COMMENTS REQUESTED FOR 1994 CONFERENCE ON UNIFORMITY OF FEDERAL-STATE SECURITIES REGULATION AGENDA

March 28, 1994 TO: INVESTMENT ADVISERS COMMITTEE NO. 25-94 SEC RULES COMMITTEE NO. 40-94 STATE LIAISON COMMITTEE NO. 27-94 UNIT INVESTMENT TRUST COMMITTEE NO. 26-94 RE: COMMENTS REQUESTED FOR 1994 CONFERENCE ON UNIFORMITY OF FEDERAL-STATE SECURITIES REGULATION AGENDA __________________________________________________________ Since 1983 the Securities and Exchange Commission ("SEC") and the North American Securities Administrators Association ("NASAA") have held a conference pursuant to Section 19(c) of the Securities Act of 1933. The policies and purposes of that section are to increase uniformity in matters concerning state and federal regulation of securities, maximize the effectiveness of securities regulation in promoting investor protection, and reduce the burdens on capital formation through increased cooperation between the SEC and the state securities regulatory authorities. This year's conference will be held on April 18, 1994 in Washington, D.C. The SEC and NASAA currently are in the process of formulating the agenda for the conference and have requested participation from interested parties through the submission of written comments on the tentative agenda. Topics on the tentative agenda relating to investment companies and investment advisers are as follows: (1) Mutual Fund Disclosure - The discussion will include (a) simplification of prospectuses for money market funds, (b) NASAA's proposed guidelines for disclosure of investment companies' investments in high yield or "junk" bonds and the risks associated with such investments, and (c) the steps conferees are taking to examine and improve the clarity and adequacy of mutual fund prospectuses in general. (2) Personal Trading by Portfolio Managers - The conferees w i l l discus s the extent t o which manage rs of mutual f u n d portfo l i o s trade f o r their o w n accoun t s , a n y abuses t h a t may be associ a t e d w i t h t h e practi c e , a n d whethe r steps should b e taken t o c u r b t h e practi ce. (3) Bank Sales of Mutual Funds - The participants will discuss any c o n c e r n s raised by sales of mutual funds and other securities on financial institution p r e m i s e s , and possible regulatory, examination, or other r e s p o n s e s available to the SEC, the s e l f - regulatory organization s and the states. The discussion will focus on issues relating to advertising o f securities products and activities, e n s u r i n g proper sales practices by p e r s o n s s e l l i n g securities o n b a n k p r e m i s e s , and methods to reduce a n y c o n f u s i o n that exists among bank c u s t o m e r s b e t w e e n i n s u r e d deposits and u n i n s u r e d investments in mutual funds and o t h e r securities. (4) "Off-the-Page" Prospectuses - The agenda includes the SEC's propos e d revisi on to R u l e 482(g) under t h e Securi t i e s Act to permit advert isemen ts for certai n mutual funds t o includ e an order f o r m i f t h e y contai n specif i e d disclo s u r e a n d comply w i t h other requir ements . Confer e e s w i l l discus s the roles t h e S E C , state regula tors, a n d t h e Nation a l Associ ation o f Securi t i e s Dealer s will p l a y i n monito r i n g these prospe ctuses . (5) Derivatives - The discussion will include application of federal and state securities laws to derivative instruments as well as disclosure issues relating to such issuances and investments. (6) "Wrap-Fee" Program Disclosures - Both the SEC and NASAA h a v e issued f o r commen t a propos al to amend F o r m A D V w i t h respec t to t h e disclo s u r e requir ements o f invest m e n t advise r s t h a t sponso r wrap- f e e progra m s . T h e confer e e s w i l l discus s this propos al and t h e commen ts the S E C h a s receiv e d thereo n. (7) Federal Investment Adviser Legislation - The conferees w i l l discus s the status o f federa l legisl ation t o amend t h e Invest m e n t Advise rs Ac o f 1 9 4 0 a n d S E C r u l e propos a l s relati ng to t h e legisl ation. Additi onally , the confer e e s w i l l discus s the effect t h e legisl ation might h a v e u p o n propos e d joint S E C a n d state action , includ i n g effort s to: ( a ) identi f y unregi stered invest m e n t advise r s ; ( b ) amend F o r m A D V ; a n d ( c ) establ ish a "one- stop" filing system allowi n g advise rs to m a k e o n e filing t h a t would b e transm itted electr onical ly to t h e S E C a n d t h e states . (8) Regulation of Broker-Dealers - Possible discussion topics under this general heading include sales practices of broker-dealers with respect to mutual funds and disclosure of front-end sales loads on mutual fund confirmations. A copy of the SEC Release is attached. Written comments must be received by the SEC on or before April 15, 1994 in order to be considered by the conference attendees. Please provide me with any comments you would like included in the Institute's comment letter by Friday, April 7, 1994. My direct telephone number is (202) 326-5821. My fax number is (202) 326-5828. Patricia Louie Associate Counsel Attachment