)
provides a similar temporary hardship exemption for registered advisers
that file an application on Form ADV-H (OMB Control No. 3235-
0538).\788\ Like rule 203-3(a), rule 204-4(e) requires advisers relying
on the temporary hardship exemption to file an application on Form ADV-
H in paper format no later than one business day after the filing that
is the subject of the Form ADV-H was due, and submit the filing on Form
ADV in electronic format with the IARD no later than seven business
days after the filing was due.\789\ Because we are adopting rule 204-4,
respondents to the collection of information on Form ADV-H will now
include exempt reporting advisers, in addition to registered advisers.
The collection of information on Form ADV-H is mandatory for registered
advisers and exempt reporting advisers relying on a temporary hardship
exemption. The information collected on Form ADV-H is not kept
confidential.
---------------------------------------------------------------------------

    \787\ New rule 204-4(e).
    \788\ Rule 203-3(a); 17 CFR 279.3 (Form ADV-H).
    \789\ New rule 204-4(e).
---------------------------------------------------------------------------

    In the Implementing Proposing Release, we estimated that exempt
reporting advisers would file approximately two responses to Form ADV-H
annually.\790\ We also estimated that Form ADV-H would impose the same
average burden per response on exempt reporting advisers as it imposes
on registered advisers--one hour. Thus, we estimated that rule 204-4