August 13, 1992
TO: BOARD OF GOVERNORS NO. 57-92
SEC RULES MEMBERS NO. 36-92
INVESTMENT ADVISER MEMBERS NO. 39-92
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 31-92
RE: SENATE APPROVES INVESTMENT ADVISER BILL
__________________________________________________________
Last night, the Senate passed the "Investment Advisers
Oversight Act of 1992." This bill, which was developed with the
Securities and Exchange Commission, is designed to improve the
regulation of the investment adviser industry.
The key provisions of the bill include: (1) the imposition
of an annual fee on advisers, which will be based on assets under
management and determined pursuant to a schedule ranging from
$300 to $7,000, and (2) a fidelity bonding requirement for
investment advisers with custody or investment discretion.
As we previously informed you, the Institute testified at a
hearing before the Securities Subcommittee in support of the
bill. (See Memorandum to Board of Governors No. 14-92, SEC Rules
Members No. 9-92, Investment Adviser Members No. 7-92 and
Investment Adviser Associate Members No. 6-92, dated February 26,
1992.) In its testimony, the Institute stressed the importance
of legislation that focuses primarily on increasing the SEC’s
resources to improve its oversight of the investment adviser
industry, without controversial provisions that have caused
legislative stalemates in the past. Thus, we are pleased that
the Senate approved such targeted legislation.
The House Energy and Commerce Committee recently reported
an investment advisers bill that is similar, but not identical,
to the Senate bill. That bill is awaiting consideration by the
full House. There are several outstanding issues in the House
bill concerning the suitability requirement and the transaction
and periodic reporting requirements. Discussions on those issues
are ongoing. We are hopeful that they will be satisfactorily
resolved as the bill moves forward. Congress has recessed until
September 8, so no additional consideration can occur until then.
We will keep you informed of developments on this matter.
Matthew P. Fink
President