January 29, 1997
TO: INSTITUTIONAL FUNDS ADVISORY COMMITTEE No. 2-97
INVESTMENT ADVISERS COMMITTEE No. 4-97
RE: IMPACT OF FEDERAL LEGISLATION ON EXISTING ADVISORY
CONTRACTS
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Effective April 9, 1997, the regulation of investment advisers will be reallocated between
the states and the Securities and Exchange Commission such that all advisers with more than
$25 million in assets under management and all advisers to investment companies will be
exclusively registered and regulated by the Commission. It has come to the attention of the
Institute that, inadvertently, this reallocation of responsibilities may impact advisory contracts
currently in effect with units of state or local governments, or other persons, that include an
express provision requiring the investment adviser to be registered in such state. [Contracts that
impose a general duty to be in compliance with any applicable state or federal law would
appear to be unaffected by these amendments.]
The Institute requests members to review their existing contracts and let us know
whether they contain clauses requiring the adviser to be state registered. If so, in connection
with our work with the states to implement the National Securities Markets Improvement Act
of 1996, we will attempt to address this issue. Please contact me by phone (202/326-5825), fax
(202/326-5828) or e-mail (tamara@ici.com) no later than Friday, February 7, 1997 regarding this
matter.
Tamara Cain Reed
Associate Counsel