96-12777. Proposal To Eliminate Fees Previously Adopted by the Commission Pursuant to the Independent Offices Appropriations Act of 1952  

  • [Federal Register Volume 61, Number 100 (Wednesday, May 22, 1996)]
    [Proposed Rules]
    [Pages 25601-25604]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-12777]
    
    
    
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    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.
    
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    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
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        \1\ Securities Act of 1933, Release No. 5229, January 25, 1972.
        \2\ The 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).
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        Today, the Commission is proposing the elimination of each of its 
    current IOAA fees.3 The collection of these fees
    
    [[Page 25602]]
    
    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
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        \3\ See 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 
    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.
        \4\ The 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.
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        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
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        \5\ Senate 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).
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        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
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        \6\ H.R. 2239, Section 31A.(a).
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        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
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        \7\ Letter 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.
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        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
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        \8\ H.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 * * *''.
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        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).
    
    [[Page 25603]]
    
    
    
                     Securities and Exchange Commission Table of IOAA Fees Proposed for Elimination                 
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                    Fee cite                     Rule/form/schedule         Amount              Description         
    ----------------------------------------------------------------------------------------------------------------
                                                 Securities Act of 1933                                             
                                                                                                                    
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    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.                           
                                                                                                                    
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                                             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         Schedule 14C..............          125  Information Statement.        
     240.14c-5(g).                                                                                                  
    17 CFR 240.12b-7.......................  Form 8-A..................          250  Registration of certain       
                                                                                       classes of securities        
                                                                                       pursuant to Section 12(b) or 
                                                                                       (g).                         
    17 CFR 240.12b-7.......................  Form 8-B..................          250  Registration of securities of 
                                                                                       certain successor issuers    
                                                                                       pursuant to Section 12(b) or 
                                                                                       (g).                         
    17 CFR 240.12b-7.......................  Form 10...................          250  General form for registration 
                                                                                       of securities pursuant 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   Form 20-F.................          250  Registration of securities of 
     CFR 240.15d-1.                                                                    foreign private issuers      
                                                                                       pursuant to Section 12 (b) or
                                                                                       (g) and annual reports       
                                                                                       pursuant to Sections 13 and  
                                                                                       15(d)                        
    17 CFR 240.12b-7, 17 CFR 240.13a-1, 17   Form 40-F.................          250  Registration of securities of 
     CFR 240.15d-1.                                                                    certain Canadian issuers     
                                                                                       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 political    
                                                                                       subdivisions thereof.        
    17 CFR 240.13d-7.......................  Schedule 13D, Schedule 13D/         100  Schedule for reporting        
                                              A (if amended to >5%).                   beneficial ownership of more 
                                                                                       than five percent in an      
                                                                                       equity security.             
    17 CFR 240.13d-7.......................  Schedule 13G, Schedule 13G/         100  Short form schedule for       
                                              A (if amended to >5%).                   reporting beneficial         
                                                                                       ownership 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 savings and   
                                                                                       similar plans.               
                                                                                                                    
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                                        Public Utility Holding Company Act of 1935                                  
                                                                                                                    
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    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.              
                                                                                                                    
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                                              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-         1,000  1940 Act registration fee.    
                                              2, N-3, N-4 and N-5.                                                  
    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.        
                                                                                                                    
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    [[Page 25604]]
    
                                                                                                                    
                                   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.
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    \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
    
    

Document Information

Published:
05/22/1996
Department:
Securities and Exchange Commission
Entry Type:
Proposed Rule
Action:
Proposed rule.
Document Number:
96-12777
Dates:
Comments must be received on or before July 8, 1996.
Pages:
25601-25604 (4 pages)
Docket Numbers:
Release Nos. 33-7293, 34-37220, 35-26517, IC-21961, IA-1563, File No. S7-14-96
RINs:
3235-AG79
PDF File:
96-12777.pdf
CFR: (5)
17 CFR 230
17 CFR 240
17 CFR 250
17 CFR 270
17 CFR 275