[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 148 Introduced in Senate (IS)]

  1st Session
                                 S. 148

            To promote the integrity of investment advisers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 4, 1995

   Mr. Gramm introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
            To promote the integrity of investment advisers.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Investment Advisers Integrity Act''.

SEC. 2. ENHANCED ENFORCEMENT PRIORITY.

    Of the amounts appropriated to the Securities and Exchange 
Commission, there are authorized to be appropriated--
            (1) not to exceed $10,000,000 in fiscal year 1996; and
            (2) not to exceed $12,000,000 for fiscal year 1997;
for the enforcement of the provisions of the Investment Advisers Act of 
1940, particularly with respect to advisers managing more than 
$5,000,000 in assets.

SEC. 3. EXEMPTION FOR STATE REGISTRATION.

    Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-3(b)) is amended--
            (1) by striking ``or'' at the end of clause (2);
            (2) by striking the period at the end of clause (3) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(4) any investment adviser who, during the course of the 
        preceding 12 months, had no more than $5,000,000 in assets 
        under management, if the investment adviser is registered with 
        the appropriate State securities regulator, except that the 
        Commission may, by rule, also require registrations by 
        investment advisers who, during the preceding 12 months, had 
        more than $1,000,000 but less than $5,000,000 in assets under 
        management if the Commission determines such action to be 
        necessary to achieve the purposes of the Act. As used in this 
        section, the term `assets under management' means the client 
        assets with respect to which an investment adviser provides 
        continuous and regular supervisory or management services.''.

SEC. 4. INVESTIGATION OF FRAUD.

    Section 209 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
9) is amended by adding at the end the following:
    ``(f) The Commission is authorized to conduct investigations of any 
investment adviser, notwithstanding any exception from registration 
under section 203(b)(4), in any case where the appropriate State 
securities regulator or one or more clients or former clients of the 
investment adviser have alleged fraud on the part of the investment 
adviser.''.

SEC. 5. DISQUALIFICATION OF CONVICTED FELONS.

    (a) Amendment.--Section 203(e) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b-3(e)) is amended--
            (1) by redesignating paragraphs (3) through (7) as 
        paragraphs (4) through (8), respectively; and
            (2) by inserting after paragraph (2) the following new 
        paragraph;
            ``(3) has been convicted within ten years preceding the 
        filing of any application for registration or at any time 
        thereafter of any crime that is punishable by imprisonment for 
        one or more years and that is not described in paragraph (2) of 
        this subsection or of a substantially equivalent crime by a 
        foreign court of competent jurisdiction.''.
    (b) Conforming Amendments.--Section 203 of such Act is further 
amended--
            (1) in subsection (e)(6) (as redesignated by subsection (a) 
        of this section), by striking ``this paragraph (5)'' and 
        inserting ``this paragraph (6)'';
            (2) in subsection (f)--
                    (A) by striking ``paragraph (1), (4), (5), or (7)'' 
                and inserting ``paragraph (1), (5), (6), or (8)''; and
                    (B) by striking ``paragraph (3)'' and inserting 
                ``paragraph (4)''; and
            (3) in subsection (i)(1)(D), by striking ``section 
        203(e)(5) of this title'' and inserting ``subsection (e)(6) of 
        this section''.
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