October 29, 1991
TO: BOARD OF GOVERNORS NO. 82-91
STATE SECURITIES MEMBERS NO. 49-91
UNIT INVESTMENT TRUST MEMBERS NO. 52-91
CONTRACTUAL PLANS COMMITTEE NO. 18-91
RE: NASAA PASSES RESOLUTION IN OPPOSITION TO THE BLUE
CHIP EXEMPTION
__________________________________________________________
At the 1991 NASAA Fall Conference, members of NASAA passed
the attached resolution which expresses NASAA's opposition to the
blue chip exemption from registration for qualified mutual funds
and unit trusts and "strongly encourages" those members of NASAA
that have adopted the blue chip exemption to reexamine it. The
resolution was passed without notice to the Institute or the
investment company industry.
According to NASAA, the blue chip exemption is so broad
that states adopting such "would not be able to effectively
implement regulatory policies designed to protect investment
company investors." The resolution further cites as a basis for
this sudden action that the NASAA Investment Company
Registration/Trading Practices Committee has identified certain
areas of concern regarding the investment company industry, i.e.,
periodic payment plans, the non-availability of the Statement of
Additional Information, the "'drift' of material information from
prospectuses to the SAI", and the use by some investment
companies of misleading names.
The Institute has contacted the President of NASAA to
express its concern not only with the rationale to justify the
resolution but also over the secretive manner with which the
resolution was introduced and passed by NASAA. The Institute has
requested a meeting with the President of NASAA to discuss this
matter.
We will keep you advised of further developments.
Patricia Louie
Assistant General Counsel
Attachment