July 14, 1989
TO: STATE LIAISON COMMITTEE NO. 10-89
SEC RULES COMMITTEE NO. 36-89
RE: NASAA REGULATED INDUSTRIES COMMITTEE PROPOSAL
REGARDING LATE RENEWAL
__________________________________________________________
The Regulated Industries Committee of the North American
Securities Administration Association (NASAA) has received
several complaints from various states regarding mutual funds
failing to renew their state registration on a timely basis. The
Committee has reviewed this issue and has prepared a Mutual Fund
Study and Recommendations (Study). The Study, which is attached,
includes: 1) a Proposed Policy Statement which will be submitted
to the NASAA membership for consideration at the NASAA Fall
Conference in Quebec, 2) a proposed administrative rule, 3) a
proposed amendment to statute containing provisions applicable to
registration generally, and 4) a model indemnification clause.
The Proposed Policy Statement states that it is NASAA's
view that mutual fund investors should not be penalized for the
wrongful acts or omissions of a mutual fund's investment adviser
and sets forth a mechanism for cooperation with the SEC, to
effect, when possible, payment by the adviser of fines and
penalties assessed by NASAA members.
The proposed administrative rule and proposed amendment to
the statute requires that an undertaking be submitted by the
investment adviser or manager to indemnify the fund with respect
to any and all losses or liabilities to which the fund may become
subject to as a result of the failure to renew the registration
of the fund's shares.
A subcommittee of the Institute's State Liaison Committee
has been formed to prepare a response to the Study for
presentation to NASAA at the Fall Conference in September. To
assist the Subcommittee in preparing its response, please submit
any comments you may have regarding the Study by August 7, 1989.
Patricia Louie
Assistant General Counsel
Attachment