May 21, 1993
TO: BOARD OF GOVERNORS NO. 48-93
RE: MEMBER OF THE BOARD OF GOVERNORS TESTIFIES ON MAJOR
SECURITIES ISSUES
__________________________________________________________
On May 20, James S. Riepe, Managing Director of T. Rowe
Price Associates, former Chairman of the Institute's Board of
Governors and a member of the Board, testified before the
Securities Subcommittee of the Senate Committee on Banking,
Housing and Urban Affairs at a hearing on the major issues facing
Congress, the new Administration and the Securities and Exchange
Committee on the securities markets and financial services
industry. The hearing was held, in part, in anticipation of the
Committee's consideration of Arthur Levitt as Chairman of the SEC
and the SEC's reauthorization for fiscal years 1994-1995.
In his testimony, Mr. Riepe stated that the growth of
mutual funds can be attributed, among other things, to the public
confidence in the industry due to the strict regulatory scheme to
which it is subject. In this regard, he stated that, "While the
regulatory scheme to which mutual funds are subject is working
well, there are steps that should be taken to ensure that the
high level of investor protection continues."
The steps suggested by Mr. Riepe include: (1) ensuring that
the SEC's funding keeps pace with the growth of the industry, (2)
repealing the exemptions in the securities laws for bank and
insurance company funds sold to participants in defined
contribution plans, and (3) modernizing the federal securities
laws to take into account the entry of commercial banks into the
mutual fund business. Mr. Riepe also suggested that the SEC
adopt (1) its proposal to permit the purchase of mutual fund
shares from a summary prospectus and (2) amendments to the
regulation of tax-exempt money market funds.
With respect to the internationalization of the mutual fund
industry, Mr. Riepe testified that U.S. regulators should
negotiate to secure better access for U.S. mutual fund managers
seeking to enter foreign markets. He also cautioned against
enacting legislation that would permit foreign funds to be
distributed in the U.S. without complying with the basic investor
protection standards applicable to U.S. funds.
A copy of Mr. Riepe's written testimony is attached.
Matthew P. Fink
President
Attachment