B-335664
October 24, 2023
The Honorable Sherrod Brown
President
The Honorable Tim Scott
Ranking Member
Banking, Housing and Urban Affairs Committee
United States Senate
The Honorable Patrick McHenry
President
The Honorable Maxine Waters
Ranking Member
Financial Services Committee
House of Representatives
Subject: Securities and Exchange Commission: Investment Company Names
Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on an important rule promulgated by the Securities and Exchange Commission (SEC) entitled "Names of Securities Companies." investment" (RIN: 3235- AM72). We received the standard on September 21, 2023. It was published in the Federal register as a final rule on October 11, 2023. 88 Fed. Reg. 70436. Effective date is December 11, 2023.
According to the SEC, it is amending a rule in the Investment Company Act of 1940 that addresses certain broad categories of investment company names that are likely to mislead investors about an investment company's investments and risks. See Investment Company Law, cap. 686, title I, 54 Stat. 789 (1940). The SEC stated that the amendments to this rule are designed to increase investor protection by improving and expanding the scope of the requirement that certain funds adopt a policy to invest at least 80 percent of the value of their assets in accordance with the approach. investment. suggesting the name of the fund, updating the rule's notification requirements and establishing recordkeeping requirements. The SEC also stated that it is also adopting enhanced prospectus disclosure requirements for terminology used in fund names, and additional requirements for funds to report information on Form N-PORT with respect to compliance with regulatory requirements related to the names.
Attached is our assessment of the SEC's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. If you have any questions about this report or would like to contact GAO officials responsible for evaluation work related to the rule issue, please contact Shari Brewster, Deputy General Counsel, at (202) 512-6398.
Shirley Jones
General Counsel Associate Manager
Enclosure
CC: Vanessa A. Countryman
Secretary
National Stock Market Commission
ENCLOSURE
REPORT UNDER 5 USC ยง 801(a)(2)(A) ON A MAJOR STANDARD
ISSUED BY THE
NATIONAL STOCK MARKET COMMISSION
NOBLE
โNAMES OF INVESTMENT COMPANIESโ
(ALSO: 3235-AM72)
(i) Cost-benefit analysis
The Securities and Exchange Commission (SEC) prepared an economic analysis for this final rule. The analysis includes: an introduction and analysis of broad economic considerations; establishing a baseline to compare costs, benefits and other economic effects; and alternatives considered by the SEC.
(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 USC ยงยง 603โ605, 607 and 609
The SEC prepared a Final Regulatory Flexibility Analysis. The analysis included a statement of the need and objectives of the final rule; a description of important issues raised by public comments; a description of the small entities subject to the final rule; projected reporting, record keeping and other compliance requirements; and a description of agency actions to minimize effects on small entities.
(iii) Agency actions relevant to sections 202โ205 of the Unfunded Mandates Reform Act of 1995, 2 USC ยงยง 1532โ1535
As an independent regulatory agency, the SEC is not subject to the Act. See 2 USC ยงยง 658(1), 1502(1).
(iv) Agency actions relevant to the Pay-as-you-go Administrative Law of 2023, Pub. l.
No. 118-5, div. B, title III, 137 Stat 31 (June 3, 2023)
Section 270 of the Pay-As-You-Go Administrative Act of 2023 amended 5 USC ยง 801(a)(2)(A) to require GAO to evaluate agency compliance with the Act, which establishes requirements for administrative actions that directly affect spending, in GAO's major rule reports. In guidance for Executive Branch agencies issued on September 1, 2023, the Office of Management and Budget (OMB) instructed that agencies must include a statement explaining that: โthe Act does not apply to this rule because it does not direct spending increases; The Act does not apply to this rule because it meets one of the exemptions in the Act (and specifies the relevant exemption); the OMB Director granted a waiver from the requirements of the Act pursuant to section 265(a)(1) or (2) of the Act; or the agency has submitted a written notice or opinion to the Director of OMB as required by section 263(a) or (b) of the Actโ in its rule submissions to GAO under the Congressional Review Act. OMB, Memorandum for Heads of Departments and Executive Agencies, Subject: Guidance for Implementation of the Pay-As-You-Go Administrative Law of 2023, M-23-21 (September 1, 2023), at 11-12. OMB also states that the memorandum directives supplementing the Act's requirements do not apply to proposed rules that have already been submitted to the Office of Information and Regulatory Affairs; however, agencies must comply with applicable requirements of the Act before finalizing such rules. .
The SEC does not discuss the Pay-As-You-Go Administrative Act of 2023 in this final rule.
(v) Other relevant information or requirements under laws and executive orders
Administrative Procedure Act, 5 USC ยงยง 551 And next.
On June 17, 2022, the SEC published a proposed rule. 87 Federal Reserve. Reg. 36594 (Proposal). The SEC stated that it received comment letters regarding the Proposal from a variety of commentators, including funds, law firms, investor advocacy groups, environmental advocacy groups, professional and trade associations, public policy research institutes, academics, and interested individuals. The SEC also stated that it considered and discussed the comments in the preamble to the final rule.
Paperwork Reduction Act (PRA), 44 USC ยงยง 3501โ3520
The SEC determined that this final rule contains information collection requirements (ICRs) and submitted them for review by the OMB. The SEC estimated the burden of each ICR. The SEC lists ICRs as follows: (1) โRule 35d-1 under the Investment Company Act of 1940, Investment Company Namesโ (OMB Control Number 3235-0548); (2) โForm N-1A under the Investment Company Act of 1940 and the Securities Act of 1933, Registration Statement for Open-end Investment Companyโ (OMB Control Number 3235-0307); (3) โForm N-2 Under the Investment Company Act of 1940 and the Securities Act of 1933, Closed-End Management Company Registration Statementโ (OMB Control Number 3235-0026); (4) โForm N-8B-2, Registration Statement for Unit Investment Trusts Currently Issuing Securitiesโ (OMB Control Number 3235-0186); (5) โForm S-6, Registration under the Securities Act of 1933 of Registered Unit Investment Trusts on Form N-8B-2โ (OMB Control Number 3235-0184); (6) โForm N-PORT under the Investment Company Act of 1940โ (OMB Control Number 3235-730); and (7) โInteractive Investment Firm Dataโ (OMB Control Number 3235-0642).
Legal authorization of the standard
The SEC promulgated this final rule pursuant to sections 77e, 77f, 77g, 77h, 77j, 77s, 78j, 78m, 78o, 78w, and 78.all80a-8, 80a-18, 80a-29, 80a-30, 80a-33, 80a-34, 80a-37, 80a-58 and 80a-63 of title 15, United States Code.
Executive Order Number 12866 (Regulatory Planning and Review)
As an independent regulatory agency, the SEC is not subject to the Order.
Executive Order Number 13132 (Federalism)
As an independent regulatory agency, the SEC is not subject to the Order.
