[Congressional Record Volume 143, Number 36 (Wednesday, March 19, 1997)]
[Extensions of Remarks]
[Pages E515-E516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      EXTENDING EFFECTIVE DATE OF INVESTMENT ADVISERS SUPERVISION 
                            COORDINATION ACT

                                 ______
                                 

                               speech of

                         HON. MICHAEL G. OXLEY

                                of ohio

                    in the house of representatives

                        Tuesday, March 18, 1997

  Mr. OXLEY. Mr. Speaker, this legislation will provide an extension of 
90 days to the effective date of title III of the National Securities 
Markets Improvement Act of 1996.
  The extension of the effective date, which was requested by 
Securities and Exchange Commission Chairman Arthur Levitt, will help 
ensure the orderly implementation of the important changes that will be 
effected by the Investment Advisers Supervision Coordination Act, which 
is title III of the Improvement Act. I strongly support this 
responsible request. The Institute of Certified Financial Planners, 
which represents many of the investment advisers who will be affected 
by the Improvement Act, also supports the extension of the effective 
date of title III. I include for the Record copies of Chairman Levitt's 
letter to Chairman Bliley, as well as a letter from the Institute of 
Certified Financial Planners to myself offering their support for this 
legislation.
  In addition, I wish to clarify the intent of a provision in title III 
of the Improvement Act that provides for the establishment of a 
telephonic or other communication means to provide information about 
investment advisers' backgrounds. The act directs the Commission to

[[Page E516]]

``provide for the establishment and maintenance'' of this information 
service. I wish to make it clear that it is entirely within the 
Commission's authority and consistent with the intention of this 
provision for the Commission to delegate the responsibility to 
establish and maintain this service to a third party, as the Commission 
has done for purposes of the information service provided pursuant to 
section 15A(i) of the Securities Exchange Act of 1934. It is also 
consistent with the purposes of title III that such a third party be 
able to charge reasonable fees of commercial users of the information 
service.

                           Securities and Exchange Commission,

                                Washington, DC, February 12, 1997.
     Hon. Thomas J. Bliley,
     Chairman, Committee on Commerce, U.S. House of 
         Representatives, Washington, DC.
       Dear Chairman Bliley: I am writing to request that Congress 
     extend the effective date of Title III of the National 
     Securities Markets Improvement Act of 1996 for 90 days, from 
     April 9 to July 8, 1997. Title III reallocates regulatory 
     responsibilities over investment advisers between the states 
     and the Commission.
       The Commission has made substantial progress in completing 
     the many rulemaking directives given to the Commission in the 
     Improvement Act. In October, the Commission proposed a rule 
     providing a safe harbor to allow journalists access to off-
     shore press conferences. In December, we proposed rules 
     implementing new exemptions from the Investment Company Act 
     for pools sold only to qualified investors. The Commission 
     also proposed, on December 18, 1996, rules to implement Title 
     III.
       The Commission is making every effort to meet the 
     legislative deadlines of the Improvement Act. Our rule 
     proposals were issued only two months after the legislation 
     was enacted, and the comment period for the proposals ended 
     earlier this week. While we believe the Commission should be 
     able to finish work on the adoption of the proposed rules by 
     April 9, the effective date of Title III, we are very 
     concerned that this timetable is likely not to afford 
     investment advisers sufficient time to examine the new rules, 
     consult with counsel as to their continuing regulatory 
     status, and properly complete and submit the required forms.
       We are also concerned about the effect of the April 9th 
     effective date on state regulatory programs. As you know, 
     Title III assigns important responsibilities for the 
     regulation of investment advisers to state regulators. 
     Because Title III will become effective on April 9th (whether 
     or not the proposed rules are adopted), state law will be 
     preempted as to all advisers still registered with the 
     Commission, including those advisers that will be exclusively 
     regulated by the states. If all (or most) advisers remain 
     registered with the Commission on April 9 because they have 
     not submitted the required forms, much of state investment 
     adviser laws will be preempted, compromising state regulatory 
     and enforcement programs.
       By dividing jurisdiction over the 22,500 advisers currently 
     registered with the Commission, the Improvement Act promises 
     to provide more efficient and effective regulation of the 
     investment advisory industry. The Commission strongly 
     supported the enactment of the Act and has moved quickly to 
     implement its purposes. We believe that by providing an 
     additional 90 days, Congress will allow investment advisers 
     adequate time to meet their obligations under the new rules 
     and will avoid disrupting state regulatory efforts that are 
     important if the goals of Title III of the Improvement Act 
     are to be achieved.
       If I or any of the Commission staff can answer any 
     questions, please do not hesitate to contact us.
           Sincerely,
                                                    Arthur Levitt,
     Chairman.
                                  ____

                                                  The Institute of


                                 Certified Financial Planners,

                                       Denver, CO, March 12, 1997.
     Hon. Michael G. Oxley,
     U.S. House of Representatives,
     Washington, DC.
       Dear Congressman Oxley: The Institute of Certified 
     Financial Planners \13\ is strongly in support of S. 410, a 
     bill which would extend the April 9 effective date of the 
     Investment Advisers Supervision Coordination Act (the 
     ``Coordination Act'') by 90 days. We offer two basic but 
     highly important reasons for supporting this delay in the 
     effective date to July 8, 1997.
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     \13\ The Institute of Certified Financial Planners is a 
     Denver-based professional organization representing 11,000 
     Certified Financial Planner members nationwide. The Institute 
     serves as a resource to federal and state legislators on 
     issues related to financial planning.
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       First, as a professional association involved in the 
     original legislative process, we are fully aware of the 
     substantive changes made to the Investment Advisers Act of 
     1940 that led to the current regulatory challenges facing the 
     Securities and Exchange Commission (the ``SEC''). And we 
     strongly commend the SEC on having successfully met the 
     initial challenge of the implementation process by issuing a 
     proposed rulemaking within a tight deadline and addressing 
     all of the critical issues raised thereunder. We are 
     concerned, however, that the remaining amount of time is not 
     enough to address the many formal comment letters (including 
     our own) which were submitted prior to the February 10 
     deadline--a total of about 80 mostly substantive comment 
     letters--as we understand it. We believe that the SEC needs 
     additional time to properly respond to the issues raised by 
     these comments, resulting actions that will result in a 
     momentous sea-change of regulation for 22,000-plus registered 
     individual investment advisers and firms.
       Second, as you are aware, up to 80 percent of all current 
     SEC registrants will withdraw their registration and be 
     subject to state regulation. Once the SEC approves the final 
     rulemaking, additional time is necessary to adjust to the new 
     regulatory environment. The SEC must have adequate time to 
     distribute the final published forms, and current registrants 
     must have time to digest the new mandates, and return the 
     appropriate forms for de-registration or continued federal 
     registration. Further, the Institute and others raised 
     questions about the ability of certain advisers to be able to 
     report accurately, for example, the aggregate assets under 
     management without some minor changes in the reporting 
     requirements suggested in the proposed rulemaking. For many 
     of these registrants, the proposed rulemaking itself raised 
     new questions and issues. No doubt the final rule also will 
     generate some additional questions, but even if the major 
     issues are clarified, the unique nature of each individual 
     adviser's practice will leave some questions 
     unanswered.\14\
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     \14\ The questions received from members are of course too 
     numerous to recount in this letter. To provide one example 
     not addressed in the proposed rulemaking was a situation 
     involving an SEC-registered adviser in the state of Ohio 
     which has no state investment adviser statute. The adviser 
     provides personal advice to a few clients but primarily 
     offers through her advisory firm investment management 
     seminars in other states, on behalf of corporations which 
     administer their own 401(k) plans, or on behalf of other 
     investment management firms that contracted them to perform 
     this specific service. It was not clear to this person 
     whether the adviser's employees who provided advice on these 
     401(k) plans would be subject to state or federal 
     registration or notice filings, etc., as investment adviser 
     representatives, supervised persons, etc., under the proposed 
     rulemaking. This unique situation is one of many that 
     undoubtedly will not be addressed under the final rulemaking.
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       This situation, while obviously smaller in scale, is not 
     unlike Congress passing major tax legislation at the end of 
     the year, and leaving the Internal Revenue Service little 
     time to clarify certain aspects of the new tax code that 
     affect thousands of Americans. Distributing new 1040s and 
     related forms within a month of April 15th would no doubt be 
     disastrous.
       For the above reasons, we strongly support S. 410 and thank 
     you for supporting the original conference report. An 
     additional 90 days should be more than adequate time to allow 
     the SEC to properly fulfill its mission and for registrants 
     to properly comply with the new changes.
       I would be happy to respond to any questions that you might 
     have regarding the above comments.
           Sincerely,
                                                    Judy Lau, CFP,
     President.

                          ____________________