May 26, 1992
TO: STATE SECURITIES MEMBERS NO. 26-92
RE: INDIANA APPLYING CSAC EXPENSE LIMITATIONS
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The Institute has been advised by certain of its members
that the Indiana Securities Division has been applying the
expense limitation contained in the Central Securities
Administrators Council Statements of Policy on Open-End
Investment Companies. As you know, this provision limits the
expenses of a fund to 1.5% of net assets up to $30 million.
The Institute wrote to the Securities Division requesting
that the Securities Division formally repeal application of the
expense limitation. The Institute informed the Securities
Division that a study conducted by two state securities
associations concluded that there was no empirical basis to
support the imposition of an expense limitation as a protective
device for investors and that such limitations were, in fact,
counterproductive from the standpoint of investor protection. A
copy of the Institute’s letter is attached.
We will be scheduling a meeting with the staff of the
Securities Division to discuss the Division’s application of the
CSAC guidelines in the near future and will keep you advised of
developments.
Patricia Louie
Assistant General Counsel
Attachment