[17756]
July 13, 2004
TO: CLOSED-END INVESTMENT COMPANY COMMITTEE No. 27-04
INVESTMENT ADVISERS COMMITTEE No. 9-04
SEC RULES COMMITTEE No. 61-04
SMALL FUNDS COMMITTEE No. 40-04
UNIT INVESTMENT TRUST COMMITTEE No. 17-04
RE: SEC SEMI-ANNUAL REGULATORY AGENDA
The Securities and Exchange Commission has published its semi-annual agenda of
rulemaking actions.1 Division of Investment Management items are listed on Federal Register
pages 38645-46 and summarized on pages 38653-61, copies of which are attached. Set forth
below is a summary of changes to the Division’s agenda related to investment companies and
investment advisers that have occurred since the last semi-annual agenda was published.
A. The following item has been reclassified from “Prerule Stage” to “Proposed Rule
Stage”:
Investment Company Portfolio Transaction Costs (requesting comment on how
disclosure of investment company transaction costs might be improved, including
whether it would be appropriate and feasible to require investment companies to
provide their investors with quantitative disclosure of portfolio transaction costs)
(p. 38654).
B. The following items have been added to “Proposed Rule Stage”:
1. Registration under the Advisers Act of Certain Hedge Fund Advisers (proposing
to require registration under the Investment Advisers Act of 1940 by certain
advisers to hedge funds) (p. 38654).
2. Privacy of Consumer Financial Information (proposing amendments to
Regulation S-P to implement sections 214 and 216 of the Fair and Accurate Credit
Transactions Act of 2003) (p. 38654).
1 See SEC Release Nos. IC-26447, IA-2235 (May 14, 2004); 69 Fed. Reg. 38643 (June 28, 2004).
2
C. The following items have been reclassified from “Proposed Rule Stage” to “Final
Rule Stage”:
1. Fund of Funds Investments2 (proposing to: (i) allow investment companies to
purchase securities issued by money market funds in excess of limits on those
investments under the Investment Company Act; (ii) alleviate certain investment
and other restrictions on investment companies that invest in other investment
companies; and (iii) require registered funds to disclose the aggregate costs of
investing in other funds) (p. 38657).
2. Disclosure of Breakpoint Discounts by Mutual Funds (proposing to require
improved disclosure in mutual fund prospectuses regarding “breakpoint”
discounts on front-end sales loads) (p. 38657).
3. Exemption from Shareholder Approval for Certain Subadvisory Contracts
(proposing new rule to allow certain types of funds or their investment advisers
to enter into subadvisory agreements for investment management services
without obtaining shareholder approval) (p. 38658).
4. Rulemaking for EDGAR System (proposing to expand the categories of
mandatory electronic filings and to identify series and classes for certain
investment company filings; proposing technical and clarifying corrections to
existing rules and forms) (p. 38659).
D. The following items have been reclassified from “Long-Term Actions” to “Final Rule
Stage”:
1. Political Contributions by Certain Investment Advisers (proposing new Rule
206(4)-5 under the Advisers Act to prohibit an investment adviser from
providing advisory services for compensation to a government client for two
years after the adviser or any of its partners, executive officers, or solicitors
makes a contribution to certain elected officials or candidates; proposing to
require a registered adviser having government clients to make certain records of
the political contributions made by the adviser or any of its partners, executive
officers, or solicitors) (p. 38655).
2. Certain Broker-Dealers Deemed Not to be Investment Advisers (proposing new
Rule 202(a)(11)-1 under the Advisers Act to exempt from the definition of
investment adviser those broker-dealers offering non-discretionary, full-service
brokerage programs, so long as the investment advice provided is solely
incidental to the brokerage services and other conditions are satisfied)
(p. 38656).
2 In the last published semi-annual agenda, this item was referred to as “Exemption to Permit Investment Companies
to Invest in Other Investment Companies.”
3
E. The following items have been added to “Final Rule Stage”:
1. Investment Adviser Codes of Ethics (proposing new Rule 204A-1 under the
Advisers Act to require investment advisers to establish, maintain, and enforce
written codes of ethics; proposing conforming amendments to Rule 17j-1 under
the Investment Company Act of 1940, the books and records requirements of
Rule 204-2 under the Advisers Act, and Form ADV) (p. 38656).
2. Disclosure Regarding Basis for Approval of Existing Investment Advisory
Contracts (proposing amendments to improve the disclosure by registered
management investment companies about how directors of such companies
evaluate and approve the continuance of existing investment advisory contracts)
(p. 38657).
3. Prohibitions on the Use of Brokerage Commissions to Finance Distribution
(proposing amendments to Rule 12b-1 under the Investment Company Act to
prohibit funds from using brokerage commissions to pay for distribution of
shares issued by open-end management investment companies) (p. 38657).
4. Amendments to Rules Governing Pricing of Mutual Fund Shares (proposing
amendments to Rule 22c-1 under the Investment Company Act to provide that
an order to purchase or redeem mutual fund shares would receive the current
day’s price only if the fund, its designated transfer agent, or a registered
securities clearing agency receives the order by the time the fund establishes for
calculating its net asset value) (p. 38658).
5. Enhanced Governance Standards for Investment Companies (proposing to
amend certain exemptive rules under the Investment Company Act to require
registered investment companies to satisfy enhanced governance standards in
order to rely on those rules; proposing to require each fund to retain materials
that the fund board considers in approving the fund’s advisory contracts)
(p. 38658).
6. Interagency Proposal to Consider Alternative Forms of Privacy Notices Under
the Gramm-Leach-Bliley Act (requesting comment on whether the SEC and other
financial regulators should consider amending the regulations that implement
the privacy provisions of the Gramm-Leach-Bliley Act to allow or require
financial institutions to provide alternative types of privacy notices that would
be easier for consumers to understand) (p. 38658).
7. Disclosure Regarding Portfolio Managers of Registered Management Investment
Companies (proposing improved disclosure regarding fund portfolio managers,
including the structure of their compensation, ownership of fund shares, and
other investment companies or accounts that are managed by a portfolio
manager to a registered fund) (p. 38659).
4
8. Mandatory Redemption Fees for Redeemable Fund Securities (proposing new
Rule 22c-2 under the Investment Company Act to require mutual funds, with
certain exceptions, to impose a 2% fee on the redemption of fund shares
purchased within the previous five business days) (p. 38659).
F. The following items have been reclassified from “Final Rule Stage” to “Completed
Actions”:
1. Compliance Programs of Investment Companies and Investment Advisers
(adopting new Rule 38a-1 under the Investment Company Act, new
Rule 206(4)-7 under the Advisers Act, and amendments to Rule 204-2 under
the Advisers Act to require each investment company and investment adviser to:
(i) adopt and implement policies and procedures reasonably designed to prevent
violations of the federal securities laws; (ii) review those policies and procedures
annually; (iii) appoint a chief compliance officer; and (iv) maintain certain
compliance records) (p. 38660).
2. Shareholder Report and Financial Statement Revisions (adopting rule and form
amendments to improve the periodic disclosure provided by registered
management investment companies about their portfolio investments, costs, and
past performance, including amendments to require quarterly disclosure of
portfolio holdings) (p. 38661).
G. The following item has been added to “Completed Actions”:
Disclosure of Policies Regarding Market Timing and Selective Disclosure of Portfolio
Holdings (adopting new rules that require the disclosure of policies regarding market
timing and selective disclosure of portfolio holdings) (p. 38661).
H. The following items have been reclassified from “Proposed Rule Stage” to
“Completed Actions” and withdrawn from the Commission’s agenda:
1. Exemption from Registration for Certain Commodity Pool Operators (p. 38660).
2. Substitution of Funds Underlying Variable Insurance Products (p. 38661).
3. Investment in Money Market Funds (p. 38661).
Rachel H. Graham
Assistant Counsel
Attachment (in .pdf format)