April 2, 1990
TO: INVESTMENT ADVISERS COMMITTEE NO. 12-90
RE: PROPOSED INVESTMENT ADVISORS DISCLOSURE AND ENFORCEMENT
ACT OF 1940
__________________________________________________________
Attached is a copy of proposed legislation introduced on
March 30 by Representative Boucher entitled the "Investment
Advisors Disclosure and Enforcement Act of 1990," and a copy of
the accompanying statement.
The proposed legislation would add to section 208 of the
Investment Advisers Act of 1940 specific disclosure requirements
relating to the suitability of advice, representations as to
qualifications, services or fees, third-party reports or
recommendations, guarantees as to results, and compensation
arrangements, including estimates of total costs. The
legislation would also provide for a private right of action
against advisers for violations of paragraph (1) or (2) of
section 206 of the Advisers Act and for violations of certain of
the disclosure provisions added to section 208 of the Act.
In addition, the bill would amend the definition of
"investment adviser" to include persons "in the business of
financial planning, financial consulting, investment advising,
investment consulting, investment planning, money managing, or
financial advising" or who use any of these terms as descriptive
of such person's business. Finally, the proposed legislation
would permit the Commission to assess civil penalties in
administrative proceedings.
We will keep you informed of developments.
Kathy D. Ireland
Associate General Counsel
Attachments