February 5, 1992
TO: BOARD OF GOVERNORS NO. 9-92
SEC RULES COMMITTEE NO. 6-92
RE: SEC BUDGET REQUEST FOR FISCAL YEAR 1993
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Attached is a copy of the budget estimate of the Securities
and Exchange Commission for fiscal year 1993. With respect to
investment management regulation, the SEC asserts that additional
resources are necessary in order "to meet the challenges
represented by major structural changes in the investment company
industry, rapid development of new products, increased complexity
of investment strategies, and further internationalization of the
securities markets." (See p. 11)
The SEC notes that assets of investment companies will
reach $1.7 trillion in 1993 and that since these assets are not
federally insured or subject to "first line" oversight by a self
regulatory organization, the SEC inspection program is of
particular importance to the protection of these assets. To
achieve maximum industry coverage, the inspection program in 1993
will target large investment company complexes, money market
funds and large investment advisers. Specifically, the staff
will inspect the 100 largest complexes and all money market funds
as well as selected small complexes and stand alone funds. In
addition, investment advisers managing more than $1 billion or
having high risk profiles will be targeted for inspection. The
proposal states that this should bring the average inspection
cycle to once every 24 years. While this is far from the optimum
cycle, the SEC notes that it is a 20 percent improvement over the
average inspection cycle of 30 years in 1992.
We will keep you informed of developments on this matter.
Lawrence A. Rogers
General Counsel
Attachment