May 9, 1994
TO: BOARD OF GOVERNORS NO. 37-94
MEMBERS - ONE PER COMPLEX NO. 28-94
RE: REPORT OF THE ADVISORY GROUP ON PERSONAL INVESTING
__________________________________________________________
I am pleased to forward the Report of the industry's
Advisory Group on Personal Investing. This Report is being
released today, Monday, May 9th. (Please see enclosed press
release.) Separately, by facsimile this morning, you should have
received the Executive Summary of the Report.
As you know, the Advisory Group was formed in February and
charged with reviewing current standards and practices governing
personal investing activities within the investment company
industry. The Advisory Group's Report documents the substantial
success that the Securities and Exchange Commission and the
industry have achieved to date in preventing potential conflicts
of interest in personal trading activities. This success has
been achieved for a number of reasons -- including the high
priority that the industry has accorded to developing effective
codes of ethics, in accordance with the longstanding mandate of
the Investment Company Act and the Commission's regulations.
The Report's recommendations incorporate the best practices
of the industry and recommend that various substantive
restrictions and certain compliance procedures be adopted
throughout the industry. The recommendations do not envision the
need for changes in federal statute or the Commission's
regulations.
During its deliberations the Advisory Group solicited the
views of all Institute members and surveyed the codes of ethics
of Institute members in order to verify current industry
practices and standards. (See Memorandum to Board of Governors
No. 31-94, dated April 11, 1994; Memorandum to Members - One Per
Complex No. 20-94, dated March 24, 1994; Memorandum to Board of
Governors No. 17-94, Members - One Per Complex No. 13-94, dated
February 16, 1994.) As during this entire process, we would be
interested in receiving your views on personal investing
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activities and, in particular, the Advisory Group's
recommendations. In this regard, we ask that you please submit
your views in writing to Paul S. Stevens, the Institute's General
Counsel.
The Advisory Group is urging early action on its
recommendations by the Board of Governors and the industry.
Therefore, the Institute's Board of Governors will convene early
this summer to consider the Advisory Group's recommendations.
We continue to appreciate your guidance as the industry
moves to address this important issue. I look forward to hearing
from you.
Matthew P. Fink
President
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