September 30, 1992
TO: STATE LIAISON COMMITTEE NO. 38-92
INVESTMENT ADVISERS COMMITTEE NO. 35-92
UNIT INVESTMENT TRUST COMMITTEE NO. 57-92
CONTRACTUAL PLANS COMMITTEE NO. 14-92
SUBCOMMITTEE ON ADVERTISING NO. 12-92
RE: INSTITUTE COMMENTS ON PROPOSED WISCONSIN RULE
AMENDMENTS
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As we previously advised you, the Office of the Wisconsin
Securities Commissioner recently proposed for comment several
revisions to the Administrative Rules of the Wisconsin Securities
Commissioner (See Memorandum to Contractual Plans Committee No.
12-92, State Liaison Committee No. 32-92, Unit Investment Trust
Committee No. 47-92, Subcommittee on Advertising No. 10-92, dated
August 26, 1992 and Investment Adviser Committee No. 32-92, dated
September 20, 1992.)
The Institute submitted the attached comment letter to the
Securities Commissioner on the proposed revisions. In its
comment letter, the Institute supported the adoption of the
proposed amendment to SEC 3.01(3), which would permit the sale of
a contractual plan in Wisconsin if the offering complied with the
provisions of the NASAA Guidelines for Registration of Periodic
Payment Plans.
The Institute also recommended that the proposed revision
to SEC 4.03(3)(e) relating to the expansion of the recordkeeping
requirements of branch offices of broker-dealers engaged solely
in the sale of mutual fund or unit trust securities be modified.
Inasmuch as it would be duplicative and very expensive to
maintain a separate file of all advertising material in a branch
office, the Institute recommended that the file contain copies of
advertising material generated from the branch office and that
all other material be available within twenty-four hours from the
principal office. In addition, the Institute recommended that
the requirement to maintain copies of customer statements be
deemed to be satisfied if such records may be accessed by
computer or may be produced in a reasonably prompt manner by
other means from the mutual fund or unit trust’s central office
or transfer agent. The Institute further recommended that
similar relief from the branch office recordkeeping requirements
be extended to all broker-dealers and not just those involved
solely in the offer and sale of mutual fund or unit trust
securities.
The Institute also submitted comments on proposed SEC
5.05(9), which would require each investment adviser that
participates in a wrap fee arrangement with a broker-dealer to
disclose to each customer under the arrangement that portion of
the wrap fee that is attributable to advisory services. The
Institute recommended that inasmuch as the adviser is not always
the sponsor of the wrap fee arrangement and since the advisory
fee is only one component of the wrap fee, that this proposal be
modified to require the sponsor of the wrap fee arrangement,
rather than the investment adviser, to provide disclosure to each
customer.
Finally, the Institute again requested that SEC 3.09(1)(b),
which limits a mutual fund’s investment in restricted and/or
illiquid securities, be amended to permit a mutual fund to invest
up to fifteen percent of its total assets in these securities.
The Institute also requested that SEC 3.09(1)(b) and SEC
3.10(1)(b) be amended to permit the investment in illiquid
securities by an interval fund, extended payment fund or closed-
end fund making periodic redemptions to the same degree as
permitted under federal law.
The Wisconsin Securities Commissioner will hold a hearing
on October 1, 1992 on the proposed revisions. We will keep you
advised of developments.
Patricia Louie
Assistant Counsel
Attachment