June 15, 1992
TO: FEDERAL LEGISLATION MEMBERS NO. 4-92
FEDERAL LEGISLATION COMMITTEE NO. 4-92
RE: INSTITUTE TESTIFIES ON INVESTMENT ADVISER LEGISLATION
__________________________________________________________
On June 10, the Institute testified before the House
Telecommunications and Finance Subcommittee in general support of
the "Investment Adviser Regulatory Enhancement and Disclosure Act
of 1992," proposed legislation to strengthen regulation of
investment advisers.
In its testimony, the Institute noted that while the
existing regulatory scheme under the Advisers Act is generally
adequate, the principal problems stem from the SEC’s lack of
resources, which has precluded the SEC from inspecting registered
investment advisers on a regular basis, and from addressing the
problem of persons failing to register as required under the Act.
The Institute therefore endorsed the key provision in the
proposed legislation, which would increase SEC funding and also
recommended that the increased resources be targeted to
investment adviser inspections and to addressing the problem of
persons failing to register as required under the Act.
The Institute also voiced general support for the proposed
bonding and suitability requirements contained in the proposed
bill as well as the provision to require the SEC to focus its
investment adviser inspection program on all high risk advisers,
regardless of their size.
The Institute stopped short of endorsing the entire
proposed bill and strongly urged the Subcommittee to delete the
provision that would establish a private right of action under
the Advisers Act. The Institute described the provision as
controversial and noted that adequate remedies are already
available.
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A copy of the testimony is attached. Please call if you
wish further information. We will keep you informed as this
matter develops.
This memo can also be found on FUNDS, the Institute’s Fund
User Network and Delivery Systems, under Legislative Affairs,
Washington Update.
Julie Domenick
Senior Vice President
Legislative Affairs