February 2, 1989
TO: INVESTMENT ADVISERS COMMITTEE NO. 4-89
RE: INSTITUTE COMMENTS ON GEORGIA PROPOSED INVESTMENT ADVISER
RULES
__________________________________________________________
As you know, the Institute has been actively involved in
the development of the Georgia rules under the Georgia investment
adviser law. (See Memorandum to Investment Adviser Committee No.
22-88.) The Georgia investment adviser law becomes effective
April 1, 1989.
In the attached letter, the Institute recommended that the
Georgia Securities Commissioner adopt policy statements in two
specific areas. First, we recommended that a policy statement be
issued that specifically states that investment advisers whose
only clients are investment companies are not required to
register under Georgia law. We recommended that a policy
statement on this issue be adopted based on the fact that the
Uniform Securities Act of 1956 and the Revised Uniform Securities
Act of 1985 both provide for an exemption from registration for
investment advisers whose only clients are investment companies.
Additionally, we stated that the Georgia law and rules were not
developed because of problems associated with such investment
advisers and thus, such a policy statement is warranted.
Our second recommendation related to the proposed rule
concerning supervision of investment adviser representatives and
employees. Although the securities commissioner did amend the
proposed rule in partial accord with the Institute's recommenda-
tions, the existing language in the proposed rule appears to be
conflicting. Therefore, we recommended that certain deletions to
the existing proposed rule be made. Our recommended changes
would still require an investment adviser to establish, maintain
and enforce effective, written supervisory procedures for its
firm and the personnel within the firm while permitting flexi-
bility to accommodate a particular adviser's internal structure.
We will continue to keep you informed of developments in
Georgia.
Robert L. Bunnen, Jr.
Assistant General Counsel
Attachment