February 10, 1989
TO: INVESTMENT ADVISERS COMMITTEE NO. 11-89
SEC RULES COMMITTEE NO. 13-89
UNIT INVESTMENT TRUST COMMITTEE NO. 7-89
RULE 144A SUBCOMMITTEE
RE: ICI FILES COMMENT LETTER ON PROPOSED RULE 144A
__________________________________________________________
The Institute has filed the attached comment letter with
the SEC on proposed rule 144A which would provide a safe harbor
from the registration requirements of the Securities Act of 1933
for the resale of restricted securities to institutional
investors.
In our letter we support the Commission's minimum asset
test of $100 million in order that specified entities may qualify
as "qualified institutional buyers" under Tier I. This category
includes investment advisers and investment companies which are
members of a family of funds that meet the asset test.
Regarding the availability of information in the private
marketplace if the rule is adopted, the Institute expresses its
concern regarding the amount of information that would be
available regarding high grade, low yield debt obligations, in
the absence of reporting requirements or contractual obligations
to provide such information. With respect to information
available regarding foreign issuers, we state our position that
the information now required under Rule 12g3-2(b) should be
sufficient, particularly in light of the ability of institutional
investors to obtain additional information about the foreign
issuer in the principal marketplace of that issuer.
Regarding the second class of institutional buyers covered
in Tiers II and III, the Institute requests that a separate
category be established for investment advisers with an asset
test based on assets under discretionary management rather than
the assets of the adviser. We suggest that the Commission may
want to adopt a minimum asset test of $25-50 million.
Finally, the Institute requests that if the proposal is
adopted and results in increased liquidity in the private
secondary market, that the Division of Investment Management
reconsider its position regarding the percentage limitations on
investment by open-end investment companies in restricted
securities.
Susan P. Hart
Assistant General Counsel
Attachment