[Federal Register Volume 81, Number 51 (Wednesday, March 16, 2016)]
[Notices]
[Pages 14217-14218]
[FR Doc No: 2016-05924]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket No. FRA-2016-0002-N-8]

Proposed Agency Information Collection Activities; Comment
Request

AGENCY: Federal Railroad Administration (FRA), Department of
Transportation (DOT).

ACTION: Notice and request for comments.

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SUMMARY: In compliance with the Paperwork Reduction Act of 1995, this
notice announces that the renewal Information Collection Requests
(ICRs) abstracted below are being forwarded to the Office of Management
and Budget (OMB) for review and comment. The ICRs describe the nature
of the information collections and their expected burden. The Federal
Register notice with a 60-day comment period soliciting comments on the
following collections of information was published on December 29,
2015.

DATES: Comments must be submitted on or before April 15, 2016.

FOR FURTHER INFORMATION CONTACT: Mr. Robert Brogan, Information
Collection Clearance Officer, Office of Safety, Safety Regulatory
Analysis Division, RRS-21, Federal Railroad Administration, 1200 New
Jersey Ave. SE., Mail Stop 25, Washington, DC 20590 (Telephone: (202)
493-6292), or Ms. Kimberly Toone, Information Collection Clearance
Officer, Office of Administration, Office of Information Technology,
RAD-20, Federal Railroad Administration, 1200 New Jersey Ave. SE., Mail
Stop 35, Washington, DC 20590 (Telephone:<PHONE_NUMBER>). (These
telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION: The Paperwork Reduction Act of 1995 (PRA),
Public Law 104-13, sec. 2, 109 Stat. 163 (1995) (codified as revised at
44 U.S.C. 3501-3520), and its implementing regulations, 5 CFR part
1320, require Federal agencies to issue two notices seeking public
comment on information collection activities before OMB may approve
paperwork packages. 44 U.S.C. 3506, 3507; 5 CFR 1320.5, 1320.8(d)(1),
and 1320.12. On December 29, 2015, FRA published a 60-day notice in the
Federal Register soliciting comment on ICRs that the agency is seeking
OMB approval. See 80 FR 81423. FRA received no comments in response to
this notice.
    Before OMB decides whether to approve these proposed collections of
information, it must provide 30 days for public comment. 44 U.S.C.
3507(b); 5 CFR 1320.12(d). Federal law requires OMB to approve or
disapprove paperwork packages between 30 and 60 days after the 30 day
notice is published. 44 U.S.C. 3507(b)-(c); 5 CFR 1320.12(d); see also
60 FR 44978, 44983, Aug. 29, 1995. OMB believes that the 30 day notice
informs the regulated community to file relevant comments and affords
the agency adequate time to digest public comments before it renders a
decision. 60 FR 44983, Aug. 29, 1995. Therefore, respondents should
submit their respective comments to OMB within 30 days of publication
to best ensure having their full effect. 5 CFR 1320.12(c); see also 60
FR 44983, Aug. 29, 1995.
    The summaries below describe the nature of the information
collection requests (ICRs) and their expected burdens. The renewal
requests are being submitted for clearance by OMB as required by the
PRA.
    Title: System for Telephonic Notification of Unsafe Conditions at
Highway-Rail and Pathway Grade Crossings.
    OMB Control Number: 2130-0591.
    Abstract: The collection of information is set forth under 49 CFR
part 234. The rule is intended specifically to help implement Section
205 of the Rail Safety Improvement Act of 2008 (RSIA), Public Law 110-
432, Division A, which was enacted on October 16, 2008. Generally, the
rule is intended to increase safety at highway-rail and pathway grade
crossings. Section 205 of the RSIA mandates that the Secretary of
Transportation require certain railroad carriers to take a series of
specified actions related to setting up and using systems by which the
public is able to notify the railroad by toll-free telephone number of
safety problems at its highway-rail and pathway grade crossings. Such
systems are commonly known as Emergency Notification Systems (ENS) or
ENS programs. 49 CFR part 234 implements Section 2015 of the RSIA. The
information collected is used by FRA to ensure that railroad carriers
establish and maintain a toll-free telephone service to report
emergencies at all public, private, and pedestrian grade crossings for
rights-of-way over which they dispatch trains.
    Type of Request: Extension with change of a currently approved
information collection.
    Affected Public: Businesses (Railroads).
    Form(s): N/A.
    Total Annual Estimated Responses: 298,245.
    Total Annual Estimated Burden: 15,310 hours.
    Title: Control of Alcohol and Drug Use in Railroad Operations:
Addition of Post-Accident Toxicological Testing for Non-Controlled
Substances.
    OMB Control Number: 2130-0598.
    Abstract: Since 1985, as part of its accident investigation
program, FRA has conducted post-accident alcohol and drug tests on
railroad employees who have been involved in serious train accidents
(50 FR 31508, Aug. 2, 1985). If an accident meets FRA's criteria for
post-accident testing (see 49 CFR 219.201), FRA conducts tests for
alcohol and for certain drugs classified as controlled substances under
the Controlled Substances Act (CSA), Title II of the Comprehensive Drug
Abuse Prevention Substances Act of 1970 (CSA, 21 U.S.C. 801 et seq.).
Controlled substances are drugs or chemicals that are prohibited or
strictly regulated because of their potential for abuse or addiction.
The Drug Enforcement Agency (DEA), which is primarily responsible for
enforcing the CSA, oversees the classification of controlled substances
into five schedules. Schedule I contains illicit drugs, such as
marijuana and heroin, which have no legitimate medical use under
Federal law. Currently, FRA routinely conducts post-accident tests for
the following drugs: Marijuana, cocaine, phencyclidine (PCP), and
certain opiates, amphetamines, barbiturates, and benzodiazepines.
Controlled substances are drugs or chemicals that are prohibited or
strictly regulated because of their potential for abuse or addiction.
    FRA research indicates that prescription and OTC drug use has
become prevalent among railroad employees. For this reason, FRA has
added certain non-controlled substances to its routine post-accident
testing program, which currently routinely tests

only for alcohol and controlled substances. At this time, FRA is adding
two types of non-controlled substances, tramadol (a synthetic opioid)
and sedating antihistamines. Publication of the PATT Final Rule,
however, in no way limits FRA's post-accident testing to the identified
substances or in any way restricts FRA's ability to make routine
amendments to its standard post-accident testing panel without prior
notice. Furthermore, in addition to its standard post-accident testing
panel, FRA always has the ability to test for ``other impairing
substances specified by FRA as necessary to the particular accident
investigation.'' See 49 CFR 219.211(a). This flexibility is essential,
since it allows FRA to conduct post-accident tests for any substance
(e.g., carbon monoxide) that its preliminary investigation shows may
have played a role in an accident.
    FRA uses the additional information collected for research and
accident investigation purposes. The addition of non-controlled
substances to the post-accident testing panel helps inform FRA about a
broader range of potentially impairing prescription and OTC drugs that
may be currently contributing to the cause or severity of train
accidents/incidents. Research generated by these data will inform
future agency policy decisions regarding these non-controlled
substances.
    Type of Request: Extension without change of a currently approved
information collection.
    Form(s): N/A.
    Total Annual Estimated Responses: 32.
    Total Annual Estimated Burden: 5 hours.
    Addressee: Send comments regarding these information collections to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, 725 Seventeenth Street NW., Washington, DC 20503,
Attention: FRA Desk Officer. Comments may also be sent via email to OMB
at the following address<EMAIL_ADDRESS>    Comments are invited on the following: Whether the proposed
collections of information are necessary for the proper performance of
the functions of the Department, including whether the information will
have practical utility; the accuracy of the Department's estimates of
the burden of the proposed information collections; ways to enhance the
quality, utility, and clarity of the information to be collected; and
ways to minimize the burden of the collections of information on
respondents, including the use of automated collection techniques or
other forms of information technology.
    A comment to OMB is best assured of having its full effect if OMB
receives it within 30 days of publication of this notice in the Federal
Register.

    Authority: 44 U.S.C. 3501-3520.

    Issued in Washington, DC, on March 11, 2016.
Erin McCartney,
Acting Chief Financial Officer.
[FR Doc. 2016-05924 Filed 3-15-16; 8:45 am]
 BILLING CODE 4910-06-P


[Federal Register Volume 84, Number 134 (Friday, July 12, 2019)]
[Rules and Regulations]
[Pages 33681-33689]
[FR Doc No: 2019-12209]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 276

[Release No. IA-5249]

Commission Interpretation Regarding the Solely Incidental Prong
of the Broker-Dealer Exclusion From the Definition of Investment
Adviser

AGENCY: Securities and Exchange Commission.

ACTION: Interpretation.

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SUMMARY: The Securities and Exchange Commission (the ``SEC'' or the
``Commission'') is publishing an interpretation of a section of the
Investment Advisers Act of 1940 (the ``Advisers Act'' or the ``Act''),
which excludes from the definition of ``investment adviser'' any broker
or dealer that provides advisory services when such services are
``solely incidental'' to the conduct of the broker or dealer's business
and when such incidental advisory services are provided for no special
compensation.

DATES: Effective July 12, 2019.

FOR FURTHER INFORMATION CONTACT: James McGinnis, Senior Counsel,
Investment Adviser Regulation Office, at<PHONE_NUMBER> or
<EMAIL_ADDRESS>and Benjamin Kalish, Attorney-Advisor, or

Parisa Haghshenas, Branch Chief, Chief Counsel's Office at (202) 551-
6825 or<EMAIL_ADDRESS>Division of Investment Management, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-8549.

SUPPLEMENTARY INFORMATION: The Commission is publishing an
interpretation of the solely incidental prong of the broker-dealer
exclusion in section 202(a)(11)(C) of the Advisers Act [15 U.S.C.
80b].\1\
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    \1\ 15 U.S.C. 80b. Unless otherwise noted, when we refer to the
Advisers Act, or any paragraph of the Advisers Act, we are referring
to 15 U.S.C. 80b of the United States Code, at which the Advisers
Act is codified.
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Table of Contents

I. Introduction
II. Interpretation and Application
    A. Historical Context and Legislative History
    B. Scope of the Solely Incidental Prong of the Broker-Dealer
Exclusion
    C. Guidance on Applying the Interpretation of the Solely
Incidental Prong
III. Economic Considerations
    A. Background
    B. Potential Economic Effects

I. Introduction

    The Advisers Act regulates the activities of certain ``investment
advisers,'' who are defined in section 202(a)(11) of the Advisers Act
in part as persons who, for compensation, engage in the business of
advising others about securities. Section 202(a)(11)(C) excludes from
the definition of investment adviser--and thus from the application of
the Advisers Act--a broker or dealer ``whose performance of such
advisory services is solely incidental to the conduct of his business
as a broker or dealer and who receives no special compensation'' for
those services (the ``broker-dealer exclusion''). The broker-dealer
exclusion shows, on the one hand, that at the time the Advisers Act was
enacted Congress recognized broker-dealers commonly provided some
investment advice to their customers in the course of their business as
broker-dealers and that it would be inappropriate to bring broker-
dealers within the scope of the Advisers Act because of this aspect of
their business.\2\ On the other hand, the limitations of the exclusion
show that Congress excluded broker-dealer advisory services from the
scope of the Advisers Act only under certain circumstances--namely,
when those services are solely incidental to the broker-dealer's
regular business as a broker-dealer (the ``solely incidental prong'')
and when the broker-dealer receives no special compensation (the
``special compensation prong'').\3\
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    \2\ Opinion of General Counsel Relating to Section 202(a)(11)(C)
of the Investment Advisers Act of 1940, Investment Advisers Act
Release No. 2 (Oct. 28, 1940) (``Advisers Act Release No. 2'').
    \3\ See Regulation Best Interest, Securities Exchange Act
Release No. 83062 (April 18, 2018) [83 FR 21574 (May 9, 2018)]
(``Reg. BI Proposal''), at n.343. The broker-dealer exclusion is
conjunctive--that is, the broker-dealer must both provide investment
advice that is solely incidental to the conduct of his business as a
broker-dealer and the broker-dealer must receive no special
compensation. In the event that a broker-dealer's investment advice
fits within the guidance of this Release with respect to the solely
incidental prong, that broker-dealer must also receive no special
compensation for the advisory service to be consistent with the
broker-dealer exclusion.
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    On April 18, 2018, the Commission proposed a rulemaking intended to
enhance the standard of conduct for broker-dealers when providing
recommendations.\4\ The Commission also proposed an interpretation
intended to reaffirm and in some cases clarify the standard of conduct
for investment advisers,\5\ as well as a rulemaking intended to provide
retail investors with clear and succinct information regarding key
aspects of their brokerage and advisory relationships.\6\ The Reg. BI
Proposal discussed the broker-dealer exclusion and requested comment on
the scope of the exclusion as applied to a broker-dealer's exercise of
investment discretion.\7\ While some commenters addressed when a
broker-dealer's advisory services are ``solely incidental to the
conduct of his business as a broker or dealer'' in the context of the
exercise of investment discretion, more commenters addressed this prong
more generally.\8\ For example, many commenters requested general
guidance on or expressed views about the meaning of the solely
incidental prong \9\ and the permissibility under this prong of various
broker-dealer activities that relate to the investment advice they
provide in light of the Reg. BI Proposal and the Relationship Summary
Proposal.\10\ Other commenters suggested that our approach to the Reg.
BI Proposal was inconsistent with the solely incidental prong of the
broker-dealer exclusion. One commenter suggested that the Reg. BI
Proposal, if adopted, would allow broker-dealers to provide investment
advice beyond what the solely incidental prong should ``reasonably be
interpreted to permit,'' arguing that to qualify for exclusion from
regulation under the Advisers Act, broker-dealers should only ``be able
to provide very limited advice. . . .'' \11\ Two commenters thought
that the Commission's expressed support for maintaining the ``broker-
dealer model as an option for retail customers seeking investment
advice'' \12\ was inconsistent with the solely incidental prong.\13\

Another commenter called the Commission's previously articulated
interpretation of the solely incidental prong ``vague.'' \14\ The
comments we received demonstrate that there is disagreement about when
the provision of broker-dealer investment advice is consistent with the
solely incidental prong.\15\ In light of these comments, we are
adopting this interpretation to confirm and clarify the Commission's
position with respect to the solely incidental prong. To illustrate how
the interpretation functions, we discuss its application to two
advisory services that a broker or dealer may provide, namely: (i)
Exercising investment discretion over customer accounts and (ii)
account monitoring.\16\ Our interpretation complements each of the
rules and forms we are adopting, which, among other things, are
intended individually and collectively to enhance investor
understanding of the relationships and services offered by investment
advisers and broker-dealers.\17\
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    \4\ See id.
    \5\ Proposed Commission Interpretation Regarding Standard of
Conduct for Investment Advisers; Request for Comment on Enhancing
Investment Adviser Regulation, Investment Advisers Act Release No.
4889 (April 18, 2018) [83 FR 21203 (May 9, 2018)] (the ``Proposed
Fiduciary Interpretation'').
    \6\ See Form CRS Relationship Summary; Amendments to Form ADV;
Required Disclosures in Retail Communications and Restrictions on
the Use of Certain Names or Titles, Investment Advisers Act Release
No. 4888 (April 18, 2018) [83 FR 21416 (May 9, 2018)]
(``Relationship Summary Proposal''). Concurrently with this
interpretation, we also are adopting the final versions of the rules
and interpretations proposed in the Relationship Summary Proposal,
the Reg. BI Proposal, and the Proposed Fiduciary Interpretation. See
Form CRS Relationship Summary; Amendments to Form ADV, Investment
Advisers Act Release No. 5247 (June 5, 2019) (the ``Relationship
Summary Adoption''); Regulation Best Interest: The Broker-Dealer
Standard of Conduct, Exchange Act Release No. 86031 (June 5, 2019)
(``Reg. BI Adoption''); and Commission Interpretation Regarding
Standard of Conduct for Investment Advisers, Investment Advisers Act
Release No. 5248 (June 5, 2019) (``Final Fiduciary
Interpretation'').
    \7\ See Reg. BI Proposal, supra footnote 3, at nn.342-67 and
accompanying text.
    \8\ We considered comments submitted in File No. S7-07-18 (Reg.
BI Proposal, supra footnote 3); File No. S7-08-18 (Relationship
Summary Proposal, supra footnote 6); and File No. S7-09-18 (Proposed
Fiduciary Interpretation, supra footnote 5). Those comments are
available on the Commission's website at https://www.sec.gov/comments/s7-07-18/s70718.htm, https://www.sec.gov/comments/s7-08-18/s70818.htm, and https://www.sec.gov/comments/s7-09-18/s70918.htm,
respectively.
    \9\ See, e.g., Comment Letter of North American Securities
Administrators Association, Inc. (Aug. 23, 2018) (``NASAA Letter'');
Comment Letter of CFA Institute (Aug. 7, 2018) (``CFA Institute
Letter'') (noting the ``need to give guidance'' on the broker-dealer
exclusion and noting that the Commission has legal authority to
provide needed clarification); Comment Letter of the Institute for
the Fiduciary Standard (Aug. 6, 2018) (``IFS Letter'') (arguing that
when a broker's investment advice is solely incidental to its
business is one of a number of ``questions the SEC should
address''); Comment Letter of the Consumer Federation of America
(Aug. 7, 2018) (``CFA Letter'') (arguing that the Commission failed
to ``engage'' on ``just how far the `solely incidental' exclusion
stretches''); Comment Letter of the Investment Adviser Association
(Aug. 6, 2018) (``IAA Letter'') (``[T]he Commission should
reconsider when broker-dealers should be able to rely on the Solely
Incidental [prong].''); Comment Letter of Michael Kitces (Aug. 2,
2018) (``Kitces Letter'') (arguing that the Commission's prior
interpretations of the solely incidental prong are inconsistent with
the plain meaning and legislative history of the term).
    \10\ See, e.g., CFA Letter; Kitces Letter.
    \11\ See NASAA Letter.
    \12\ See Reg. BI Proposal, supra footnote 3, at text
accompanying n.31.
    \13\ See CFA Letter (stating that certain aspects of the
Relationship Summary Proposal and the Reg. BI Proposal indicated
that broker-dealers were in an ``advice relationship'' in a manner
that does not ``remotely sound like advice that is `solely
incidental to' the conduct of their business as a broker or
dealer''); Kitces Letter (arguing that referring to the broker-
dealer model as a ``model for advice'' is in contravention of the
broker-dealer exclusion because ``advice can only be incidental if
it occurs by chance, as a consequence of a product sale, or without
intent to give advice'').
    \14\ See Comment Letter of Securities Arbitration Clinic, St.
Vincent DePaul Legal Program, Inc., St. John's University School of
Law (Aug. 7, 2018) (``St. John's Clinic Letter'').
    \15\ Furthermore, interested parties have for years expressed
their views to the Commission on what they believe the broker-dealer
exclusion requires, including disagreements with the Commission's
interpretation of the exclusion. See, e.g., Comment Letter of
Consumer Federation of America (Sept. 20, 2004) (arguing that the
Commission should ``define `solely incidental' in a way that hews
closely to what commenters described as Congress's clear intent to
provide only a very narrow exclusion''), available at https://www.sec.gov/rules/proposed/s72599/s72599-1101.pdf.
    \16\ We received comments requesting guidance with respect to
the solely incidental prong on both activities. See infra section
II.C.
    \17\ See Reg. BI Adoption; Relationship Summary Adoption; Final
Fiduciary Interpretation, supra footnote 6. We also received a few
comments in response to the Reg. BI Proposal and the Relationship
Summary Proposal requesting that the Commission provide guidance on
the special compensation prong. See, e.g., CFA Letter (arguing,
among other points, that special compensation would constitute any
compensation other than commissions for trade execution); Comment
Letter of Coalition of Mutual Fund Investors (Aug. 8, 2018)
(``Mutual Fund Investors Letter'') (arguing that special
compensation should include all asset-based compensation and third-
party fees from mutual funds and their advisers). We are not
providing guidance on the special compensation prong in this Release
as we do not believe our views on this prong require additional
clarification. The Commission has considered the meaning of the
special compensation prong on previous occasions. See, e.g.,
Interpretive Rule Under the Advisers Act Affecting Broker-Dealers,
Investment Advisers Act Release No. 2652 (Sept. 24, 2007) (``2007
Proposing Release''); Certain Broker-Dealers Deemed Not to Be
Investment Advisers, Investment Advisers Act Release No. 2376 (Apr.
12, 2005) (``2005 Adopting Release,'' in which, as discussed infra
at footnote 38 and accompanying text, the Commission adopted a rule
that a court vacated on grounds that did not address our
interpretive positions relating to the solely incidental prong). The
comments we received in response to requests for comment to the Reg.
BI Proposal and the Relationship Summary Proposal did not
demonstrate that there is significant disagreement with our
interpretation of that prong.
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II. Interpretation and Application

A. Historical Context and Legislative History

    When the Advisers Act was enacted in 1940, broker-dealers regularly
provided investment advice.\18\ They did so in two distinct ways: As an
auxiliary part of traditional brokerage services for which their
brokerage customers paid fixed commissions and, alternatively, as a
distinct advisory service for which their advisory clients separately
contracted and paid a fee.\19\ The advice that broker-dealers provided
as an auxiliary component of traditional brokerage services was
referred to as ``brokerage house advice'' in a leading study of the
time.\20\ ``Brokerage house advice'' was extensive and varied,\21\ and
included information about various corporations, municipalities, and
governments; \22\ broad analyses of general business and financial
conditions; \23\ market letters and special analyses of companies'
situations; \24\ information about income tax schedules and tax
consequences; \25\ and ``chart reading.'' \26\ The second way in which
broker-dealers dispensed advice was to charge a distinct fee for
advisory services, which typically were provided through special
``investment advisory departments'' within broker-dealer firms that
advised customers for a fee in the same manner as firms whose sole
business was providing ``investment counsel'' services.\27\
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    \18\ For an extensive discussion of broker-dealer practice in
the years leading up to enactment of the Advisers Act, from which
this summary is drawn, see 2005 Adopting Release, supra footnote 17;
Certain Broker-Dealers Deemed Not to Be Investment Advisers,
Investment Advisers Act Release No. 2340 (Jan. 6, 2005) (``2005
Proposing Release'').
    \19\ See, e.g., Investment Trusts and Investment Companies:
Hearings on S. 3580 Before a Subcomm. of the Senate Committee on
Banking and Currency, 76th Cong., 3d Sess. 736 (1940) (``Hearings on
S. 3580'') (testimony of Dwight C. Rose, president of the Investment
Counsel Association of America) (``Most . . . investment dealers . .
. and brokers advise on investment problems, either as an auxiliary
service without charge, or for specific charges allocated to this
specific function.'').
    \20\ See Twentieth Century Fund, The Security Markets (1935)
(``Security Markets'') at 633-46 (discussing ``brokerage house
advice''); see also Charles F. Hodges, Wall Street (1930) (``Wall
Street'') at 253-85; SEC, Report on Investment Counsel, Investment
Management, Investment Supervisory, and Investment Advisory Services
(1939) (H.R. Doc. No. 477) (``Investment Counsel Report'') at n.1.
    \21\ See, e.g., Report of Public Examining Bd. on Customer
Protection to N.Y. Stock Exchange (Aug. 31, 1939), at 3: The
customer entrusts the broker with information regarding his
financial affairs and dealings which he expects to be kept in strict
confidence. Frequently he looks to the broker to perform a whole
series of functions relating to the investment of his funds and the
care of his securities. Although he could secure similar services at
his bank, he asks his broker, as a matter of choice and convenience,
to hold credit balances of cash pending instructions; to retain
securities in safekeeping and to collect dividends and interest; to
advise him respecting investments; and to lend him money on suitable
collateral.
    \22\ Security Markets, supra footnote 20, at 633; Wall Street,
supra footnote 20, at 254 (``This information includes current and
comparative data for a number of years on earning and earnings
records, capitalization, financial position, dividend record,
comparative balance sheets and income statements . . . production
and operating statistics, territory and markets served, officers and
directors of the company and much other information of value to the
investor in appraising the value of a security.'').
    \23\ Security Markets, supra footnote 20, at 634; Wall Street,
supra footnote 20, at 254.
    \24\ Security Markets, supra footnote 20, at 640-43; Wall
Street, supra footnote 20, at 277-85.
    \25\ Security Markets, supra footnote 20, at 641.
    \26\ Id. at 643 (defining ``chart reading'' as ``the study of
the charted course of prices and volume of trading over a long
period of time in order to discover typical conformations recurring
in the past with sufficient frequency to be utilized in the present
as a basis of judgment as to impending price changes'').
    \27\ See Advisers Act Release No. 2, supra footnote 2; see also
Security Markets, supra footnote 20, at 646, 653 (referring to
``investment supervisory departments'' and ``special investment
management departments'' of broker-dealers). In general,
contemporaneous literature used the term ``investment counsel'' or
``investment counselor'' to refer to those who provided investment
advice for a fee and whose advisory relationship with clients had a
supervisory or managerial character. See id. at 646 (defining
``investment counselor'' as ``an individual, institution,
organization, or department of an institution or organization which
undertakes for a fee to advise or to supervise the investment of
funds by, and on occasion to manage the investment accounts of,
clients''). Under the Advisers Act, ``investment counsel'' is a
defined subset of the ``investment advisers'' to whom the Act
applies. See section 208(c) of the Act.
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    Between 1935 and 1939, the Commission conducted a congressionally
mandated study of investment trusts and investment companies and in
connection with this study surveyed investment advisers, including
broker-dealers with investment advisory departments.\28\ In a report to
Congress (the ``Investment Counsel Report''), the Commission informed
Congress that the Commission's study had identified two broad classes
of problems relating to investment advisers that warranted legislation:
``(a) The problem of distinguishing between bona fide investment
counselors and `tipster' organizations; and (b) those problems
involving the organization and operation of investment counsel

institutions.'' \29\ Based on the findings of the Investment Counsel
Report, representatives of the Commission testified at the
congressional hearings on what ultimately became the Advisers Act in
favor of regulating the persons engaged in the business of providing
investment advice for compensation.
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    \28\ Investment Counsel Report, supra footnote 20, at 1. The
study was conducted pursuant to section 30 of the Public Utility
Holding Company Act of 1935 [15 U.S.C. 79z-4]; see Hearings on S.
3580, supra footnote 19, at 995-96.
    \29\ Investment Counsel Report, supra footnote 20, at 27.
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    Congress responded by passing the Advisers Act. Section 202(a)(11)
of the Act defined ``investment adviser''--those subject to the
requirements of the Act--broadly to include ``any person who, for
compensation, engages in the business of advising others, either
directly or through publications or writings, as to the value of
securities or as to the advisability of investing in, purchasing, or
selling securities, or who, for compensation and as part of a regular
business, issues or promulgates analyses or reports concerning
securities. . . .'' In adopting this broad definition, Congress
necessarily rejected arguments presented during its hearings that
legitimate investment counselors \30\ should be free from any oversight
except, perhaps, by the few states that had passed laws regulating
investment counselors and by private organizations, such as the
Investment Counsel Association of America.\31\ Instead, in responding
to such views, congressional committee members repeatedly observed that
those whose business was limited to providing investment advice for
compensation were subject to little if any regulatory oversight, and
questioned why they should not be subject to regulation even though
other professionals were.\32\
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    \30\ Hearings on S. 3580, supra footnote 19, at 745-48; see also
2005 Adopting Release, supra footnote 17, at n.62.
    \31\ Hearings on S. 3580, supra footnote 19, at 716-18, 736-38,
740-41, 744-45, 760, 763.
    \32\ Id. at 738-39, 745-49, 751-53 (Senators Wagner and Hughes).
David Schenker, chief counsel for the Commission's study, offered
the following observations in response to investment counselors'
arguments against the registration and regulation required by the
Act: Then there is another curious thing, Senator, that those people
who are subject to supervision by some authoritative body of some
kind, such as securities dealers or investment bankers have to
register with us as brokers and dealers. People, who are brokers and
members of stock exchanges and are supervised by the stock
exchanges. Curiously enough, the people in the investment-counsel
business who are supervised are not eligible for membership in the
investment counsel association; because the association says that if
you are in the brokerage or banking business you cannot be a member
of the association. So the situation is that if you take their
analysis, the only ones who would not be subject to regulation by
the SEC. would be the people who are not subject to regulation by
anybody at all. These investment counselors who appeared here are no
different from the over-the-counter brokers and dealers or the
members of the New York Stock Exchange. Id. at 995-96. Eventually,
members of the investment counsel industry agreed with the proposed
legislation. See id. at 1124; Investment Trusts and Investment
Companies: Hearings on H.R. 10065 Before a Subcomm. of the House
Committee on Interstate and Foreign Commerce, 76th Cong., 3d Sess.
(1940) (``Hearings on H.R. 10065''); see also S. Rep. No. 76-1775,
76th Cong., 3d Sess. 21 (1940); H.R. Rep. No. 76-2639, 76th Cong.,
3d Sess. 27 (1940).
---------------------------------------------------------------------------

    Conversely, the Advisers Act specifically excluded persons, among
others, from the broad definition of ``investment adviser'' to the
extent that such persons rendered investment advice incidental to their
primary business.\33\ Broker-dealers were among these excluded persons,
as section 202(a)(11)(C) of the Act excludes from the definition of
``investment adviser'' a broker-dealer who provides investment advice
that is ``solely incidental to the conduct of his business as a broker
or dealer and who receives no special compensation therefor''--i.e.,
the broker-dealer exclusion.
---------------------------------------------------------------------------

    \33\ The exclusion for certain professionals in Advisers Act
section 202(a)(11) is very similar to certain state-law provisions
governing investment counselors at the time, which excepted
``brokers, attorneys, banks, savings and loan associations, trust
companies, and certified public accountants.'' See Statutory
Regulation of Investment Advisers (prepared by the Research
Department of the Illinois Legislative Council) reprinted in
Hearings on S. 3580, supra footnote 19, at 1007. That report stated
that ``the investment advice furnished by these excepted groups
would seem to be merely incidental to some other function being
performed by them.'' Id.
---------------------------------------------------------------------------

B. Scope of the Solely Incidental Prong of the Broker-Dealer Exclusion

    The Commission and its staff have on several occasions discussed
the scope of the broker-dealer exclusion.\34\ In adopting a rule
regarding fee-based brokerage accounts in 2005, for example, the
Commission stated that investment advisory services are ``solely
incidental to'' the conduct of a broker-dealer's business when the
services are offered in connection with and are reasonably related to
the brokerage services provided to an account.\35\ The interpretation
was consistent with the Commission's contemporaneous construction of
the Advisers Act as excluding broker-dealers whose investment advice is
given ``solely as an incident of their regular business.'' \36\ The
2005 interpretation stated that the importance or frequency of the
investment advice was not a determinant of whether the solely
incidental prong was satisfied; the Commission rejected the view that
only minor, insignificant, or infrequent advice qualifies for the
broker-dealer exclusion, noting that the advice broker-dealers gave as
part of their brokerage services in 1940 was often substantial and
important to customers.\37\
---------------------------------------------------------------------------

    \34\ See, e.g., Advisers Act Release No. 2, supra footnote 2;
Applicability of the Investment Advisers Act to Certain Brokers and
Dealers; Interpretation of the Term `Special Compensation',
Investment Advisers Act Release No. 640 (Oct. 5, 1978);
Applicability of the Investment Advisers Act to Financial Planners,
Pension Consultants, and Other Persons Who Provide Investment
Advisory Services as a Component of Other Financial Services,
Investment Advisers Act Release No. 1092 (Oct. 8, 1987).
    \35\ 2005 Adopting Release, supra footnote 17; 2005 Proposing
Release, supra footnote 18.
    \36\ See Advisers Act Release No. 2, supra footnote 2; see also
2005 Adopting Release, supra footnote 17.
    \37\ See 2005 Adopting Release, supra footnote 17, at nn.139-42
and accompanying text.
---------------------------------------------------------------------------

    On March 30, 2007, the Court of Appeals for the District of
Columbia Circuit in Financial Planning Association v. SEC vacated the
rule regarding fee-based brokerage accounts, but not on grounds that
addressed our interpretive positions relating to the solely incidental
prong.\38\ In September 2007, we proposed to reinstate these
interpretive positions.\39\
---------------------------------------------------------------------------

    \38\ See 482 F.3d 481 (D.C. Cir. 2007).
    \39\ 2007 Proposing Release, supra footnote 17.
---------------------------------------------------------------------------

    Since that time, a federal appellate court has addressed the solely
incidental prong. In 2011, in Thomas v. Metropolitan Life Insurance
Company, the Court of Appeals for the Tenth Circuit addressed the scope
of the broker-dealer exclusion in the context of a private suit
alleging that a broker had violated the Advisers Act by failing to
disclose incentives to sell proprietary products.\40\ As part of its
analysis of the exclusion, the court looked to the interpretation of
the solely incidental prong that we advanced in 2005 and 2007. The
court found these interpretations to be ``persuasive'' in light of its
own analysis of the text of the solely incidental prong of the broker-
dealer exclusion as well as the legislative history and historical
background of the Advisers Act.\41\ The court concluded that a broker-
dealer's investment advice is solely incidental to its conduct as a
broker-dealer if the advice is given ``only in connection with the
primary business of selling securities.'' \42\ Thus, the court
explained, ``broker-dealers who give advice that is not connected to
the sale of securities--or whose primary business consists of giving
advice--do not meet the [solely incidental] prong'' of the broker-
dealer exclusion.\43\ The court also agreed with the Commission's
interpretations that the solely incidental prong does not

hinge upon ``the quantum or importance'' of a broker-dealer's advice
but on its relationship to the broker-dealer's primary business.\44\ In
the court's view, ``[t]he quantum or importance of the broker-dealer's
advice is relevant only insofar as the advice cannot supersede the sale
of the product as the `primary' goal of the transaction or the
`primary' business of the broker-dealer.'' \45\
---------------------------------------------------------------------------

    \40\ 631 F.3d 1153 (10th Cir. 2011).
    \41\ Id. at 1163-64.
    \42\ Id. at 1164.
    \43\ Id.
    \44\ Id. at 1163.
    \45\ Id. at 1166. In Thomas, the brokerage firm's representative
had conducted an analysis of the plaintiffs' financial situation and
advised them to purchase a particular financial product based in
part on that analysis. The plaintiffs alleged that the firm's policy
``required [representatives] to provide investment advice to
potential customers as a means to sell more proprietary products''
and that this policy was ``so pervasive that [representatives]
allegedly gave financial advice to every customer to whom they sold
a product.'' Id. at 1157. The Court rejected the plaintiffs'
contention that these facts rendered the advice so central to the
transaction that it could not be considered ``solely incidental'' to
it. Because the representative's advice ``was closely related to the
sale of the [product] and selling the [product] was the primary
object of the transaction,'' the Court concluded, the advice was
``solely incidental'' to the representative's conduct as a broker.
Id. at 1167.
---------------------------------------------------------------------------

    Based on the text and history of the solely incidental prong, our
previous interpretations of the prong, the Thomas decision, and the
comments we have received, we are providing the following
interpretation.\46\ We interpret the statutory language to mean that a
broker-dealer's provision of advice as to the value and characteristics
of securities or as to the advisability of transacting in securities
\47\ is consistent with the solely incidental prong if the advice is
provided in connection with and is reasonably related to the broker-
dealer's primary business of effecting securities transactions.\48\ If
a broker-dealer's primary business is giving advice as to the value and
characteristics of securities or the advisability of transacting in
securities, or if the advisory services are not offered in connection
with or are not reasonably related to the broker-dealer's business of
effecting securities transactions, the broker-dealer's advisory
services are not solely incidental to its business as a broker-
dealer.\49\ Whether advisory services provided by a broker-dealer
satisfy the solely incidental prong is assessed based on the facts and
circumstances surrounding the broker-dealer's business, the specific
services offered, and the relationship between the broker-dealer and
the customer.
---------------------------------------------------------------------------

    \46\ To the extent that this interpretation is inconsistent with
the Commission's prior interpretations with respect to the solely
incidental prong, this interpretation supersedes those
interpretations.
    \47\ See Advisers Act section 202(a)(11) (definition of
``investment adviser'').
    \48\ Cf. 2005 Adopting Release, supra footnote 17 (``In general,
investment advice is `solely incidental to' the conduct of a broker-
dealer's business within the meaning of section 202(a)(11)(C) and to
`brokerage services' provided to accounts . . . when the advisory
services rendered are in connection with and reasonably related to
the brokerage services provided.''). We have modified the wording of
our interpretation to make clear that the broker-dealer's primary
business must also be effecting securities transactions.
    \49\ Nothing in this interpretation alters the Commission's 2006
interpretation of section 28(e) of the Exchange Act, which, in the
context of a client commission arrangement that otherwise satisfies
section 28(e), permits a broker-dealer to be paid out of a pool of
commissions for its research even if that broker-dealer did not
effect a securities transaction. See Commission Guidance Regarding
Client Commission Practices Under Section 28(e) of the Securities
Exchange Act of 1934, Securities Exchange Act Release No. 54165
(July 18, 2006), 71 FR 41978 (July 24, 2006).
---------------------------------------------------------------------------

    The quantum or importance of investment advice that a broker-dealer
provides to a client is not determinative as to whether or not the
provision of advice is consistent with the solely incidental prong.
Advice need not be trivial, inconsequential, or infrequent to be
consistent with the solely incidental prong. Indeed, our simultaneous
adoption of (i) Regulation Best Interest, which raises the standard of
conduct that applies to broker-dealer recommendations, and (ii) the
relationship summary, which provides information about broker-dealer
recommendation services to customers, underscores that broker-dealer
investment advice can be consequential even when it is offered in
connection with and reasonably related to the primary business of
effecting securities transactions.
    To illustrate the application of this interpretation in practice,
we provide the following guidance on the application of the
interpretation to (i) exercising investment discretion over customer
accounts and (ii) account monitoring.

C. Guidance on Applying the Interpretation of the Solely Incidental
Prong

1. Investment Discretion
    The Commission has for many years considered issues related to a
broker-dealer's exercise of investment discretion over customer
accounts and the extent to which such practices could be considered
solely incidental to the business of a broker-dealer.\50\ The
Commission has stated that discretionary brokerage relationships ``have
many of the characteristics of the relationships to which the
protections of the Advisers Act are important.'' \51\ In particular,
the Commission has explained that when a broker-dealer exercises
investment discretion, it is not providing advice to customers that is
in connection with and reasonably related to effecting securities
transactions; rather, the broker-dealer is making investment decisions
relating to the purchase or sale of securities on behalf of customers
on an ongoing basis.\52\ At the same time, the Commission has taken the
position that some limited exercise of discretionary authority by
broker-dealers could be considered solely incidental to their
business.\53\
---------------------------------------------------------------------------

    \50\ See Reg. BI Proposal, supra footnote 3, at nn.343-62 and
accompanying text.
    \51\ Final Extension of Temporary Exemption from the Investment
Advisers Act for Certain Brokers and Dealers, Investment Advisers
Act Release No. 626 (Apr. 27, 1978) (``Advisers Act Release No.
626'').
    \52\ See 2005 Proposing Release, supra footnote 18.
    \53\ See Reg. BI Proposal, supra footnote 3, at nn.355-62 and
accompanying text. Cf. NASD rule 2510 (allowing discretion only if a
customer ``has given prior written authorization to a stated
individual or individuals . . . in accordance with [FINRA] rule
3010'').
---------------------------------------------------------------------------

    We requested comment in the Reg. BI Proposal on a broker-dealer's
exercise of investment discretion over customer accounts and the extent
to which the exercise of investment discretion should be considered
solely incidental to the business of a broker-dealer.\54\ Commenters
agreed that the exercise of unlimited discretion should not be
considered ``solely incidental'' investment advice.\55\ Commenters
expressed varying views, however, on the extent to which the exercise
of temporary or limited discretion could be considered solely
incidental to the business of a broker-dealer. Several commenters
suggested that the exercise of any investment discretion should be
governed by the Advisers Act.\56\ One commenter suggested that the
Commission should interpret the solely incidental prong through the
lens of the definition of ``investment discretion'' in section 3(a)(35)
of the Securities Exchange Act of 1934 (the ``Exchange Act''),\57\
noting that section 3(a)(35)

focuses on ``the level of authority, decision-making ability,
influence--and ultimately, control--an intermediary has over another's
money'' and arguing that those with section 3(a)(35) investment
discretion have a heightened likelihood of mismanagement and abuse of
another's money.\58\ Another commenter suggested that, while discretion
generally should subject a broker-dealer to the Advisers Act, there are
certain cases where temporary or limited discretion does not have the
supervisory or managerial character of the investment discretion
warranting the protections of the Advisers Act.\59\
---------------------------------------------------------------------------

    \54\ See Relationship Summary Proposal, supra footnote 6, at
nn.363-67 and accompanying text; see also id. at nn.343-62 and
accompanying text for a description of the Commission's historical
approaches.
    \55\ See, e.g., Comment Letter of Financial Planning Coalition
(Aug. 7, 2018) (``FPC Letter'') (``[A] broker-dealer's provision of
unfettered discretionary investment advice should never be
considered `solely incidental' to its business as a broker-dealer.''
(emphasis removed)); CFA Letter; IFS Letter.
    \56\ See, e.g., Comment Letter of Invesco Advisers, Inc. (Aug.
7, 2018) (``Discretionary management over an account, whether or not
temporary, is not within the scope of the `solely incidental'
exclusion.''); IAA Letter; CFA Institute Letter.
    \57\ Under Exchange Act section 3(a)(35), a person exercises
``investment discretion'' with respect to an account if, directly or
indirectly, such person (A) is authorized to determine what
securities or other property shall be purchased or sold by or for
the account, (B) makes decisions as to what securities or other
property shall be purchased or sold by or for the account even
though some other person may have responsibility for such investment
decisions, or (C) otherwise exercises such influence with respect to
the purchase and sale of securities or other property by or for the
account as the Commission, by rule, determines, in the public
interest or for the protection of investors, should be subject to
the operation of the provisions of this title and the rules and
regulations thereunder. 15 U.S.C. 78c(a)(35).
    \58\ See FPC Letter (noting also that several federal and state
courts have used factors similar to those in section 3(a)(35) to
impose a fiduciary standard). Another commenter also suggested using
Exchange Act section 3(a)(35) ``investment discretion'' as a basis
for establishing whether discretion is not solely incidental for
purposes of the broker-dealer exclusion, with an exception for
investment discretion ``that a customer grants on a temporary or
limited basis.'' See Comment Letter of Pickard Djinis and Pisarri
(Aug. 14, 2018) (``Pickard Letter'').
    \59\ See Comment Letter of the Securities Industry and Financial
Markets Association (Aug. 7, 2018) (``SIFMA Letter'').
---------------------------------------------------------------------------

    Applying our interpretation of the solely incidental prong, a
broker-dealer's exercise of unlimited discretion \60\ would not be
solely incidental to the business of a broker-dealer consistent with
the meaning of section 202(a)(11)(C).\61\ It would be inconsistent with
the solely incidental prong for broker-dealers to exercise ``investment
discretion'' as that term is defined in section 3(a)(35) of the
Exchange Act with respect to any of its accounts, except for certain
instances of investment discretion granted by a customer on a temporary
or limited basis, as discussed below. A broker-dealer with unlimited
discretion to effect securities transactions possesses ongoing
authority over the customer's account indicating a relationship that is
primarily advisory in nature; such a level of discretion by a broker-
dealer is so comprehensive and continuous that the provision of advice
in such context is not incidental to effecting securities transactions.
---------------------------------------------------------------------------

    \60\ We view unlimited investment discretion as a person having
the ability or authority to buy and sell securities on behalf of a
customer without consulting the customer--i.e., having
responsibility for a customer's trading decisions.
    \61\ The Commission has in the past stated that the
quintessentially supervisory or managerial character of investment
discretion warrants the protection of the Advisers Act. See
Amendment and Extension of Temporary Exemption from the Investment
Advisers Act for Certain Brokers and Dealers, Investment Advisers
Act Release No. 471 (Aug. 20, 1975); see also 2005 Proposing
Release, supra footnote 18; 2005 Adopting Release, supra footnote
17.
---------------------------------------------------------------------------

    We recognize, however, that there are situations where a broker-
dealer may exercise temporary or limited discretion in a way that is
not indicative of a relationship that is primarily advisory in nature.
Generally, these are situations where the discretion is limited in
time, scope, or other manner and lacks the comprehensive and continuous
character of investment discretion that would suggest that the
relationship is primarily advisory. The totality of the facts and
circumstances would be relevant to determining whether temporary or
limited discretion is consistent with the solely incidental prong.
Taking into consideration specific examples that commenters have
suggested in the past, instances of temporary or limited investment
discretion that, standing alone, would not support the conclusion that
a relationship is primarily advisory--and therefore outside the scope
of the solely incidental prong--include discretion: (i) As to the price
at which or the time to execute an order given by a customer for the
purchase or sale of a definite amount or quantity of a specified
security; (ii) on an isolated or infrequent basis, to purchase or sell
a security or type of security when a customer is unavailable for a
limited period of time; (iii) as to cash management, such as to
exchange a position in a money market fund for another money market
fund or cash equivalent; \62\ (iv) to purchase or sell securities to
satisfy margin requirements, or other customer obligations that the
customer has specified; (v) to sell specific bonds or other securities
and purchase similar bonds or other securities in order to permit a
customer to realize a tax loss on the original position; (vi) to
purchase a bond with a specified credit rating and maturity; and (vii)
to purchase or sell a security or type of security limited by specific
parameters established by the customer. We view these examples of
temporary or limited discretion as typically consistent with the
broker-dealer exclusion because they are in connection with and
reasonably related to a broker-dealer's business of effecting
securities transactions and do not suggest that the broker-dealer's
primary business is providing investment advice.
---------------------------------------------------------------------------

    \62\ Certain changes to money market fund regulation and
operations have been implemented since our prior interpretations.
See Money Market Fund Reform; Amendments to Form PF, Investment
Company Act Release No. 31166 (Jul. 23, 2014) (removing an exemption
that permitted institutional non-government money market funds to
maintain a stable net asset value, while maintaining such exemption
for certain other money market funds, and applying certain fees and
gates reforms to institutional non-government money market funds and
retail money market funds but not to government money market funds,
among other changes). In light of these changes, differently
categorized money market funds may have different investment
characteristics. Accordingly, we anticipate that FINRA will be
reviewing the application of the rules that apply to the exercise of
broker-dealer discretion in this context. The Commission staff also
will evaluate broker-dealer exercise of discretionary cash
management to consider whether additional measures may be necessary.
---------------------------------------------------------------------------

    We have previously described a similar list of situations that we
would consider temporary or limited discretion that may be consistent
with the solely incidental prong.\63\ We make three refinements.
---------------------------------------------------------------------------

    \63\ See 2005 Adopting Release, supra footnote 17, at nn.178-81
and accompanying text; 2007 Proposing Release, supra footnote 17, at
n.13 and accompanying text.
---------------------------------------------------------------------------

    First, we are not including authority for a period ``not to exceed
a few months'' relating to the time a broker-dealer may purchase or
sell a security or type of security when a customer is unavailable for
a limited period of time. Depending on the facts and circumstances, a
period of discretion lasting a few months may be indicative of a
business or customer relationship that is primarily advisory in nature.
    Second, we would view it as consistent with our interpretation of
the solely incidental prong for broker-dealers to purchase or sell
securities to satisfy margin requirements, or other customer
obligations that the customer has specified (new wording italicized).
In our view, there may be similar obligations to a broker-dealer or a
third party whereby a broker-dealer may be authorized to make a
purchase or sale, such as a sale to satisfy a collateral call.
    Third, we would view it as consistent with our interpretation of
the solely incidental prong for broker-dealers to sell specific bonds
or other securities in order to permit a customer to realize a tax loss
on the original position (new wording italicized). We see no
distinction between bonds or other securities in this particular
context.
2. Account Monitoring
    We received several comments regarding the extent to which a
broker-dealer may monitor the status and

performance of a customer's account while relying on the broker-dealer
exclusion. Some commenters suggested that a broker-dealer's agreement
to provide ongoing monitoring for the purpose of recommending changes
to a customer's investments is not an advisory service that is solely
incidental to the primary securities transaction business of a broker-
dealer and thus the broker-dealer exclusion should not be available to
broker-dealers who provide such services.\64\ Another commenter
suggested that broker-dealers providing personalized investment advice
about securities on an ongoing basis should not be able to rely on the
broker-dealer exclusion.\65\ Commenters also suggested that providing
services that cause overseen assets to meet the definition of
``regulatory assets under management'' under Form ADV (i.e., securities
portfolios for which the broker-dealer provides ``continuous and
regular supervisory or management services'') should subject a broker-
dealer to the Advisers Act.\66\
---------------------------------------------------------------------------

    \64\ See FPC Letter (``[B]roker-dealers that enter into
agreements with retail customers to provide ongoing monitoring for
purposes of recommending changes in investments should be considered
investment advisers and subject to fiduciary obligations under the
Advisers Act. Entering into an agreement to provide ongoing
monitoring. . . goes beyond advice that is solely incidental to the
conduct of business as a broker-dealer. . . .''); IAA Letter (same
quotation as the FPC Letter); IAA Letter (``[A] broker-dealer that
agrees to provide a retail customer ongoing monitoring for purposes
of recommending changes in investments would not be providing
services that are solely incidental to its business as a broker-
dealer under the 2007 interpretation.''); Fisher Letter (``Brokers
can give ongoing investment advice . . . yet still not be required
to register as an investment adviser. . . . [T]he boundaries
[between brokers and investment advisers] have practically been
erased.'').
    \65\ See Mutual Fund Investors Letter (``[The SEC] should . . .
subject broker-dealers to the Advisers Act when they are providing
personalized investment advice about securities on an ongoing basis
. . . The term `solely incidental' should be interpreted narrowly
and only include personalized investment advice that is one-time,
temporary, or limited in scope.'').
    \66\ See IAA Letter; Pickard Letter.
---------------------------------------------------------------------------

    We disagree with commenters who suggested that any monitoring of
customer accounts would not be consistent with the solely incidental
prong. A broker-dealer that agrees to monitor \67\ a retail customer's
account on a periodic basis for purposes of providing buy, sell, or
hold recommendations may still be considered to provide advice in
connection with and reasonably related to effecting securities
transactions.\68\ In contrast, when a broker-dealer, voluntarily and
without any agreement with the customer, reviews the holdings in a
retail customer's account for the purposes of determining whether to
provide a recommendation to the customer--and, if applicable, contacts
that customer to provide a recommendation based on that voluntary
review--the broker-dealer's actions are in connection with and
reasonably related to the broker-dealer's primary business of effecting
securities transactions. Absent an agreement with the customer (which
would be required to be disclosed pursuant to Regulation Best
Interest), we do not consider this voluntary review to be ``account
monitoring.'' \69\
---------------------------------------------------------------------------

    \67\ The guidance in this section applies when a broker-dealer
agrees to monitor a customer's account. See Reg. BI Adoption, supra
footnote 6, at section II.B.2 for a discussion of what constitutes
such an agreement.
    \68\ See id. Monitoring agreed to by the broker-dealer would
result in a recommendation to purchase, sell, or hold a security
each time the agreed-to monitoring occurs and would be covered by
Regulation Best Interest. See id. (``For example, if a broker-dealer
agrees to monitor the retail customer's account on a quarterly
basis, the quarterly review and each resulting recommendation to
purchase, sell, or hold, will be a recommendation subject to
Regulation Best Interest.'').
    In agreeing to provide any monitoring services, broker-dealers
should also consider that a broker-dealer that separately contracts
or charges a separate fee for advisory services is providing
investment advice that is inconsistent with the broker-dealer
exclusion. See, e.g., 2005 Adopting Release, supra footnote 17.
Broker-dealers should also consider that, even where such monitoring
is consistent with the solely incidental prong, the broker-dealer
must also receive no special compensation for the activity to be
eligible for the broker-dealer exclusion. Broker-dealers receive
special compensation where there is a clearly definable charge for
investment advice. See Advisers Act Release No. 626, supra footnote
51; see also Advisers Act Release No. 2, supra footnote 2; 2007
Proposing Release, supra footnote 17 (describing this interpretation
as the Commission's ``longstanding view'').
    \69\ See Reg. BI Adoption, supra footnote 6, at section
II.B.2.b. Any recommendation made to the retail customer as a result
of such voluntary review would be subject to Regulation Best
Interest. See id.
---------------------------------------------------------------------------

    We decline to delineate every circumstance where agreed-upon
monitoring is and is not solely incidental to a broker-dealer's
brokerage business. Broker-dealers may consider adopting policies and
procedures that, if followed, would help demonstrate that any agreed-
upon monitoring is in connection with and reasonably related to the
broker-dealer's primary business of effecting securities transactions.
For example, broker-dealers may include in their policies and
procedures that a registered representative may agree to monitor a
customer's account at specific time frames (e.g., quarterly) for the
purpose of determining whether to provide a buy, sell, or hold
recommendation to the customer.\70\ However, such policies and
procedures should not permit a broker-dealer to agree to monitor a
customer account in a manner that in effect results in the provision of
advisory services that are not in connection with or reasonably related
to the broker-dealer's primary business of effecting securities
transactions, such as providing continuous monitoring.\71\
Additionally, dually registered firms may similarly consider adopting
policies and procedures that distinguish the level and type of
monitoring in advisory and brokerage accounts.\72\
---------------------------------------------------------------------------

    \70\ As noted in the Reg. BI Adoption, and consistent with the
relationship summary adopted in the Relationship Summary Adoption,
the scope and frequency of a broker-dealer's monitoring is a
material fact relating to the type and scope of services provided to
a retail customer and thus is required to be disclosed under
Regulation Best Interest. See id. at section II.B.2; cf.
Relationship Summary Adoption, supra footnote 6. A broker-dealer
disclosing to a customer that the broker-dealer will provide
monitoring constitutes an agreement to monitor. See supra footnote
67.
    \71\ The two examples of advisory services we discuss in this
Release--investment discretion and monitoring--cannot be viewed and
interpreted in isolation. For example, it would not be consistent
with the solely incidental prong for a broker-dealer to exercise
unlimited investment discretion over a customer account even if its
monitoring activities do comport with the solely incidental prong.
Thus, any policies and procedures that a broker-dealer adopts to
ensure that the broker-dealer's activities are in connection with
and reasonably related to the broker-dealer's primary business of
effecting securities transactions similarly should not grant the
broker-dealer the ability or authority to buy and sell securities on
behalf of a customer as part of periodic account monitoring, except
in circumstances of temporary or limited discretion that would be
consistent with the solely incidental prong, as discussed above.
    \72\ In the Final Fiduciary Interpretation, we note that
investment advisers may consider whether written policies and
procedures relating to monitoring would be appropriate under
Advisers Act rule 206(4)-7. See Final Fiduciary Interpretation,
supra footnote 6, at section II.B.3.
     Additionally, the Reg. BI Adoption confirms that a dual
registrant is an investment adviser solely with respect to those
accounts for which a dual registrant provides investment advice or
receives compensation that subjects it to the Advisers Act. See Reg.
BI Adoption, supra footnote 6, at section II.B.3.d. Determining the
capacity in which a dual registrant is making a recommendation is a
facts and circumstances test. See id.
---------------------------------------------------------------------------

    The Commission will consider further comment on its interpretation
of the solely incidental prong of the broker-dealer exclusion and its
application to certain brokerage activities to evaluate whether
additional guidance might be appropriate in the future. Based on any
comments received, the Commission may, but need not, supplement this
interpretation.

III. Economic Considerations

    The Commission's interpretation above is intended to advise the
public of its understanding of the solely incidental prong of the
broker-dealer exclusion. The interpretation does not itself create any
new legal obligations for broker-dealers. Nonetheless, the

Commission recognizes that to the extent a broker-dealer's practices
are not consistent with this interpretation of the solely incidental
prong, the interpretation could have potential economic effects. We
discuss these effects below.

A. Background

    The Commission's interpretation regarding the solely incidental
prong of the broker-dealer exclusion would affect broker-dealers and
their associated persons as well as the customers of those broker-
dealers, and the market for financial advice more broadly.\73\ As of
December 2018, there were approximately 3,764 registered broker-dealers
with over 140 million customer accounts. In total, these broker-dealers
have over $4.3 trillion in total assets, which are total broker-dealer
assets as reported on Form X-17a-5.\74\ Of the broker-dealers
registered with the Commission as of December 2018, 363 broker-dealers
were dually registered with the Commission as investment advisers.\75\
Dual registrant firms hold over 90 million (63%) of the overall 140
million customer accounts held by broker dealers.\76\ As part of the
Reg. BI Proposal, we requested data and other information related to
the nature and magnitude of discretionary services offered by broker-
dealers,\77\ but did not receive any data or information to inform our
analysis of potential economic effects stemming from this
interpretation.
---------------------------------------------------------------------------

    \73\ See Relationship Summary Adoption, supra footnote 6, at
section IV.B (discussing the market for financial advice generally).
    \74\ Assets are estimated by Total Assets (allowable and non-
allowable) from Part II of the FOCUS filings (Form X-17A-5 Part II,
available at https://www.sec.gov/files/formx-17a-5_2.pdf) and
correspond to balance sheet total assets for the broker-dealer. The
Commission does not have an estimate of the total amount of customer
assets for broker-dealers. We estimate broker-dealer size from the
total balance sheet assets as described above.
    \75\ For purposes of this analysis, a dual registrant is any
firm that is dually registered with the Commission as an investment
adviser and a broker-dealer. Because this number does not include
the number of broker-dealers who are also registered as state
investment advisers, the number undercounts the full number of
broker-dealers that operate in both capacities.
    \76\ Some broker-dealers may be affiliated with investment
advisers without being dually registered. From Question 10 on Form
BD, 2,098 broker-dealers report that directly or indirectly, they
either control, are controlled by, or under common control with an
entity that is engaged in the securities or investment advisory
business. Comparatively, 2,691 (19.57%) SEC-registered investment
advisers report an affiliate that is a broker-dealer in Section 7A
of Schedule D of Form ADV, including 1,916 SEC-registered investment
advisers that report an affiliate that is a registered broker-
dealer. Approximately 74% of total assets under management of
investment advisers are managed by these 2,691 investment advisers.
    \77\ See Reg. BI Proposal, supra footnote 3.
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B. Potential Economic Effects

    Broker-dealers currently incur ongoing costs related to compliance
with their legal and regulatory obligations, including costs related to
understanding their practices and structuring their practices to be
consistent with the solely incidental prong of the broker-dealer
exclusion. This interpretation generally confirms the scope of the
solely incidental prong of the broker-dealer exclusion.
    Generally, we believe that few, if any, broker-dealers take the
view that they act consistently with the solely incidental prong with
respect to any accounts over which the broker-dealer exercises more
than temporary or limited investment discretion.\78\ As with other
circumstances in which the Commission speaks to the legal obligations
of regulated entities, we acknowledge that affected firms, including
those whose practices are consistent with the Commission's
interpretation, incur costs to evaluate the Commission's interpretation
and assess its applicability to them. Further, to the extent certain
broker-dealers currently understand the scope of permissible monitoring
or other permissible advisory activities under the solely incidental
prong to be different from what is set forth in this interpretation,
there could be some economic effects.\79\
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    \78\ See Comment Letter of UBS (noting that broker-dealers have
existing arrangements where they exercise temporary or limited
discretion, such as discretion as to time and price, and that those
types of discretion ``do not present the sort of risks about which
the SEC is concerned with respect to the exercise of unfettered
discretion'') (emphasis added); SIFMA Letter (noting that there are
instances in which temporary or limited discretion, such as
discretion as to prices at which securities can be purchased, does
not have the supervisory or managerial character of the investment
discretion warranting the protections of the Advisers Act).
    \79\ The above application of our interpretation of the solely
incidental prong to the exercise of investment discretion is
generally consistent with the position taken in the 2005 Adopting
Release and preliminarily taken in the 2007 Proposing Release. We
believe that many broker-dealers changed their practices with
respect to investment discretion in light of those releases, and
thus those practices likely are consistent with our interpretation
of the solely incidental prong.
---------------------------------------------------------------------------

    This interpretation may produce economic effects to the extent that
it causes any broker-dealers to recognize that their practices are
inconsistent with the solely incidental prong and to adjust their
practices to make them consistent. In particular, broker-dealers that
have interpreted the solely incidental prong to conduct more advisory
activities than this interpretation permits may choose to no longer
provide such services to customers. This could result in a loss of
certain customers, a reduction in certain business activities, and
could preclude those broker-dealers from further developing certain
services for their customers, except to the extent those broker-dealers
are dually registered firms and their customers are also advisory
clients. This may, in turn, result in decreased competition in the
market for certain services, increased fees for those services, or a
diminished number of broker-dealers offering commission-based services
to investors.\80\
---------------------------------------------------------------------------

    \80\ For example, to the extent that broker-dealers respond to
the interpretation by limiting the levels of discretion that they
provide for their customers, execution quality (including the
execution price) may be affected due to the delays encountered when
the broker-dealer must contact a customer to proceed with a
transaction.
---------------------------------------------------------------------------

    To the extent any broker-dealers have been providing advisory
services beyond the scope of this interpretation, their customers may
receive fewer advisory services if these broker-dealers choose not to
register as investment advisers and adjust their business practices in
light of this interpretation. To the extent that this interpretation
would lead to a decline in the supply of certain services offered by
broker-dealers (or a decline in broker-dealers offering services to
particular customers), it could reduce the efficiency of portfolio
construction for those investors who might otherwise benefit from
broker-dealers providing investment advice with respect to their
account and would find similar advice from investment advisers to be
too costly or unattainable (e.g., due to account minimum requirements).
For example, certain broker-dealers may incur costs to adopt or revise
policies and procedures to ensure that the account monitoring that they
may agree to provide their customers is consistent with this
interpretation and may choose instead to stop offering such monitoring
services. Further, to the extent that any broker-dealers determine that
their services are not consistent with this interpretation, they may
choose to register as investment advisers with the Commission, or one
or more states, as applicable. Such broker-dealers would bear costs in
choosing to register as investment advisers to continue providing those
services, and their clients may face higher fees as a result.
Alternatively, broker-dealers that have investment adviser affiliates
may seek to place existing customers in advisory accounts instead of
brokerage accounts.
    Broker-dealers that determine they must change business practices
as a

result of this interpretation will choose their responses based on
their circumstances. For example, if broker-dealers with affiliated
advisers are able to utilize their existing regulatory infrastructure
and compliance policies and procedures to account for activities that
are inconsistent with the solely incidental exclusion they may face
lower costs associated with migration of brokerage accounts and
activities to investment advisory accounts. By contrast, we expect the
costs of regulatory registration and compliance to be greater for any
standalone broker-dealers that choose to become registered investment
advisers, as they are more likely to need to undertake new systems,
procedures, and policies.
    To the extent that broker-dealers choose to discontinue providing
certain services, register as investment advisers, or encourage
migration of customer's brokerage accounts to advisory accounts of
affiliates, this interpretation could result in a shift in the demand
for the services of different types of financial service providers,
decreasing the demand for services of broker-dealers and increasing the
demand for the services of investment advisers.\81\
    This interpretation may also produce some overall economic effects
to the extent that it causes any broker-dealers that to date have
avoided performing limited discretion and other activities to recognize
that they may perform such activities consistent with the solely
incidental prong of the broker-dealer exclusion. Such broker-dealers
may respond to this interpretation by increasing the amount of limited
discretionary services or monitoring services that they agree to
provide to their customers. Investors that have established
relationships with such broker-dealers may benefit from more efficient
access to these services and may demand these services from broker-
dealers rather than becoming clients of investment advisers. While
additional provision of these services by broker-dealers also raises
the risk of regulatory arbitrage because similar activities would be
regulated under different regimes, we believe this risk will be
mitigated by the adoption of rules that enhance the standard of conduct
that applies to broker-dealer recommendations.

List of Subjects in 17 CFR Part 276

    Securities.

Amendments to the Code of Federal Regulations

    For the reasons set out above, the Commission is amending title 17,
chapter II of the Code of Federal Regulations as set forth below:

PART 276--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT
ADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER

0
1. Part 276 is amended by adding Release No. IA-5249 and the release
date of June 5, 2019, to the end of the list of interpretive releases
to read as follows:

----------------------------------------------------------------------------------------------------------------
                Subject                   Release No.              Date                   FR vol. and page
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Commission Interpretation Regarding            IA-5249  June 5, 2019.............  [Insert FR Volume Number] FR
 the Solely Incidental Prong of the                                                 [Insert FR Page Number]
 Broker-Dealer Exclusion from the
 Definition of Investment Adviser.
----------------------------------------------------------------------------------------------------------------

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

    \81\ To the extent this interpretation results in altered
compliance costs for standalone broker-dealers, non-affected
standalone broker-dealers (i.e., those standalone broker-dealers
that already are in compliance with the solely incidental prong as
we have interpreted it), dual registrants, investment advisers, and
other financial intermediaries that are not required to register as
investment advisers (such as banks, trust companies, insurance
companies, commodity trading advisers, and municipal advisors) may
to a varying degree gain business at these affected broker-dealers'
expense.

---------------------------------------------------------------------------
    By the Commission.

    Dated: June 5, 2019.
Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019-12209 Filed 7-11-19; 8:45 am]
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[Federal Register Volume 88, Number 229 (Thursday, November 30, 2023)]
[Notices]
[Pages 83558-83560]
[FR Doc No: 2023-26358]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2022-E-2089]

Determination of Regulatory Review Period for Purposes of Patent
Extension; Rezurock

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA or the Agency) has
determined the regulatory review period for Rezurock and is publishing
this notice of that determination as required by law. FDA has made the
determination because of the submission of an application to the
Director of the U.S. Patent and Trademark Office (USPTO), Department of
Commerce, for the extension of a patent which claims that human drug
product.

DATES: Anyone with knowledge that any of the dates as published (see
SUPPLEMENTARY INFORMATION) are incorrect may submit either electronic
or written comments and ask for a redetermination by January 29, 2024.
Furthermore, any interested person may petition FDA for a determination
regarding whether the applicant for extension acted with due diligence
during the regulatory review period by May 28, 2024. See ``Petitions''
in the SUPPLEMENTARY INFORMATION section for more information.

ADDRESSES: You may submit comments as follows. Please note that late,
untimely filed comments will not be considered. The https://www.regulations.gov electronic filing system will accept comments until
11:59 p.m. Eastern Time at the end of January 29, 2024. Comments
received by mail/hand delivery/courier (for written/paper submissions)
will be considered timely if they are received on or before that date.

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to https://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on https://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand Delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Dockets
Management Staff, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2022-E-2089 for ``Determination of Regulatory Review Period for
Purposes of Patent Extension; REZUROCK.'' Received comments, those
filed in a timely manner (see ADDRESSES), will be placed in the docket
and, except for those submitted as ``Confidential Submissions,''
publicly viewable at https://www.regulations.gov or at the

Dockets Management Staff between 9 a.m. and 4 p.m., Monday through
Friday,<PHONE_NUMBER>.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on https://www.regulations.gov.
Submit both copies to the Dockets Management Staff. If you do not wish
your name and contact information to be made publicly available, you
can provide this information on the cover sheet and not in the body of
your comments and you must identify this information as
``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with Sec.  10.20 (21 CFR 10.20) and
other applicable disclosure law. For more information about FDA's
posting of comments to public dockets, see 80 FR 56469, September 18,
2015, or access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852,<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Beverly Friedman, Office of Regulatory
Policy, Food and Drug Administration, 10903 New Hampshire Ave., Bldg.
51, Rm. 6250, Silver Spring, MD 20993,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    The Drug Price Competition and Patent Term Restoration Act of 1984
(Pub. L. 98-417) and the Generic Animal Drug and Patent Term
Restoration Act (Pub. L. 100-670) generally provide that a patent may
be extended for a period of up to 5 years so long as the patented item
(human drug product, animal drug product, medical device, food
additive, or color additive) was subject to regulatory review by FDA
before the item was marketed. Under these acts, a product's regulatory
review period forms the basis for determining the amount of extension
an applicant may receive.
    A regulatory review period consists of two periods of time: a
testing phase and an approval phase. For human drug products, the
testing phase begins when the exemption to permit the clinical
investigations of the drug becomes effective and runs until the
approval phase begins. The approval phase starts with the initial
submission of an application to market the human drug product and
continues until FDA grants permission to market the drug product.
Although only a portion of a regulatory review period may count toward
the actual amount of extension that the Director of USPTO may award
(for example, half the testing phase must be subtracted as well as any
time that may have occurred before the patent was issued), FDA's
determination of the length of a regulatory review period for a human
drug product will include all of the testing phase and approval phase
as specified in 35 U.S.C. 156(g)(1)(B).
    FDA has approved for marketing the human drug product Rezurock
(belumosudil mesylate). Rezurock is indicated for the treatment of
adult and pediatric patients 12 years and older with chronic graft-
versus-host disease after failure of at least two prior lines of
systemic therapy. Subsequent to this approval, the USPTO received a
patent term restoration application for Rezurock (U.S. Patent No.
8,357,693) from Kadmon Pharmaceuticals, LLC (agent for Surface Logix,
LLC), and the USPTO requested FDA's assistance in determining the
patent's eligibility for patent term restoration. In a letter dated
September 13, 2022, FDA advised the USPTO that this human drug product
had undergone a regulatory review period and that the approval of
Rezurock represented the first permitted commercial marketing or use of
the product. Thereafter, the USPTO requested that FDA determine the
product's regulatory review period.

II. Determination of Regulatory Review Period

    FDA has determined that the applicable regulatory review period for
Rezurock is 4,327 days. Of this time, 4,037 days occurred during the
testing phase of the regulatory review period, while 290 days occurred
during the approval phase. These periods of time were derived from the
following dates:
    1. The date an exemption under section 505(i) of the Federal Food,
Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 355(i)) became effective:
September 12, 2009. The applicant claims January 8, 2016, as the date
the investigational new drug application (IND) became effective.
However, FDA records indicate that the IND effective date was September
12, 2009, which was 30 days after FDA receipt of an earlier IND.
    2. The date the application was initially submitted with respect to
the human drug product under section 505 of the FD&C Act: September 30,
2020. FDA has verified the applicant's claim that the new drug
application (NDA) for Rezurock (NDA 214783) was initially submitted on
September 30, 2020.
    3. The date the application was approved: July 16, 2021. FDA has
verified the applicant's claim that NDA 214783 was approved on July 16,
2021.
    This determination of the regulatory review period establishes the
maximum potential length of a patent extension. However, the USPTO
applies several statutory limitations in its calculations of the actual
period for patent extension. In its application for patent extension,
this applicant seeks 1,154 days of patent term extension.

III. Petitions

    Anyone with knowledge that any of the dates as published are
incorrect may submit either electronic or written comments and, under
21 CFR 60.24, ask for a redetermination (see DATES). Furthermore, as
specified in Sec.  60.30 (21 CFR 60.30), any interested person may
petition FDA for a determination regarding whether the applicant for
extension acted with due diligence during the regulatory review period.
To meet its burden, the petition must comply with all the requirements
of Sec.  60.30, including but not limited to: must be timely (see
DATES), must be filed in accordance with Sec.  10.20, must contain
sufficient facts to merit an FDA investigation, and must certify that a
true and complete copy of the petition has been served upon the patent
applicant. (See H. Rept. 857, part 1, 98th Cong., 2d sess., pp. 41-42,
1984.) Petitions should be in the format specified in 21 CFR 10.30.
    Submit petitions electronically to https://www.regulations.gov at
Docket No. FDA-2013-S-0610. Submit written petitions (two copies are
required) to the Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    Dated: November 24, 2023.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2023-26358 Filed 11-29-23; 8:45 am]
BILLING CODE 4164-01-P