February 8, 1994
TO: BOARD OF GOVERNORS NO. 15-94
RE: PERSONAL TRADING BY PORTFOLIO MANAGERS
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Recent developments lead me to believe that attention to the issue of
personal trading by portfolio managers may escalate even sooner than anticipated.
We have received reports that there may be a number of SEC investigations
involving personal securities trading by advisory personnel; that Chairman Markey
is likely to make additional inquiries of the SEC and/or hold hearings; and that
Chairman Levitt is very concerned about this matter. I believe that if we do not
take the initiative, events may overtake us.
Therefore, we have advised the SEC and members of Congress that the
industry takes this matter extremely seriously, that firms have codes and
compliance procedures in place (many of them based on the Institute's Drafting
Guide for Codes of Ethics), and that the Institute's Board of Governors will
consider recommendations for further tightening of standards.
A subcommittee of the Executive Committee will develop recommendations
which will be reviewed by the Executive Committee and then by the Board of
Governors.
I hope that this process will permit us to move expeditiously without the
need for a special meeting of the Board. If events warrant, however, we will
schedule a meeting.
I will keep you advised of developments. Please share your views with me.
Matthew P. Fink