[9939]
May 18, 1998
TO: BOARD OF GOVERNORS No. 30-98
RE: ICI LETTER REGARDING REVIEW OF SEC ENFORCEMENT DIVISION
______________________________________________________________________________
The ICI recently submitted a letter to Commissioner Unger regarding the SEC’s review of its
Enforcement Division. A copy of the letter is attached.
The letter suggests ways to improve the enforcement process as it pertains to investment
companies and investment advisers. The letter stresses the need for the SEC to ensure that only
appropriate enforcement actions are brought against investment companies and advisers. To achieve this
objective, the letter suggests that: (1) the Enforcement Liaison Office in the Division of Investment
Management be strengthened by adding additional staff attorneys; (2) the Division of Enforcement
consult with the Division of Investment Management before recommending any action against an
investment company or investment adviser; (3) the SEC, to the extent feasible, require the Divisions of
Enforcement and Investment Management to respond specifically to the question of whether there are
existing rules or interpretive guidance that may cast doubt over the theories that underlie an
recommended enforcement proceeding; and (4) Enforcement Division staff receive extensive training in
the specifics of the two 1940 Acts and, in this context, consideration be given to creating specific units
within the Division that will develop expertise in the area of investment company and investment adviser
regulation.
In addition, the letter recommends that the SEC’s enforcement program also focus on entities that
are exempt from the Investment Company Act and Investment Advisers Act.
Amy B.R. Lancellotta
Senior Counsel
Attachment