Proposal To Eliminate Fees Previously Adopted by the Commission Pursuant to the Independent Offices Appropriations Act of 1952

1Securities Act of 1933, Release No. 5229,
January 25, 1972.
2The Independent Offices Appropriations Act of 1952, specifically 31 U.S.C. 9701, authorizes independent agencies of the federal government to prescribe fees and charges for activities that provide benefits to individuals and businesses. This statute states that ‘‘It is the sense of Congress that each service * * * provided by an agency * * * to a person * * * is to be self-sustaining to the extent possible.’’ The statute also authorizes the head of each agency to prescribe regulations establishing the charge for a service. Notably, a separate provision of the Securities Exchange Act of 1934 (Exchange Act) specifically authorizes the Commission to impose fees authorized by this act. 15 U.S.C. 14(g)(4). 3See attached table of IOAA fees. Note that the Commission’s proposal would only eliminate the collection of regulatory fees imposed under the IOAA; it would not affect other fees imposed by Continued SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 230, 240, 250, 270, and 275 [Release Nos. 33–7293; 34–37220; 35– 26517; IC–21961; IA–1563; File No. S7–14– 96] RIN 3235–AG79 Proposal To Eliminate Fees Previously Adopted by the Commission Pursuant to the Independent Offices Appropriations Act of 1952 AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. SUMMARY: The Securities and Exchange Commission (Commission) is proposing to eliminate each of the user fees currently adopted under the Independent Offices Appropriations Act of 1952, in conjunction with rules under the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. These fees were first adopted in 1972 to contribute towards the cost of agency operations. However, since that time, the amount of fees collected by the Commission has increased dramatically. In 1995, the Commission collected nearly double the amount of fees required to fund the agency’s operations. DATES: Comments must be received on or before July 8, 1996. ADDRESSES: All interested persons are invited to submit their views and comments concerning the rule proposal should be submitted in triplicate to Jonathan G. Katz, Secretary, U.S. Securities and Exchange Commission, Mail Stop 6–9, 450 Fifth Street, N.W., Washington, D.C. 20549. Comments also may be submitted electronically at the following E-mail address: rule￾comments@sec.gov. All comment letters should refer to File Number S7–14–96; this file number should be included in the subject line if E-mail is used. Comment letters will be available for inspection and copying in the public reference room at the same address. Electronically submitted comments will be posted on the Commission’s Internet web site (http://www.sec.gov). FOR FURTHER INFORMATION CONTACT:
Henry I. Hoffman, Office of the
Comptroller, at (202) 942–0343.
SUPPLEMENTARY INFORMATION: Each fee identified for elimination is listed on the attached table labeled TABLE OF IOAA FEES PROPOSED FOR ELIMINATION. Proposal In 1972, to offset the cost to the government of related Commission operations, the Securities and Exchange Commission established through rulemaking a fee schedule for numerous types of applications, statements and reports.1 These regulatory fees, authorized under Title V of the Independent Offices Appropriations Act of 1952 (31 U.S.C.A. 9701), are commonly referred to as IOAA fees.2 Today, the Commission is proposing the elimination of each of its current IOAA fees.3 The collection of these fees

25602 Federal Register / Vol. 61, No. 100 / Wednesday, May 22, 1996 / Proposed Rules statute that are also collected by the Commission. These statutory fees include registration fees collected pursuant to Section 6(b) of the Securities Act of 1933 (Securities Act) and Section 307(b) of the Trust Indenture Act of 1939, going private fees collected pursuant to Section 13 of the Exchange Act, proxy and tender offer fees collected pursuant to Section 14 of the Exchange Act, and transaction fees collected pursuant to Section 31 of the Exchange Act. 4The vast increase in Commission fee revenue between 1972 and 1995 has developed from two basic sources. First is a significant increase in the underlying value of the securities on which the statutory fees are based. The underlying value of securities registered with the Commission under
Section 6(b) of the Securities Act increased from
$62 billion to $1.2 trillion from 1972 to 1995.
Further, during the same period, the value of shares transacted on the U.S. securities exchanges and subject to a fee under Section 31 of the Exchange Act increased from $196 billion to $3 trillion. Second is the increased use of offsetting collections under Section 6(b) of the Securities Act to fund agency operations since 1990. The amount of offsetting revenue collected under Section 6(b) in 1991, the first year fee revenue was used to directly offset Commission funding, was $37 million at a fee rate of 1⁄40 of one percent, and in 1995 was $157 million at an increased fee rate of 1⁄29 of one percent. 5Senate Report 100–105, 100th Cong., 1st Session, and, in response, Commission issued findings in a U.S. Securities and Exchange Commission ‘‘Self Funding Study’’ (January 1989) and accompanying ‘‘Legislative Proposals and Fee Options’’ (January 1989). 6H.R. 2239, Section 31A.(a). 7Letter dated April 6, 1995, from Senator D’Amato, Chairman of the Senate Banking Committee, to Senators Domenici and Exon, respectively Chairman and Ranking Member of the Senate Committee on the Budget. 8H.R. 2972, Section 2(2). 9 Ibid, Section 7(1) states that ‘‘the fees authorized by the amendments made by this Act are in lieu of, and not in addition to, any fees that the Securities and Exchange Commission is authorized to impose or collect pursuant to Section 9701 of title 31, United States Code * * *’’. is no longer appropriate since the amount of revenue currently generated by statutory fees imposed under the securities laws far exceeds the annual cost of Commission operations. The additional revenue added by the IOAA fees is an insignificant portion of the total revenue received. In fiscal 1972, the Commission collected $19 million in fees and cost $27 million to operate. IOAA fees represented 12 percent of the total 1972 revenue. In fiscal 1995, the Commission collected $559 million in fees and was appropriated $297 million for operating costs. IOAA fees represented just 2 percent of the total 1995 revenue.4 This significant difference between the amount of fee revenue collected by the Commission and the amount of its annual funding level has been of continuing concern to Congress. In 1988, the Securities Subcommittee of the Senate Committee on Banking, Housing and Urban Affairs directed the Commission to study its fee structure and funding status (Commission Fee Study).5 As a result of the Commission Fee Study and continuing Congressional concerns about the level of the Commission’s fees, in 1993 the House passed H.R. 2239, the Securities and Exchange Commission Authorization Act of 1993. One of the stated purposes of this bill was to ‘‘establish a system for the annual adjustment of fees collected by the Commission so that the total amount appropriated to the Commission for any fiscal year will be offset by the amount collected during such fiscal year

• • *’’ 6
    Although Congress did not enact H.R.
    2239, in 1995 members of the
    Commission’s authorization committee in the Senate stated that the total amount of fees collected annually by the agency far exceed the cost of its regulation and, therefore, should be reduced.7 On March 12, 1996, the House passed H.R. 2972, the ‘‘Securities and Exchange Commission Authorization Act of 1996.’’ This bill has as a major purpose, ‘‘to reduce over time the rates of fees charged under the Federal securities laws.’’ 8 Notably, H.R. 2972 contains a sense of the Congress resolution that the Commission should eliminate its fees imposed under the IOAA.9 The Commission is proposing to eliminate IOAA fees for two additional reasons. First, the Commission is committed, consistent with its mission of investor protection, to eliminate unnecessary regulations imposed on the capital formation process. The Commission has determined that eliminating these IOAA fees will reduce such burdens but neither harm investors nor the Commission’s mission to protect them. Second, the collection of these IOAA fees imposes a disproportionate cost on the Commission. In 1995, IOAA fees represented less than 2% of the total fee revenue collected by the Commission, but more than one-half of the total number of fee payments processed by Commission staff, making recordkeeping for these fees disproportionately costly. Cost/Benefit Analysis Comments are requested related to any costs or benefits associated with the elimination of the Commission’s current IOAA fees. The elimination of IOAA fees will provide an obvious benefit to persons obligated to pay such fees, i.e., they will no longer have to pay the fees. In addition, the Commission will avoid the costs associated with processing and auditing the collection of such fees; Commission resources spent on those tasks will be reallocated to other mandated tasks. Other costs and benefits are expected to be de minimis. Summary of Regulatory Flexibility Analysis The Commission has prepared an Initial Regulatory Flexibility Analysis in accordance with 5 U.S.C. 603 regarding the proposed rule changes. The analysis reiterates the reasons and objectives for the proposed rule changes discussed above in this release. The analysis also describes the legal basis for the proposal and discusses its effect on small entities as defined by the Securities Act, the Exchange Act, the Public Utility Holding Company Act of 1935, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. This proposed rule imposes no additional reporting, recordkeeping or other compliance requirements on small businesses, and the Commission believes that there are no overlapping or conflicting federal rules. In addition, the Commission does not believe that any significant alternative to the proposal would both accomplish the stated objectives and minimize any significant impact on small companies. In fact, the alternatives to eliminating the fee would be to maintain or increase the current fees. Neither alternative provides any increased
    benefit nor is appropriate in the public interest. The Commission encourages the submission of written comments with respect to the Initial Regulatory Flexibility Analysis. A copy of the Initial Regulatory Flexibility Analysis may be obtained by contacting Henry I. Hoffman, Securities and Exchange Commission, Office of the Comptroller, Room 2080, Washington, D.C. 20549. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the proposed elimination of IOAA fees does not impose recordkeeping or information collection requirements, or other collections of information which require the approval of the Office of Management and Budget under 44 U.S.C. 3501 et seq. Statutory Basis: The Commission’s authority for this action is 31 U.S.C. 9701 and 15 U.S.C. 14(g)(4).

Federal Register / Vol. 61, No. 100 / Wednesday, May 22, 1996 / Proposed Rules 25603 SECURITIES AND EXCHANGE COMMISSION TABLE OF IOAA FEES PROPOSED FOR ELIMINATION Fee cite Rule/form/schedule Amount Description Securities Act of 1933 17 CFR 230.236(a),(c) ............................................ Rule 236 ........................ $100 Exemption of shares offered in connection with certain transactions. 17 CFR 230.252(f) .................................................. Form 1–A ....................... 500 Offering statement under Regulation A. 17 CFR 230.310(a) ................................................. Schedules A, B, C or D 100 Offering sheet under Regulation B. 17 CFR 230.604(a) ................................................. Form 1–E ....................... 100 Notification of offering under Regulation E by a small business investment company. 17 CFR 230.652. .................................................... Form 1–F ....................... 100 Notification under Regulation F. Securities Exchange Act of 1934 17 CFR 240.0–11(c)(1)(ii) ....................................... Schedule 14A ................ 125 Proxy Statement. 17 CFR 240.0–11(c)(1)(ii) 17 CFR 240.14c–5(g) ... Schedule 14C ................ 125 Information Statement. 17 CFR 240.12b–7 ................................................. Form 8–A ....................... 250 Registration of certain classes of securities pursu￾ant to Section 12(b) or (g). 17 CFR 240.12b–7 ................................................. Form 8–B ....................... 250 Registration of securities of certain successor is￾suers pursuant to Section 12(b) or (g). 17 CFR 240.12b–7 ................................................. Form 10 ......................... 250 General form for registration of securities pursu￾ant to Section 12(b) or (g). 17 CFR 240.12b–7 ................................................. Form 10–SB .................. 250 Optional form for the registration of securities of a small business issuer. 17 CFR 240.12b–7 ................................................. Form 18 ......................... 250 Application for registration of securities of foreign governments and political subdivisions thereof. 17 CFR 240.12b–7, 17 CFR 240.13a–1, 17 CFR 240.15d–1. Form 20–F ..................... 250 Registration of securities of foreign private issuers pursuant to Section 12 (b) or (g) and annual re￾ports pursuant to Sections 13 and 15(d) 17 CFR 240.12b–7, 17 CFR 240.13a–1, 17 CFR 240.15d–1. Form 40–F ..................... 250 Registration of securities of certain Canadian is￾suers pursuant to Section 12(b) or (g) and for reports pursuant to Section 15(d) and Rule 15d–4. 17 CFR 240.13a–1, 17 CFR 240.15d–1 ................ Form 10–K ..................... 250 Annual report pursuant to Sections 13 and 15(d). 17 CFR 240.13a–1, 17 CFR 240.15d–1 ................ Form 10–KSB ................ 250 Optional form for annual report of small business issuers under Sections 13 and 15(d). 17
CFR 240.13a–1 ................................................. Form 18–K ..................... 250 Annual report for foreign governments and politi￾cal subdivisions thereof. 17 CFR 240.13d–7 ................................................. Schedule 13D, Schedule 13D/A (if amended to >5%). 100 Schedule for reporting beneficial ownership of more than five percent in an equity security. 17 CFR 240.13d–7 ................................................. Schedule 13G, Schedule 13G/A (if amended to >5%). 100 Short form schedule for reporting beneficial own￾ership of more than five percent in an equity security 17 CFR 240.14a–6(i) .............................................. Schedule 14A ................ 125/500 Proxy Statement. 17 CFR 240.14a–101 (Item 22(a)(2)) ..................... Schedule 14A ................ 125 Proxy filing fee for investment companies. 17 CFR 240.15d–1 ................................................. Form 11–K ..................... 250 Annual report for employee stock purchase sav￾ings and similar plans. Public Utility Holding Company Act of 1935 17 CFR 250.1(d) ..................................................... Form U5S ...................... 250 Annual report of registered holding company. 17 CFR 250.94(b) ................................................... Form U–13–60 ............... 250 Annual report of mutual or subsidiary service company. 17 CFR 250.106 ..................................................... Form U–1 ....................... 2,000 Application-declaration statement. 17 CFR 250.106 ..................................................... Form U–3A–2 ................ 2,000/500 Annual holding company exemption statement. 17 CFR 250.106 ..................................................... Form U–3A3–1 .............. 500 Bank exemption statement. 17 CFR 250.106 ..................................................... Form U–13–1 ................. 2,000 Application for approval of mutual or subsidiary service company. 17 CFR 250.106 ..................................................... Form U–7D .................... 200/100 Certificate of lease of utility facilities. 17 CFR 250.106 ..................................................... Form U–R–1 .................. 2,000 Declaration regarding a reorganization. Investment Company Act of 1940 17 CFR 240.14a–101 (Item 22(a)(2)) ..................... Schedule 14A ................ 125 Proxy filing fee. 17 CFR 270.0–5(d) ................................................. Rule 0–5 ........................ 500 Application under the 1940 Act. 17 CFR 270.8b–6 ................................................... Rule 8b–6, Forms N–1A, N–2, N–3, N–4 and N–5. 1,000 1940 Act registration fee. 17 CFR 270.24f–2(a)(3) .......................................... Rule 24f–2 ..................... 500 Registration of an indefinite amount of securities. 17 CFR 270–30a–1 ................................................ Rule 30–1 ...................... 125 Form N-SAR filing fee.

25604 Federal Register / Vol. 61, No. 100 / Wednesday, May 22, 1996 / Proposed Rules SECURITIES AND EXCHANGE COMMISSION TABLE OF IOAA FEES PROPOSED FOR ELIMINATION—Continued Fee cite Rule/form/schedule Amount Description Investment Advisers Act of 1940 (‘‘Advisers Act’’) 17 CFR 275.0–5(d) ................................................. Rule 0–5 ........................ 150 Application under the Advisers Act. 17 CFR 275.203–3(a) ............................................. Rule 203–3 .................... 150 Advisers Act registration fee. 1 (First/subseq.). Dated: May 16, 1996. By the Commission. Margaret H. McFarland, Deputy Secretary. [FR Doc. 96–12777 Filed 5–21–96; 8:45 am] BILLING CODE 8010–01–P