May 21, 1993
TO: BOARD OF GOVERNORS NO. 47-93
SEC RULES COMMITTEE NO. 49-93
RE: INSTITUTE LETTER TO CHAIRMAN MARKEY ON SEC AUTHORIZATION
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On May 19, the House Telecommunications and Finance
Subcommittee held a hearing on the SEC's authorization for
appropriation for fiscal years 1994-1995. In anticipation of
that hearing, the Institute sent Subcommittee Chairman Edward
Markey the attached letter, which stresses the importance of
ensuring that the SEC has the necessary resources to continue its
very successful program of investment company regulation.
The Institute's letter points out that the tremendous
growth of the investment company industry in recent years has
outpaced increases in the resources available to the SEC for
regulating the industry. If this trend continues, the letter
states, concerns could arise in the future regarding the SEC's
ability to maintain its excellent record of protecting investment
company shareholders.
The letter indicates that the gap between the size of the
mutual fund industry and the amount of SEC resources available to
regulate the industry threatens to increase despite the fact that
mutual funds pay substantial amounts in registration fees to the
SEC. As an example, the letter notes that in 1992, investment
company registration fees totaled approximately $80.9 million,
but the amount the SEC expended to regulate investment companies
was only about $18.4 million, or less than 23% of the amount
paid.
The Institute's letter recommends that in order to ensure
the availability of adequate SEC resources for investment company
regulation in the coming years, a greater portion of the revenues
generated by SEC registration fees collected from investment
companies should be dedicated to regulating those companies.
Matthew P. Fink
President
Attachment