* See Memorandum to Investment Advisers Committee No. 3-97, dated January 28, 1997.
February 11, 1997
TO: INVESTMENT ADVISERS COMMITTEE No. 9-97
RE: INSTITUTE LETTER ON PROPOSED INVESTMENT ADVISER RULES
______________________________________________________________________________
The Institute has submitted comments to the Securities and Exchange Commission on
proposed rules intended to implement the investment adviser provisions of the National
Securities Markets Improvement Act of 1996. The comment letter is substantially similar to the
draft letter previously circulated to you.* A copy of the letter is attached.
The letter expresses general support for the proposed rules. The letter, however,
suggests several changes to the proposed rules and requests that certain issues be clarified. The
most significant of these include:
The Commission should clarify that suspension of Form ADV-S relieves registered
advisers from all of the reporting requirements thereunder and that the updating
requirements as set forth in Form ADV are still in effect.
The Commission should extend the grace period proposed in Rule 203A-1 from 90 to
120 days and permit an adviser to amend its Schedule I if it again becomes eligible
for Commission registration during the grace period.
The Commission should amend the criteria for determining which advisers that are
affiliated with Commission-registered advisers may register with the Commission.
In particular, we recommend elimination of the "same address" criterion.
In defining "investment adviser representative," the Commission should: exclude
sophisticated investors in determining whether the representative conducts a
substantial portion of its business with retail investors; eliminate the asset test in
determining whether a substantial portion of the representatives business is with
retail clients; and exclude registered representatives of broker-dealers.
For purposes of the definition of "investment adviser representative," the Institute
recommends that the Commission clarify that "place of business" is not intended to
include locations merely visited by a representative.
The Commission should clarify that solicitors of Commission-registered advisers
that are "supervised persons" of such advisers would not be subject to state
regulation, unless they fall within the definition of "investment adviser
representative."
Tamara Cain Reed
Associate Counsel
Attachment (in .pdf format)