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October 16, 1989
TO: SEC RULES COMMITTEE NO. 64-89
CLOSED-END FUND COMMITTEE NO. 45-89
UNIT INVESTMENT TRUST COMMITTEE NO. 71-89
INVESTMENT ADVISERS COMMITTEE NO. 42-89
RE: DRAFT INSTITUTE COMMENT LETTER ON AMENDMENTS TO RULES
UNDER SECTION 16
__________________________________________________________
As we previously informed you, the SEC has reproposed for
comment amendments to the rules under Section 16 of the
Securities Exchange Act. (See Memorandum to SEC Rules Committee
No. 51-89, Closed-End Fund Committee No. 35-89, Unit Investment
Trust Committee No. 53-89 and Investment Advisers Committee No.
35-89, dated August 23, 1989.)
Attached is a copy of a draft of the Institute's comment
letter. In the draft letter, the Institute has three principal
comments:
(1) The letter supports the exemption for customer accounts
managed by "13G Institutions" from the aggregation of holdings in
order to determine insider status. The letter opposes the
limitations on this exemption mentioned in the SEC release in the
cases of (1) ten percent holdings for a single customer and (2) a
single person or committee making investment decisions for each
customer account.
(2) The letter supports the safe harbor for certain
performance fees under the pecuniary interest test, but
recommends that the exemption cover non-performance related fees,
as well.
(3) The letter requests that the SEC clarify that an
investment company of which a member of its board of trustees is
a Section 16 insider will not itself be deemed an insider.
Comments are due November 1. If you have any comments on
the draft, please contact the undersigned no later than 5:00 p.m.
on Friday, October 27.
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Craig S. Tyle
Associate General Counsel
Attachment