May 26, 1992
TO: STATE LIAISON COMMITTEE NO. 21-92
RE: SEC STAFF REPORT ISSUED ON INVESTMENT COMPANY REGULATION
__________________________________________________________
As you know, two years ago the Securities and Exchange
Commission undertook a review of the regulation of investment
companies to determine, among other issues, whether existing
regulation imposed unnecessary constraints on investment
companies. The SEC concept release requesting comment on
possible reforms of the regulation of investment companies noted
that one of the barriers to internationalization of investment
company shares is state blue sky regulation.
On May 21st, the SEC issued a staff report prepared by the
Division of Investment Management entitled Protecting Investors:
A Half Century of Investment Regulation. The chapter of the
report on "Internationalization and Investment Companies" states
that "[i]n light of the substantive federal regulation of
investment companies and investment advisers under the Investment
Company Act, the Securities Act and the Investment Advisers Act,
the merits of additional state substantive review are debatable.
... The diversity of each state’s substantive and procedural
blue sky requirements make compliance difficult."
The Division recommends that the Commission continue to
work with state regulators to eliminate duplicative substantive
regulation of investment companies which would ease compliance
burdens for both domestic and foreign funds.
A copy of the portion of the executive summary and report
pertaining to blue sky regulation is attached. We will keep you
advised of further developments.
Patricia Louie
Assistant General Counsel
Attachment