July 18, 1990
TO: INVESTMENT ADVISER MEMBERS NO. 32-90
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 29-90
RE: GAO STUDY ON SEC REGULATION OF INVESTMENT ADVISERS
__________________________________________________________
Attached is a copy of the report prepared by the General
Accounting Office evaluating the SEC's regulation of investment
advisers. In summary, the study concludes that the SEC's current
registration and inspection program needs to be improved. The
specific enhancements recommended by the GAO include: verifying
information before the SEC registers advisers; warning investors
that registration is limited to disclosing information and
business practices and not to evaluating adviser competence; and,
inspecting each new adviser within a reasonable time, such as
within 1 year after registration, and periodically thereafter
based on risk.
We will keep you informed of developments.
Amy B. Rosenblum
Assistant General Counsel
Attachment