[Federal Register Volume 65, Number 52 (Thursday, March 16, 2000)]
[Notices]
[Pages 14325-14330]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6516]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 33-7808, File No. S7-08-00]


Securities Uniformity; Annual Conference on Uniformity of 
Securities Laws

AGENCY: Securities and Exchange Commission.

ACTION: Notice of Conference; Request for Comments.

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SUMMARY: The Commission and the North American Securities 
Administrators Association, Inc. today announced a request for comments 
on the proposed agenda for their annual conference to be held on April 
3, 2000. This meeting seeks to carry out the policies and purposes of 
Section 19(c) of the Securities Act of 1933, which are to increase 
cooperation between the Commission and state securities regulatory 
authorities in order to maximize the effectiveness and efficiency of 
securities regulation.

DATES: The conference will be held on April 3, 2000. We must receive 
your written comments by March 30, 2000 in order to be considered by 
conference participants.

ADDRESSES: Please send three copies of written comments to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 5th Street, 
N.W., Washington, D.C. 20549-0609. Comments also can be sent 
electronically to the following E-mail address: [email protected]. 
Comment letters should refer to File No. S7-08-00; if E-mail is used, 
please include this file number on the subject line. Anyone can inspect 
and copy the comment letters at our Public Reference Room, 450 5th 
Street, N.W., Washington, D.C. 20549-0102. All electronic comment 
letters will be posted on the Commission's internet web site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT: John Reynolds, Office of Small 
Business Review, Division of Corporation Finance, Securities and 
Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549-0304, 
(202) 942-2950.

SUPPLEMENTARY INFORMATION:

I. Discussion

    The federal government and the states have jointly regulated 
securities offerings and the securities industry since the adoption of 
the federal regulatory structure in the Securities Act of 1933 (the 
``Securities Act'').\1\ Issuers trying to raise capital through 
securities offerings, as well as participants in the secondary trading 
markets, must comply with the federal securities laws as well as all 
applicable state laws and regulations. Parties involved in this process 
have long recognized the need to increase uniformity and cooperation 
between the federal and state regulatory systems so that capital 
formation can be made

[[Page 14326]]

easier while investor protections are retained.
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    \1\ 15 U.S.C. 77a et seq.
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    Congress endorsed greater uniformity in securities regulation with 
the enactment of Section 19(c) of the Securities Act in the Small 
Business Investment Incentive Act of 1980.\2\ Section 19(c) authorizes 
the Commission to cooperate with any association of state securities 
regulators which can assist in carrying out that Section's policy and 
purpose. Section 19(c) mandates greater federal and state cooperation 
in securities matters in order to:
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    \2\ Pub. L. 96-477, 94 Stat. 2275 (October 21, 1980).
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     Maximize effectiveness of regulation;
     Maximize uniformity in federal and state standards;
     Minimize interference with the business of capital 
formation; and
     Reduce the costs, paperwork and burdens of raising 
investment capital, particularly by small business, and also reduce the 
costs of the government programs involved.

The Commission is required to conduct an annual conference to establish 
ways to achieve these goals. The 2000 meeting will be the seventeenth 
conference.
    During 1996, Congress again examined the system of dual federal and 
state securities regulation. It considered the need for regulatory 
changes to promote capital formation, eliminate duplicative regulation, 
decrease the cost of capital and encourage competition, while at the 
same time promoting investor protection. Congress passed The National 
Securities Markets Improvement Act of 1996 \3\ (the ``1996 Act'') as a 
result. The 1996 Act contains significant provisions that realign the 
partnership between federal and state regulators. The legislation 
reallocates responsibility for regulation of the nation's securities 
markets between the federal government and the states in order to 
eliminate duplicative costs and burdens and improve efficiency, while 
preserving investor protections.
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    \3\ Pub. L. 104-290, 110 Stat. 3416 (October 11, 1996).
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II. 2000 Conference

    The Commission and the North American Securities Administrators 
Association, Inc. (``NASAA'') \4\ are planning the 2000 Conference on 
Federal-State Securities Regulation to be held April 3, 2000 in 
Washington, D.C. At the conference, Commission and NASAA 
representatives will divide into working groups in the areas of 
corporation finance, market regulation and oversight, investment 
management, investor education, and enforcement. Each group will 
discuss methods to enhance cooperation in securities matters and 
improve the efficiency and effectiveness of federal and state 
securities regulation. Generally, only Commission and NASAA 
representatives may attend the conference to encourage open and frank 
discussion. However, each working group in its discretion may invite 
specific self-regulatory organizations to attend and participate in 
certain sessions.
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    \4\ NASAA is an association of securities administrators from 
each of the 50 states, the District of Columbia, Puerto Rico, Mexico 
and twelve Canadian Provinces and Territories.
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    The Commission and NASAA are preparing the conference agenda. We 
invite the public, securities associations, self-regulatory 
organizations, agencies, and private organizations to participate by 
submitting written comments on the issues set forth below. In addition, 
we request comment on other appropriate subjects. Conference attendees 
will consider all comments.

III. Tentative Agenda and Request for Comments

    The tentative agenda for the conference consists of the following 
topics in the areas of corporation finance, market regulation, 
investment management, investor education, and enforcement.

(1) Corporation Finance Issues

    The 1996 Act amended section 18 of the Securities Act \5\ to 
preempt state blue-sky registration and review of offerings of covered 
securities.\6\ Covered securities, as defined by Section 18, include 
several types of securities. One class of covered securities are 
securities traded on the national markets like the New York Stock 
Exchange, Inc. (``NYSE''), American Stock Exchange LLC (``Amex'') and 
the Nasdaq National Market System (``Nasdaq/NMS''). Covered securities 
also include registered investment company securities and some exempt 
securities and offerings.
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    \5\ 15 U.S.C. 77r.
    \6\ 15 U.S.C. 77r(a) and (b).
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    The states retain some authority over offerings of covered 
securities despite this preemption. Except for nationally-traded 
securities, the states have the right to require fee payments and 
notice filings. The states also retain anti-fraud authority over all 
securities offerings, including offerings of covered securities.
    Securities that are not covered securities remain subject to state 
registration requirements. These securities generally include the 
securities of smaller companies, like those quoted on the Nasdaq 
SmallCap market or the over-the-counter Bulletin Board, or in the 
``pink sheets.'' Securities issued under some federal exemptions from 
registration are not covered securities; the states retain authority to 
register or exempt those securities. These include securities issued in 
unregistered offerings under the following exemptions:
     Section 4(2) of the Securities Act where the offering does 
not meet the safe harbor requirements of Rule 506 of Regulation D; \7\
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    \7\ 17 CFR 230.501 through 230.508.
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     Regulation A; \8\ and
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    \8\ 17 CFR 230.251 through 230.263.
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     Rules 504 and 505 of Regulation D.\9\
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    \9\ 17 CFR 230.504 and 230.505. Besides the listed securities, 
other securities also are not considered covered securities. These 
include securities traded on regional exchanges and asset-backed and 
mortgage-backed securities.
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    The states' authority over securities offerings, particularly their 
ability to register and review offerings of non-covered securities, 
continues the need for uniformity between the federal and state 
registration systems, where consistent with investor protection. Staff 
from the Commission's Division of Corporation Finance and state 
representatives will discuss ways to increase uniformity between the 
systems. The group will focus primarily on the following topics:
A. State Small Business Initiatives
    The group will discuss several state initiatives designed to 
facilitate offerings by smaller issuers. These include:
     The Small Company Offering Registration (``SCOR'') form 
and state Regional Review Programs;
     The NASAA model state accredited investor exemption; and
     The Coordinated Equity Review (``CER'') program.

1. Small corporate offering registration; Regional review

    NASAA adopted the SCOR form in 1989 to help small businesses raise 
seed capital to expand their operations through small securities 
offerings. The SCOR form is a simplified question and answer format 
used for the registration of securities offerings. Virtually all the 
states permit offerings on this form. It is used to register securities 
offerings exempt from federal registration under Rule 504 of Regulation 
D or Regulation A. More than 1,100 companies across the country have 
issued securities under the SCOR form. In September, 1999,

[[Page 14327]]

NASAA approved changes to simplify and improve the SCOR form.
    The SCOR form disclosure requirements are the basis for one 
disclosure format for securities offerings exempt from federal 
registration under Regulation A. The Regulation A exemption allows 
companies that do not file reports with the Commission to offer and 
sell up to $5 million of securities within any twelve-month period 
without federal registration. An issuer seeking to rely on Regulation A 
must file an offering statement with the Commission, including, among 
other things, a disclosure document called an offering circular. 
Issuers may provide non-financial disclosure in their offering 
circulars based on one of three formats. One format includes the 
disclosure requirements of the state SCOR form. The group will discuss 
steps to address the revised SCOR form at the federal level, such as 
plans to amend Regulation A to incorporate the revised form.
    Many states use a coordinated program to review state registrations 
using the SCOR form, the ``Regional Review Program.'' Under this 
program, states in certain regions of the country elect one state to 
lead the review and issue comments on the filing. Four regional 
programs have been started to date and include about 33 of the states 
requiring registration of these offerings.
    NASAA's representatives will discuss their experiences with the 
SCOR form and the state coordinated review programs, including issues 
which have arisen in their use. Participants will consider how these 
programs may be improved to increase uniformity between the federal and 
state levels.

2. NASAA model state accredited investor exemption

    The group also will discuss NASAA's Model Accredited Investor 
Exemption which was adopted in 1997. Generally, the model rule exempts 
offers and sales of securities from state registration requirements if, 
among other things, the securities are sold only to persons who are, or 
are reasonably believed to be, accredited investors.\10\ Although the 
model exemption permits public offers to accredited investors, it 
limits the manner of the solicitation. State representatives will share 
their experiences with the exemption, and the group will discuss issues 
and concerns.
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    \10\ 17 CFR 230.501(a). The term ``accredited investor,'' as 
defined by the Securities Act and the Commission's rules under the 
Act, is intended to encompass those persons whose financial 
sophistication render the protections of the Securities Act 
registration process unnecessary. Offers and sales to these 
investors are afforded special treatment under the federal 
securities laws.
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3. Coordinated Equity Review

    The CER program provides for a coordinated state review process for 
some offerings of equity securities registered at the federal level. 
Under CER, the participating states coordinate with each other to 
produce one comment letter to an issuer which addresses both 
substantive and disclosure matters. To date, 43 states have agreed to 
participate in the program. The states have reviewed a number of 
registration statements under this program.
B. Federal small business initiatives

1. Rule 504 exemption

    Rule 504 of Regulation D provides an exemption from the Securities 
Act registration requirements for offerings up to $1 million in any 12-
month period, if certain conditions are met. Rule 504 is available only 
to the companies that do not report under the Exchange Act. The 
Commission amended Rule 504 in April 1999 to limit the circumstances 
where general solicitation is permitted and freely tradeable securities 
are issued under the rule.\11\ Specifically, issuers may generally 
solicit and advertise and issue freely tradeable securities only in 
transactions that are either:
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    \11\ Securities Act Release No. 7644 (February 25, 1999) [64 FR 
11090].
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     Registered under state law requiring public filing and 
delivery of a substantive disclosure document to investors before sale; 
or
     Exempted under state law as long as sales are made to 
``accredited investors'' only.
    The group will discuss various matters that have arisen under the 
revised rule. One issue relates to some state accredited investor 
exemptions that do not impose a holding period requirement on 
purchasers. Although NASAA's model exemption generally restricts 
resales within 12 months of sale, some states have adopted unique 
exemptions that do not impose those transfer restrictions. The group 
will consider matters of common interest under revised Rule 504 and 
state accredited investor exemptions.

2. Securities of blank check companies

    A blank check issuer or company is one in the development stage 
with no specific business plan or purpose, or one that indicates its 
plan is to engage in a merger or acquisition with an unidentified 
company or companies.\12\ In 1990, the U.S. Congress found that 
offerings by these kinds of issuers were common vehicles for fraud and 
manipulation in the market for penny stocks. The Commission has adopted 
several rules, as Congress directed, to deter fraud in connection with 
these offerings.
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    \12\ See Section 7(b)(3) of the Securities Act. 15 U.S.C. 
77g(b)(3).
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    Although blank check issuers are prohibited from relying on certain 
exemptions from federal registration, they may issue securities without 
federal registration under some exemptions including, for instance, the 
section 4(2) private offering exemption and the Rule 506 safe harbor. 
In many cases, the securities are issued for little or no 
consideration. Often, the promoters of the blank check company ``gift'' 
part of their securities to various donees.
    The group will discuss matters of mutual concern relating to these 
offerings, including, for instance, issues raised by resales of 
restricted blank check securities.

3. Federal coordinating exemption for offerings exempt under state 
law

    The Commission in 1996 adopted an exemption from federal 
registration for offerings up to $5 million made in compliance with one 
of California's exemptions from state securities qualification 
requirements. The California exemption--Section 25102(n) of the 
California Corporation Code--permits some forms of general solicitation 
and limits sales to persons called qualified purchasers.\13\ The 
federal exemption applies only to offers and sales that satisfy the 
conditions of the California exemption. The Division understands that 
some issuers are misusing the exemption by making offers and sales to 
qualified purchasers in states other than California and claiming the 
federal coordinating exemption for those transactions. The staff 
believes those offers and sales are not exempt federally and may 
violate state securities laws as well.
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    \13\ 17 CFR 230.1001.
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    The Division and state representatives will discuss ways to prevent 
misuse of this exemption and consider other issues of mutual interest.

4. Small business town hall meetings

    During 1999, the Commission continued to meet with small businesses 
in town hall meetings conducted throughout the United States. These 
meetings--started in 1996--are intended to provide basic information

[[Page 14328]]

about the securities offering process to small business issuers and 
educate the Commission about the concerns and problems facing small 
businesses in raising capital. Fifteen town hall meetings have been 
held to date. The group will discuss the results and prospects of this 
program.
C. Electronic distribution procedures in offerings of securities
    Many underwriters have begun using the Internet to offer and sell 
securities in public offerings. These ``e-brokers'' are posting 
preliminary prospectuses and sometimes other materials on their 
websites. They also have set procedures that relate to prospectus 
access, account funding and the timing of offers and sales of the 
securities. Different firms have established diverse procedures.
    The Division addressed the procedures of one e-broker in July, 
1999. \14\ The staff, without concurring in counsel's analysis, agreed 
not to recommend enforcement action to the Commission against the e-
broker for its conduct of initial public offerings using the procedures 
described in the no-action letter request. The request described many 
procedures; one of which involved the solicitation of conditional 
electronic offers to buy the securities before effectiveness of the 
registration statement. The staff also has considered the transmission 
of ``road shows'' over the Internet. \15\ Road shows generally are 
meetings between an issuer's senior management, brokers involved in the 
offering and a limited audience of select prospective investors that 
occur after the registration statement is filed with the Commission.
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    \14\ See Wit Capital no-action letter (July 14, 1999).
    \15\ See, for example, the no-action letter to Charles Schwab & 
Co., Inc. (November 15, 1999 and February 9, 2000).
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    The group will discuss the various issues raised by offerings that 
are made electronically.

D. Plain English

    Beginning October 1, 1998, issuers filing Securities Act 
registration statements must use plain English writing principles when 
drafting the front part of prospectuses, i.e., the cover page and the 
summary and risk factors sections. \16\ These plain English principles 
include: active voice; short sentences; everyday language; tabular 
presentation or ``bullet lists'' for complex material, if possible; no 
legal jargon or highly technical business terms; and, no multiple 
negatives.
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    \16\ Securities Act Release No. 7497 (January 28, 1998) [63 FR 
6370].
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    The Division's staff, in its full review of a registration 
statement, examines the prospectus for compliance with the plain 
English requirements. If appropriate, the Division staff will issue 
comments to obtain improved plain English disclosures. Some states also 
review and issue comments on prospectus disclosures. The concurrent 
comment process from different regulators raises the prospect of 
inconsistent comments. For instance, the Division may ask for changes 
to conform to plain English requirements which seem contrary to state 
disclosure standards. The group will consider issues that have arisen 
in this area and ways to facilitate federal and state coordination in 
the comment process.
E. Uniform Securities Act
    A committee of the National Conference of Commissioners on Uniform 
State Laws is in the process of drafting a new version of the Uniform 
Securities Act. The Uniform Securities Act is a uniform state 
securities law statute. Two versions are currently in force--The 
Uniform Securities Act of 1956 and the Revised Uniform Securities Act 
of 1985. The new version will modernize and update the law for many 
changes including, for example, NSMIA, technology advances, and 
internationalization of securities trading. The group will discuss the 
status of this redrafting effort and related matters.

(2) Market Regulation Issues

A. Books and Records
    Section 103 of the 1996 Act prohibits any state from imposing 
broker-dealer books and records requirements that differ from, or are 
in addition to, the Commission's requirements. In addition, the same 
section directs the Commission to consult periodically with the state 
securities authorities concerning the adequacy of the Commission's 
books and records requirements.
    On October 2, 1998, the Commission reproposed amendments to the 
books and records rules to clarify and expand recordkeeping 
requirements with respect to purchase and sale documents, customer 
records, associated person records, customer complaints, and certain 
other matters. The reproposed amendments also specified the books and 
records that broker-dealers would make available at their local 
offices. The Commission modified the reproposed amendments to reduce 
the burden on broker-dealers without substantially detracting from the 
original objective of establishing rules that would facilitate 
examinations and enforcement activities of the Commission, self 
regulatory organizations (SROs), and state securities regulators. \17\ 
Among other changes in the reproposed amendments, the Commission 
redefined the term local office to include a place where two or more 
associated persons regularly conduct a securities business. The 
original proposal \18\ defined the term local office to include a place 
where one associated person conducted a securities business. As 
reproposed, a broker-dealer would be required to update its customer 
account records at least once every three years. The original proposal 
required broker-dealers to update the customer account records 
annually.
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    \17\ Exchange Act Rel. No. 40518 (October 2, 1998) [63 FR 
54404].
    \18\ Exchange Act Rel. No. 37850 (October 22, 1996) [61 FR 
55593].
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    The comment period closed December 9, 1998. The Commission received 
approximately 120 comment letters in response to the release re-
proposing the amendments. The Commission staff has been reviewing the 
comments that have been submitted. The participants will discuss these 
efforts to amend Rules 17a-3 and 17a-4.
B. Capacity
    The participants will discuss broker-dealer systems capacity issues 
in light of the increasing number of online brokerage accounts being 
opened by investors (9.7 million online accounts opened by the end of 
the second quarter of 1999, as compared to 7.3 million in 1998 and 3.7 
million in 1997), and the instances of systems problems at broker-
dealers.
C. Significant SEC and SRO Rule Proposals
    On January 28, 2000, the Commission issued an order directing SROs 
to develop a plan to implement decimal pricing in the equities and 
options markets beginning no later than July 3, 2000. \19\ The SROs are 
required to submit their decimalization implementation plan by March 
13, 2000, and rule changes necessary to implement the plan by March 28, 
2000. The participants intend to discuss the issues associated with the 
decimalization implementation plan submitted, as well as any comment 
letters submitted in response to proposed rule changes necessary to 
implement the plan.
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    \19\ Exchange Act Release No. 42360 (January 28, 2000) [65 FR 
5003].
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    Day trading practices continue to be the focus of media attention. 
Presently, the Commission is carefully considering the various issues 
relating to day trading activities. In particular, the Commission has 
been considering proposed rule

[[Page 14329]]

changes by the NYSE and the National Association of Securities Dealers, 
Inc. (NASD) to amend margin requirements for day trading customers of 
member firms.
    On January 14, 2000, the Commission published the NYSE's proposal 
raising margin requirements for day traders. The NASD filed a similar 
proposal on January 13, 2000, which was published on February 11, 2000. 
The Commission has received numerous comment letters, which are under 
review. Both the NYSE and NASD proposals are available on the 
Commission's web site.
D. Financial Modernization Legislation
    After over twenty years of debate, on November 22, 1999, the 
President signed S. 900--the Gramm-Leach-Bliley Act of 1999--into law. 
S. 900 permits securities, insurance, and banking firms to enter each 
other's lines of business. In the coming years, the Commission staff 
will continue to work with other financial regulators and the financial 
services industry to implement the various provisions of S. 900. One 
early project will be to implement regulations regarding the privacy of 
customer financial information. The participants will discuss this 
legislation.
E. Central Registration Depository
    The Central Registration Depository (CRD) system is operated and 
maintained by the NASD and is used by the Commission, the SROs, and 
state securities regulators in connection with registering and 
licensing broker-dealers and their registered personnel. On August 16, 
1999, the old ``Legacy'' CRD system was replaced by Web CRD, a new 
Internet-based system. The ability to file electronically through Web 
CRD is expected to further streamline and lower the costs associated 
with the one-stop registration process for broker-dealers and their 
associated persons. In connection with this transition, the Commission 
adopted technical amendments to Forms BD and BDW, the uniform forms for 
broker-dealer registration and withdrawal from registration, and 
related rules under the Exchange Act.\20\ The Commission also issued an 
order approving changes proposed by NASD Regulation, Inc. to Form U-4 
(the Uniform Application for Securities Industry Registration or 
Transfer) and Form U-5 (the Uniform Termination Notice for Securities 
Industry Registration). These changes were also needed to conform to 
the Web CRD environment. \21\ The participants may discuss issues 
related to Web CRD.
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    \20\ Release No. 34-41594 (July 2, 1999) [64 FR 37586]; Release 
No. 34-41356 (April 30, 1999) [64 FR 25143].
    \21\ Release No. 34-41560 (June 25, 1999) [64 FR 36059].
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F. Examination Issues
    State and federal regulators also will discuss various examination-
related issues of mutual interest, including: summits and examination 
coordination; branch office examinations; micro-cap issues; and day 
trading.

(3) Investment Management Issues

A. Division of Regulatory Authority
    In the 1996 Act, Congress amended the Investment Advisers Act of 
1940 (``Advisers Act'') \22\ to divide regulatory responsibility for 
investment advisers between the Commission and state securities 
regulators. Advisers that have assets under management of $25 million 
or more, or that advise registered investment companies, generally 
register with the Commission while advisers that have assets under 
management of less than $25 million must register with the appropriate 
state securities authorities. \23\ Approximately 8,500 investment 
advisers are currently registered with the Commission.
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    \22\ 15 U.S.C. 80b-1.
    \23\ Advisers Act Section 203A(a), 15 U.S.C. 80b-3a. The 
Advisers Act also provides for registration with the Commission of 
advisers that have their principal office and place of business in a 
state that has not enacted an investment adviser statute (currently, 
Wyoming), or that have their principal office and place of business 
outside the United States. In addition, the Commission has adopted 
rules exempting five categories of investment advisers from the 
prohibition on registration with the Commission. See Rule 203A-2, 17 
CFR 275.203A-2.
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    The conferees will discuss cooperation between Commission and state 
adviser programs, including sharing information about examinations of 
advisers, advisers switching between federal and state registration, 
advisers that may no longer qualify for SEC registration, advisers 
whose registration has been canceled by the SEC, and advisers located 
in the state of Wyoming--the only state that does not have an 
investment adviser statute. The conferees also will discuss advisers 
that provide advice over the Internet and best execution reviews.
B. Electronic Filing System
    Congress also amended the Advisers Act to require the Commission to 
establish and maintain a ``readily accessible telephonic or other 
electronic process'' to receive public inquiries about the disciplinary 
histories of investment advisers and persons associated with investment 
advisers.\24\
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    \24\ 1996 Act section 306.
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    To satisfy this mandate, the Commission, in cooperation with NASAA 
and the state securities authorities, has been working with NASD 
Regulation, Inc. to design, build, and operate the Investment Adviser 
Registration Depository (IARD) system. The IARD will be a one-stop 
electronic filing system that investment advisers will use to apply for 
registration with the Commission or the appropriate state securities 
authorities, to update their registration, and to make notice filings 
with the states. The Commission and state authorities will have access 
to the resulting database to review adviser registration materials and 
the database will be available to the public on an Internet web site. 
Clients and prospective clients of investment advisers will be able to 
quickly obtain disciplinary and other information about investment 
advisers and persons associated with investment advisers.
    The conferees will discuss the transition to electronic filing by 
investment advisers on the IARD, which is expected to begin receiving 
investment adviser submissions later this year.
C. Revised Registration and Disclosure Forms
    The Commission and NASAA are revising the investment adviser 
registration and disclosure forms. The revised registration form would 
provide more useful information to the Commission and the state 
securities regulators. The new disclosure form would require advisers 
to provide clear and complete disclosures in plain English to clients 
and prospective clients.
    The conferees will discuss the revised forms, which the Commission 
staff expects soon to recommend that the Commission propose for 
comment.

(4) Investor Education and Assistance Issues

    The Commission currently pursues a number of programs to educate 
investors on how to invest wisely and to protect themselves from fraud 
and abuse. The states and NASAA have a long-standing commitment to 
investor education, and the SEC intends to complement those efforts to 
the greatest extent possible. The investor education working group will 
discuss the following investor education initiatives and potential 
joint projects:
A. Online Investor Protection
    The SEC's staff will brief NASAA on the steps it has taken to fight 
Internet fraud and to educate investors on how to use the Internet to 
invest wisely.

[[Page 14330]]

Similarly, NASAA will discuss state initiatives to enhance online 
investor protection.
B. Financial Literacy 2001
    In the spring of 1998, NASAA, the NASD, and the Investor Protection 
Trust (IPT) joined forces to launch ``Financial Literacy 2001'' 
(FL2001), an unprecedented $1 million campaign targeting 25,000 high 
school teachers across America. The goal of FL2001 is to encourage--and 
make it easier for--teachers in every state to teach the basics on 
saving and investing. Working together, NASAA, the NASD, and the IPT 
have developed a state-by-state customized classroom guide and have 
begun to provide aggressive distribution and teacher training. During 
the working group session, the states will brief the SEC on the 
progress of FL2001 and plans for dissemination of the FL2001 program in 
the coming year.
C. Facts on Saving and Investing Campaign
    In the spring of 1998, NASAA and the SEC, in conjunction with the 
Council of Securities Regulators of the Americas (COSRA), launched the 
Facts on Saving and Investing Campaign. The campaign is an ongoing, 
grassroots effort to educate individuals about saving, investing, and 
avoiding financial fraud. Twenty-one countries throughout the Western 
Hemisphere participated in the campaign's enormously successful kick-
off week. In the U.S., campaign partners--including more than thirty 
government agencies, consumer organizations, and financial industry 
associations--held educational events and distributed information on 
saving and investing throughout the country. During the working group 
session, participants will discuss the campaign and future campaign 
initiatives. They'll also discuss other initiatives for international 
investor education.
D. New Investor Education Programs
    Participants will brainstorm ideas for new investor education 
programs, including joint NASAA and SEC initiatives.
E. Investor Education Resources
    The group will assess existing resources for investor education--
including brochures, videotapes, online materials, and other media--and 
identify gaps. They will further discuss the most efficient and 
effective ways to provide educational resources to individuals at the 
grassroots level.

(5) Enforcement Issues

    In addition to the above topics, state and federal regulators will 
discuss various enforcement-related issues of mutual interest.

(6) General

    There are a number of matters which are applicable to all, or a 
number, of the areas noted above. These include EDGAR--the Commission's 
electronic disclosure system, rulemaking procedures, training and 
education of staff examiners and analysts, and information sharing.
    The Commission and NASAA request specific public comments and 
recommendations on the above-mentioned topics. Commenters should focus 
on the agenda but may also discuss or comment on other proposals which 
would enhance uniformity in the existing scheme of state and federal 
regulation, while helping to maintain high standards of investor 
protection.

    Dated: Dated: March 10, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-6516 Filed 3-15-00; 8:45 am]
BILLING CODE 8010-01-P