[Federal Register Volume 60, Number 149 (Thursday, August 3, 1995)]
[Rules and Regulations]
[Pages 39643-39645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19160]



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SECURITIES AND EXCHANGE COMMISSION

17 CFR PART 200

[Release No. 34-36031]


Establishment of Office and Delegation of Authority to Administer 
Functions

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is 
amending its Rules of Organization and Program Management to establish 
the Office of Compliance Inspections and Examinations (``OCIE'') and to 
delegate authority to administer its functions to the Director of OCIE. 
This reorganization is designed to improve efficiency and allow for an 
enhanced integration of functions by combining the inspection and 
examination operations of the Division of Market Regulation and the 
Division of Investment Management.

EFFECTIVE DATE: September 5, 1995.

FOR FURTHER INFORMATION CONTACT: James A. Chan, 202/942-0742; Matthew 
O'Toole, 202/942-0694; or Philip H. Oettinger, 202/942-0784.

SUPPLEMENTARY INFORMATION: On March 22, 1995, the Chairman of the 
Securities and Exchange Commission announced the creation of a new 
office, OCIE, that would combine the inspections and examinations 
functions of the Division of Market Regulation and the Division of 
Investment Management. The goal of OCIE is to increase the efficiency 
of the inspection and examination process by integrating the functions 
and personnel of both Divisions. The Commission today is adopting Rules 
19c and 30-18 of its Rules of Organization and Program Management to 
delegate responsibility for the examination and inspection of brokers, 
dealers, transfer agents, self-regulatory organizations, investment 
companies, and investment advisers to OCIE, and to establish the 
administrative and substantive responsibilities of the Office.
    The Commission has determined that this addition to its rules 
relates solely to the agency's organization, procedure or practice. 
Therefore, the provisions of the Administrative Procedure Act (``APA'') 
regarding notice of proposed rulemaking and opportunities for public 
participation,1 are not applicable. Similarly, the provisions of 
the Regulatory Flexibility Act,2 which apply only when notice and 
comment are required by the APA or other law, are not applicable.

    \1\ 5 U.S.C. 553.
    \2\ 5 U.S.C. 601 et seq.
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    In the rare instances involving close questions or cases that may 
be potentially controversial, the staff would either consult with the 
Commission, or seek Commission authorization before acting.3 The 
staff believes that its experience with the issues that may arise in 
this area 

[[Page 39644]]
reduces the need for day-to-day review by the Commission.

    \3\ Rule 30-18(i) states that ``[n]otwithstanding anything in 
the foregoing [delegations], in any case in which the Director of 
the Office of Compliance Inspections and Examinations believes it 
appropriate, the Director may submit the matter to the Commission.''
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Effects on Competition

    Section 23(a)(2) of the Securities Exchange Act of 1934 (``Exchange 
Act'') 4 requires the Commission, in adopting rules under the 
Exchange Act, to consider the anti-competitive effects of such rules, 
if any, and to balance any impact against the regulatory benefits 
gained in terms of furthering the purposes of the Exchange Act. The 
Commission has considered the additions to its rules announced in this 
release in light of the standards cited in section 23(a)(2) and 
believes that their adoption would not impose any burden on competition 
not necessary or appropriate in furtherance of the Exchange Act.

    \4\ 15 U.S.C. 78w(a)(2).
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Statutory Basis of Rule

    The amendments to the Commission's rules are adopted pursuant to 
the authorities set forth herein.

List of Subjects in 17 CFR Part 200

    Administrative practices and procedures, Authority delegations 
(Government agencies), Organizations and functions (Government 
agencies).

    For the reasons set out in the preamble, Title 17, Chapter II of 
the Code of Federal Regulations is amended as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION 
REQUESTS

Subpart A--Organization and Program Management

    1. The authority citation for Part 200, Subpart A continues, in 
part, to read as follows:

    Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 79t, 
77sss, 80a-37, 80b-11, unless otherwise noted.
* * * * *
    2. Section 200.19c is added to read as follows:


Sec. 200.19c  Director of the Office of Compliance Inspections and 
Examinations.

    The Director of the Office of Compliance Inspections and 
Examinations (``OCIE'') is responsible for the compliance inspections 
and examinations relating to the regulation of exchanges, national 
securities associations, clearing agencies, securities information 
processors, the Municipal Securities Rulemaking Board, brokers and 
dealers, municipal securities dealers, transfer agents, investment 
companies, and investment advisers, under Sections 15C(d)(1) and 17(b) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5(d)(1) and 
78q(b)), Section 31(b) of the Investment Company Act of 1940 (15 U.S.C. 
80a-30(b)), and Section 204 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b-4).
    3. Section 200.30-18 is added to read as follows:
Sec. 200.30-18  Delegation of authority to Director of the Office of 
Compliance Inspections and Examinations.

    Pursuant to the provisions of Pub. L. 100-181, 101 Stat. 1254, 1255 
(15 U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission hereby 
delegates, until the Commission orders otherwise, the following 
authority to the Director of the Office of Compliance Inspections and 
Examinations (``OCIE'') to be performed by the Director or by such 
other person or persons as may be designated from time to time by the 
Chairman of the Commission:
    (a) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that access to nonpublic information as defined in such 
Section shall be provided only with the concurrence of the head of the 
Commission division or office responsible for such information or the 
files containing such information.
    (b) Pursuant to the Securities Exchange Act of 1934 (``the Exchange 
Act'') (15 U.S.C. 78a, et seq.):
    (1) To grant and deny applications for confidential treatment filed 
pursuant to Section 24(b) of the Exchange Act (15 U.S.C. 78x(b)) and 
Rule 24b-2 thereunder (Sec. 240.24b-2 of this chapter); and
    (2) To revoke a grant of confidential treatment for any such 
application.
    (c) Pursuant to Section 17(b) of the Exchange Act (15 U.S.C. 
78q(b)), prior to any examination of a registered clearing agency, 
registered transfer agent, or registered municipal securities dealer 
whose appropriate regulatory agency is not the Commission, to notify 
and consult with the appropriate regulatory agency for such clearing 
agency, transfer agent, or municipal securities dealer.
    (d) Pursuant to Section 17(c)(3) of the Exchange Act (15 U.S.C. 
78q(c)(3)), in regard to clearing agencies, transfer agents and 
municipal securities dealers for which the Commission is not the 
appropriate regulatory agency:
    (1) To notify the appropriate regulatory agency of any examination 
conducted by the Commission of any such clearing agency, transfer 
agent, or municipal securities dealer;
    (2) To request from the appropriate regulatory agency a copy of the 
report of any examination of any such clearing agency, transfer agent, 
or municipal securities dealer conducted by such appropriate regulatory 
agency and any data supplied to it in connection with such examination; 
and
    (3) To furnish to the appropriate regulatory agency on request a 
copy of the report of any examination of any such clearing agency, 
transfer agent, or municipal securities dealer conducted by the 
Commission and any data supplied to it in connection with such 
examination.
    (e) To administer the provisions of Section 24(d) of the Exchange 
Act (15 U.S.C. 78x(d)).
    (f) To notify the Securities Investor Protection Corporation 
(``SIPC'') of facts concerning the activities and the operational and 
financial condition of any registered broker or dealer which is or 
appears to be a member of SIPC and which is in or approaching financial 
difficulty within the meaning of Section 5 of the Securities Investor 
Protection Act of 1970, as amended, 15 U.S.C. 78aa, et seq.
    (g) Pursuant to Section 15(b)(2)(C) of the Exchange Act (15 U.S.C. 
78o(b)(2)(C)):
    (1) To delay until the second six month period from registration 
with the Commission the inspection of newly registered broker-dealers 
that have not commenced actual operations within six months of their 
registration with the Commission; and
    (2) To delay until the second six month period from registration 
with the Commission the inspection of newly registered broker-dealers 
to determine whether they are in compliance with applicable provisions 
of the Exchange Act and rules thereunder, other than financial 
responsibility rules.
    (h) With respect to the Investment Advisers Act of 1940 (``Advisers 
Act'') (15 U.S.C. 80b-1, et seq.):
    (1) Pursuant to Section 203(h) of the Advisers Act (15 U.S.C.80b-
3(h)), to authorize the issuance of orders cancelling registration of 
investment advisers, or applications for registration, if such 
investment advisers or applicants for registration are no longer in 
existence or are not engaged in business as investment advisers; and
    (2) Pursuant to Rule 204-2(j)(3)(ii) (Sec. 275.204-2(j)(3)(ii) of 
this chapter), to make written demands upon non-resident investment 
advisers subject to the provisions of such rule to furnish to the 
Commission true, correct, complete, and current copies of any or all 
books and records which such non-resident investment advisers are 
required to make, keep current, or preserve pursuant to any provision 
of any rule or regulation of the Commission adopted 

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under the Advisers Act, or any part of such books and records which may 
be specified in any such demand.
    (i) Notwithstanding anything in the foregoing, in any case in which 
the Director of the OCIE believes it appropriate, the Director may 
submit the matter to the Commission.

    By the Commission.

    Dated: July 28, 1995.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-19160 Filed 8-2-95; 8:45 am]
BILLING CODE 8010-01-P