8011-01P
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-233, OMB Control No. 3235-0223]
Proposed Collection; Comment Request; Extension: Rule 17f-2
Upon Written Request, Copies Available From
Securities and Exchange Commission
Office of FOIA Services
100 F Street, NE
Washington, DC 20549-2736
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l et seq.), the Securities and Exchange Commission (the "Commission") is soliciting
comments on the collection of information summarized below. The Commission plans to submit this
existing collection of information to the Office of Management and Budget for extension and approval.
Rule 17f-2 (17 CFR 270.17f-2), entitled “Custody of Investments by Registered Management
Investment Company,” establishes safeguards for arrangements in which a registered management
investment company or business development company ("fund") is deemed to maintain custody of its
own assets, such as when the fund maintains its assets in a facility that provides safekeeping but not
custodial services.1 The rule includes four distinct requirements that are an information collection
under the Paperwork Reduction Act. First, fund's directors must prepare a resolution designating not
more than five fund officers or responsible employees who may have access to the fund's assets.
Secondly, the fund’s board must vote to approve this resolution. Third, the designated access persons
(two or more of whom must act jointly when handling fund assets) must prepare a written notation
providing certain information about each deposit or withdrawal of fund assets and must transmit the
notation to another officer or director designated by the directors. Lastly, an independent public

The rule generally requires all assets to be deposited in the safekeeping of a "bank or other company whose
functions and physical facilities are supervised by Federal or State authority."

accountant must verify the fund's assets three times each year, and two of those examinations must be
unscheduled.2
Rule 17f-2’s requirements are designed to safeguard fund assets from loss by requiring certain
specific controls when those assets are not placed and maintained in the custody of a bank or other
custodian as permitted under section 17(f) of the Investment Company Act of 1940 (15 U.S.C. 80a17(f)) (“Act”) and the rules thereunder. Specifically, the requirement that directors designate access
persons is intended to ensure that directors evaluate the trustworthiness of insiders who handle fund
assets. The requirements that access persons act jointly in handling fund assets, prepare a written
notation of each transaction, and transmit the notation to another designated person are intended to
reduce the risk of misappropriation of fund assets by access persons, and to ensure that adequate
records are prepared, reviewed by a responsible third person, and available for examination by the
Commission. The requirement that auditors verify fund assets without notice twice each year is
intended to provide an additional deterrent to the misappropriation of fund assets and to detect any
irregularities. Less frequent examinations by a fund’s accountants could impair the ability of the
Commission’s examination staff to ascertain the fund’s compliance with the rule.
The Commission staff estimates that each fund makes 974 responses and spends an average of
252 hours annually in complying with the rule’s requirements.3 Commission staff estimates that on an
annual basis it takes: (i) 0.5 hours of fund accounting personnel at a total cost of $126 and 1 hour of
fund attorney personnel time at a cost of $484 , for a total of 1.5 hours and a cost of $610 to draft
director resolutions;4 (ii) 0.5 hours of the fund’s board of directors at a total cost of $2,385 to adopt the
resolution;5 (iii) 244 hours for the fund’s accounting personnel at a total cost of $81,086 to prepare
The accountant must transmit to the Commission promptly after each examination a certificate describing the
examination on Form N-17f-2; the preparation and filing of Form N-17f-2, which largely serves as a cover-sheet
for the accountant’s certification of their audit, is covered by a separate information collection; the third
(scheduled) examination may coincide with the annual verification required for every fund by section 30(g) of the
Act (15 U.S.C. 80a-29(g)).

The 974 responses are: 1 (one) response to draft and adopt the resolution and 973 notations; estimates of the
number of hours are based on conversations with individuals in the fund industry; the actual number of hours may
vary significantly depending on individual fund assets.

The estimate relating to fund accounting personnel is based on the following calculation: 0.5 (burden hours per
fund) x $252 (senior accountant’s hourly rate) = approximately $126 ; unless otherwise indicated, the hourly wage
figures used herein are from the Securities Industry and Financial Markets Association’s Management &
Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour
work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead.

The staff has estimated the average cost of board of director time as $4,770 per hour, which was last adjusted for

written notations of transactions;6 and (iv) 3 hours for the fund’s controller or administrator at a total
cost of $1,704 to assist the independent public accountants when they perform verifications of fund
assets.7 The total of these four requirements would then be 249 hours at a cost of $84,081 per
respondent.8 Commission staff estimates that approximately 165 funds file Form N-17f-2 each year.9
Thus, the total annual hour burden for rule 17f-2 is estimated to be 41,085 hours.10 Based on the total
costs per fund listed above, the total cost of rule 17f-2’s collection of information requirements is
estimated to be approximately $13,873 .11
The estimate of average burden hours is made solely for the purposes of the Paperwork
Reduction Act and is not derived from a comprehensive or even a representative survey or study of the
costs of Commission rules and forms. Complying with the collections of information required by rule
17f-2 is mandatory for those funds that maintain custody of their own assets. Responses will not be
kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid control number.
Written comments are invited on: (a) whether the proposed collection of information is
necessary for the proper performance of the functions of the Commission, including whether the
information shall have practical utility; (b) the accuracy of the Commission's estimate of the burden of

inflation through 2019; this is a combined cost for the entire board and assumes as average of 9 board members per
board..
Respondents estimated that each fund makes 973 responses on an annual basis and spends a total of 0.25 hours per
response; the staff assumes that the fund personnel involved are Accounts Payable Manager ($237 hourly rate),
Senior Operations Manager ($425 hourly rate) and General Accounting Manager ($337 hourly rate); the blended
average hourly rate of these personnel is $333 ($333 = (237 + 425 + 337) / 3); the total estimated cost of preparing
notations is based on the following calculation: 974 x 0.25 x $333 = $81,086..

This estimate is based on the following calculation: 3 x $568 (fund controller’s hourly rate) = $1704.

249 = 0.5 + 1 + 0.5 + 3 + 244; $84,081 = 126 + 484 + $2,385 + 81,086 + 1,704.

On average, each year approximately 165 funds filed Form N-17f-2 with the Commission during calendar years
2020-2022; as every fund subject to rule 17f-2 must file Form N-17f-2, we believe this is a good estimate for the
number of respondents to the rule.

This estimate is based on the following calculation: 165 (funds) x 249 (total annual hourly burden per fund) =
41,085 hours for rule; the annual burden for rule 17f-2 does not include time spent preparing Form N-17f-2; the
burden for Form N-17f-2 is included in a separate collection of information.

This estimate is based on the following calculation: $84,081 (total annual cost per fund) x 165 funds =
$13,873,365.

the collection of information; (c) ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other forms of information technology.
Consideration will be given to comments and suggestions submitted by [INSERT DATE 60 DAYS
AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].
An agency may not conduct or sponsor, and a person is not required to respond to, a collection
of information under the PRA unless it displays a currently valid OMB control number.
Please direct your written comments to: David Bottom, Chief Information Officer, Securities
and Exchange Commission, c/o John Pezzullo, 100 F Street, NE Washington, DC 20549 or send an
email to: PRA_Mailbox@sec.gov .

Dated: June 17, 2024.

Sherry R. Haywood,
Assistant Secretary.

[FR Doc. 2024-13702 Filed: 6/21/2024 8:45 am; Publication Date: 6/24/2024]