August 1, 1989
TO: INVESTMENT ADVISERS COMMITTEE NO. 29-89
RE: SENATORS DODD AND HEINZ INTRODUCE "INVESTMENT ADVISER
SELF-REGULATION ACT"
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As we have previously informed you, the Securities and
Exchange Commission has drafted legislation that would allow for
the creation of one or more self-regulatory organizations for
investment advisers. (See Memorandum to Investment Adviser
Members No. 36-89 and Investment Adviser Associate Members No.
35-89, dated June 23, 1989.)
On July 26, 1989, Senators Dodd and Heinz introduced, at
the request of the Commission "Investment Adviser Self-Regulation
Act" which is identical to the SEC draft legislation. A copy of
Senator Dodd's introductory remarks is attached.
In his statement, Senator Dodd said: "We are introducing
the bill at this time in order to further public debate on the
problem of inspecting and regulating the growing investment
adviser industry in the face of severe and continuing limits on
SEC resources." He also stated that as a result of the explosive
growth in the industry, "...the SEC is able to inspect investment
advisers at the rate of only once every 12 years." Finally, he
stated that "...a self-regulatory structure for investment
advisers -- under tough, SEC oversight -- has the potential to
achieve far greater supervision over this industry than the SEC
can do with its own, limited staff. Thus, the proposal deserves
a serious review by the Congress."
We will keep you advised of developments.
Robert L. Bunnen, Jr.
Assistant General Counsel
Attachment