Supporting Statement_Rule 0-4

OMB CONTROL NUMBER 3235-0633
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 0-4
A.

JUSTIFICATION
1.

Necessity for the Collection Information

Multiple sections of the Investment Advisers Act of 1940 (“Advisers Act”) give the
Securities and Exchange Commission (“Commission”) the authority to issue orders granting
exemptions from the Advisers Act’s provisions. 1 The section that grants the broadest authority
is section 206A, which provides the Commission with authority to conditionally or
unconditionally exempt any person or transaction, or any class or classes of persons, or
transactions, from any provision of the Advisers Act, or the rules or regulations thereunder, if
and to the extent that such exemption is necessary or appropriate in the public interest and
consistent with the protection of investors and the purposes fairly intended by the policy and
provisions of the Advisers Act. 2 Congress enacted section 206A to give the Commission the
flexibility to address unforeseen or changed circumstances in the investment adviser industry.
Rule 0-4 under the Advisers Act prescribes general instructions for filing an application
seeking exemptive relief with the Commission.3 Rule 0-4 contains a currently approved
“collection of information,” for purposes of the Paperwork Reduction Act, under Office of
Management and Budget (“OMB”) control number 3235-0633, and is titled “Rule 0-4 under the
Investment Advisers Act of 1940, General Requirements of Papers and Applications.” An

1

15 U.S.C. 80b-1 et seq. See e.g., 17 CFR 275.206(4)-5(e) (providing that the Commission may,
upon application, exempt an adviser from certain prohibitions of a rule concerning political
contributions, and providing a non-exclusive list of factors the Commission will consider when
evaluating these applications).

2

15 U.S.C. 80b-6(a).

3

17 CFR 275.0-4.

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 OMB control number.
Respondents to the collection of information are applying for orders of the Commission
exempting them from one or more provisions of the Advisers Act. Applicants for such orders
can include registered investment advisers, affiliated persons of registered investment advisers,
and entities seeking to avoid investment adviser status, among others. The requirements of rule
0-4 are designed to provide Commission staff with the necessary information to assess whether
granting the orders of exemption is necessary or appropriate in the public interest and consistent
with the protection of investors and the intended purposes of the Advisers Act. This collection
of information is necessary in order to obtain or retain benefits. Responses will not be kept
confidential.
2.

Purpose and Use of the Information Collection

Respondents to the collection are applying for orders of the Commission exempting them
from one or more provisions of the Advisers Act. The requirements of rule 0-4 are designed to
provide Commission staff with the necessary information to assess whether granting the orders
of exemption are necessary or appropriate in the public interest and consistent with the protection
of investors and the intended purposes of the Advisers Act.
3.

Consideration Given to Information Technology

Rule 0-4 requires an applicant seeking Advisers Act relief to submit its application
electronically to the Commission through the Electronic Data Gathering, Analysis, and Retrieval
(“EDGAR”) system.
4.

Duplication

The reporting requirements of rule 0-4 are not duplicated elsewhere.
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5.

Effect on Small Entities

The requirements of rule 0-4 apply equally to all applicants seeking orders of the
Commission exempting them from one or more provisions under the Advisers Act, regardless of
size. If we were to exempt small entities from the information collection requirements, it would
be difficult for Commission staff to obtain the necessary information to assess whether granting
orders of exemption for such entities would be necessary or appropriate in the public interest and
consistent with the protection of investors and the intended purposes of the Advisers Act.
Therefore, it would defeat the purpose of rule 0-4 to exempt small entities from the information
collection requirements. The information collection requirements will not affect most investment
advisers that are small entities because they generally are registered with one or more state securities
authorities and not with the Commission.4 Investment advisers that manage less than $100 million
in regulatory assets under management generally are prohibited from registering with the
Commission and register with state securities authorities.5 As required by the Regulatory
Flexibility Act, the Commission reviews all rules periodically to identify ways to minimize
reporting and recordkeeping requirements that may affect small businesses. 6
6.

Consequences of Not Conducting Collection

The requirements of rule 0-4 apply only to applications for orders from the Commission
for which a form is not specifically prescribed. Applicants for orders under the Advisers Act file
4

Under Advisers Act Rule 0-7, for purposes of the Regulatory Flexibility Act an investment
adviser generally is a small entity if it: (1) has assets under management of less than $25 million;
(2) did not have total assets of $5 million or more on the last day of its most recent fiscal year;
and (3) does not control, is not controlled by, and is not under common control with another
investment adviser that has assets under management of $25 million or more, or any person (other
than a natural person) that had total assets of $5 million or more on the last day of its most recent
fiscal year. 17 CFR 275.0-7.

5

See 15 U.S.C. 80b-3a.

6

5 U.S.C. 601 et seq.

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applications as they deem necessary; therefore, the Commission has no control over the number
of applications submitted. As a result, the Commission generally cannot require a less frequent
collection unless it does not require the collection with respect to every application. Eliminating
rule 0-4 requirements for certain or all applications would make it difficult for the Commission
to process and review requests for exemptive relief. The Commission will, however, when it
deems it necessary or appropriate, codify prior exemptive relief into rules to eliminate the need
for respondents to file exemptive applications in those instances, and relieve them of rule 0-4
requirements.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Not applicable.
8.

Consultation With Persons Outside the Agency

The Commission requested public comment on the collection of information requirements in rule
0-4 before submitting this request for extension and approval to the OMB. The Commission
received no comments in response to its request.

The Commission and the staff of the

Division of Investment Management participate in an ongoing dialogue with representatives of
the investment adviser industry through public conferences, meetings and informal exchanges.
These forums provide the Commission and the staff with a means of ascertaining and acting
upon paperwork burdens confronting the industry.
9.

Payment or Gift

Not applicable.
10.

Assurance of Confidentiality

Not applicable.
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11.

Sensitive Questions

Not applicable.
12.

Burden of Information Collection

Applicants for orders under the Advisers Act file applications as they deem necessary.
The Commission continues to estimate that it receives seven initial applications per year
submitted under rule 0-4 of the Advisers Act. Although some applications are submitted on
behalf of multiple applicants, these applicants in the vast majority of cases are related entities
and are treated as a single respondent for purposes of this analysis.
Most of the work of preparing an application is performed by outside counsel and,
therefore, imposes no time burden on the respondents. Nevertheless, the Commission requests
approval for one burden hour for administrative purposes, which is the current hour burden for
administrative purposes, and which we believe remains appropriate. The time burden estimate is
made solely for the purposes of the Paperwork Reduction Act and is not derived from a
comprehensive or even representative survey or study of the costs of Commission rules and
forms.
Table 1: Summary of the Annual Number of Responses, Time Burden, and External
Cost Burden
Previously
Description
Requested
Change
Approved
Responses

7

7

0

Time burden (Hours)

1

1

0

$440,387.38

$405,210

$35,177.38

External Cost Burden (Dollars) 7

7

See infra Item 13 (Cost to Respondents).

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13.

Cost to Respondents

We have increased our estimated external cost burden due to using updated data for
baseline costs, 8 which is discussed in the table below.
Table 2: Annual External Cost Burden Estimates
Types of
applications
Well-Precedented
Applications
Advisers Act
Exemptive
Applications

Current external cost
burden per filing1

Number of
applications2

15,259.94

Medium Complexity
Applications

51,948.56

High Complexity
Applications

238,761.88

x

Current total external cost
burden per filing type

3

$45,779.82

3

$155,845.68

1

$238,761.88

Annual total external cost burden:

$440,387.38

Notes:
1. The cost that outside counsel charges applicants depends on the complexity of the issues covered by the
application and the time required. Based on conversations with applicants and attorneys, the cost for applications
ranges from approximately $15,259.94 for preparing a well-precedented, routine (or otherwise less involved)
application; $51,948.56 for preparing medium complex applications; and approximately $238,761.88 to prepare a
complex or novel application. We have adjusted these numbers to reflect changes in prices from the previously
approved estimates based on the U.S. Bureau of Labor Statistic’s CPI Inflation calculator.
2. Based on our experience, we estimate that the Commission annually receives three well-precedented applications,
three applications of medium complexity, and one high complexity application.

8

The previously approved annual external cost burden is $405,210.

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14.

Cost to the Federal Government

The annual cost of reviewing and processing applications under the Advisers Act for
orders from the Commission for exemptive relief amounted to approximately $801,799.32in
fiscal year 2025, based on the Commission’s computation of the value of staff time devoted to
this activity and related overhead. 9
15.

Changes in Burden

We estimate no changes in the annual number of responses or annual time burden. Rule
0-4 imposes no time burden; however, we are continuing to request one hour for administrative
purposes. We estimate that the annual external cost burden will increase by $35,177.38 from
$405,210 to $440,387.38. We expect that the annual external cost burden would increase due to
updated data concerning baseline costs. These changes in burden also reflect the Commission’s
revision and update of burden estimates for all information collections under this OMB control
number.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

Not applicable.
18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submissions

Not applicable.

9

Using the previously approved amount of $737,753 from May 2022, we used the CPI inflation
calculator from the U.S. Bureau of Labor Statistics to calculate that this amount has the same
buying power as $801,799.32 in January 2025. The U.S. Bureau of Labor Statistics CPI inflation
calculator is available at https://www.bls.gov/data/inflation_calculator.htm.

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B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
Not applicable.

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