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October 3, 1989
TO: SEC RULES COMMITTEE NO. 58-89
CLOSED-END FUND COMMITTEE NO. 40-89
UNIT INVESTMENT TRUST COMMITTEE NO. 67-89
INTERNATIONAL FUNDS TASK FORCE NO. 14-89
RE: INSTITUTE COMMENT LETTER ON PROPOSED RULE 12d1-1
__________________________________________________________
As we previously informed you, the SEC has issued proposed
Rule 12d1-1, which would remove restrictions on registered
investment companies purchasing securities of foreign banks and
foreign insurance companies. Proposed Rule 12d1-1 would exempt
foreign banks and foreign insurance companies from the definition
of "investment company" for purposes of Section 12(d)(1)(A) of
the 1940 Act, which imposes limitations on the purchase by
registered investment companies of shares of other investment
companies. (See Memorandum to SEC Rules Committee No. 43-89,
Closed-End Fund Committee No. 30-89, Unit Investment Trust
Committee No. 40-89 and International Funds Task Force No. 8-89,
dated July 31, 1989.)
Attached is a copy of the Institute's comment letter on
proposed Rule 12d1-1. In the letter, the Institute strongly
supports swift adoption of the rule, noting that the purchase of
securities issued by bona fide foreign banks and foreign
insurance companies does not raise any of the concerns that led
to the adoption of Section 12(d)(1)(A). The Institute also
recommends that the relief granted in the proposed rule be
extended to encompass finance subsidiaries and parent holding
companies of foreign banks and foreign insurance companies, and
that the adopting release clarify that offshore branches and
agencies of foreign banks are within the scope of the rule.
The release proposing Rule 12d1-1 contained two alternative
definitions of "foreign insurance company". In its comment
letter, the Institute recommends that the final rule utilize
Alternative II, which did not contain the condition that a
foreign insurance company write or reinsure only those types of
insurance that have "substantially similar credit, insurance
underwriting and investment risk characteristics as those sold in
the United States."
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We will keep you informed of developments.
Craig S. Tyle
Assistant General Counsel
Attachment