Imágenes de páginas
[blocks in formation]

CJJ/3 3JE 76


[blocks in formation]

Institute of Chartered Financial Analysts:

CFA examination results (totals).

Description of professional standards program..
Letter from W. Scott Bauman, executive director.

Investment Company Institute, letter to Senator Williams from Robert L.
Augenblick, president, with respect to the question of duplicate State
and Federal regulation of investment advisers..
Investment Counsel Association of America, Inc.:






Chartered investment counselor, candidate study, and examination


Exchange of letters between Senator Williams and John L. Casey,


Letter from Henry Thielbar, president, to Milton H. Cohen, director,
special study of securities markets, June 11, 1962.


Letter with additional statement from Paul J. Miller, chairman,
legislative committee...


List of board of governors, officers, and administrators.
List of member firms..



Standards of practice for member firms..


Katz, Howard S., editor and publisher, The Speculator Advisory Service, letters and statements received for the record..


Michigan Department of Commerce, letter from Hugh H. Makens, director, Corporation and Securities Bureau..


New York Society of Security Analysts, Inc.:

Code of ethics...


Constitution and bylaws..





Letter to Senator Williams from Herbert E. Goodfreind, president__
Procedures for disciplinary proceedings--

Requirements and instructions for membership..

New York State, reporting of Senate bill No. 7645, to amend the education
law, in relation to licensing and regulation of security analysts - - -
New York Stock Exchange, letter with enclosure showing comparison of
regulation, from James J. Needham, chairman and chief executive

Securities and Exchange Commission:

Letter from Peter Kiernan, Assistant Director, Division of Investment Management Regulation transmitting descriptions of and material on enforcement cases under the Investment Advisers Act of 1940...

Letter to Nelson A. Rockefeller, President, U.S. Senate enclosing
legislative proposals -

Memorandum of the Division of Investment Management Regulation.
Statement in support of proposed amendments to the Investment
Advisers Act of 1940..

[merged small][merged small][ocr errors][merged small][merged small][subsumed][subsumed][merged small]

Table showing types of regulation imposed on investment advisers in the 52 jurisdictions of the United States.. Standard & Poor's Corp., statement of Brenton W. Harries, president.. T. Rowe Price Associates, Inc., letter from H. Spencer Everett, Jr., vice president, general counsel, and secretary..

[merged small][ocr errors][merged small][merged small]

Statement of Irving M. Pollack, Commissioner__






Washington, D.C.

The subcommittee met at 10:05 a.m. in room 5302 of the Dirksen Senate Office Building; Senator Harrison A. Williams, Jr., chairman of the subcommittee, presiding.

Present: Senators Williams and Morgan.

Senator WILLIAMS. We will bring the hearing of the Securities Subcommittee to order.

Today the Subcommittee on Securities will begin hearings on S. 2849, a bill to amend the Investment Advisers Act of 1940.

The investment advisory profession has a significant role in promoting the economic well-being of Americans. Investment advisers manage hundreds of billions of dollars worth of other peoples' securities. By their published reports and direct counseling, investment advisers influence all of the investment decisions made by individual investors.

The amounts of money involved are huge in the aggregate. But it is at the smaller, personal level that the impact of investment advisory services usually is felt the most. For example, an investment adviser's decisions may directly affect whether a family will be able to send its children to college, or whether that college will be able to provide all the services it wishes. And their decisions greatly determine the standard of living of many persons in retirement.

Although this is a personal, professional business where clients put great reliance on the integrity and expertise of their investment advisers, it is somewhat anomalous that the Investment Advisers Act fails to give the Securities and Exchange Commission authority to establish minimum professional standards of qualification and responsibility. This treatment is quite different from that of brokers and dealers who have similar relationships with their clients.

From its experience in administering the Federal securities laws, the SEC knows of the difficulties in effectively regulating the conduct of persons engaged in the securities business without having the ability to adequately screen would-be members at the point of entry. The SEC must also be able to establish basic, minimal standards of financial responsibility, authority which the Congress gave to it over brokers and dealers in 1964. The bill before us today extends to registered investment advisers and their employees this same regulatory pattern that has, in the past, been successfully applied to broker-dealers and their salesmen.

S. 2849 would make three major regulatory changes in the Advisers


First, it would authorize the SEC to set minimum qualification standards before a person could enter the investment advisory business. This would be done by the promulgation of rules and regulations pertaining to standards of training and experience.

Second, it would give the SEC authority to require investment advisers to maintain a minimum level of financial responsibility. Rules under these provisions would require such things as a fidelity bond or minimum net capital requirements.

Third, it would remove the exemption from registration for investment advisers whose business is solely within one state.

S. 2849 also would clarify the right of an individual who has been injured as a result of a violation of the Advisers Act to sue for civil damages in Federal courts.

Finally, S. 2849 would direct the SEC to conduct a study of whether the Advisers Act would be more efficiently administered under the umbrella of self-regulation.

None of these provisions break new ground. All of them are an integral part of the broker-dealer and investment company regulatory pattern. With the continuing growth of the investment adviser profession, both in size and influence, it is more important than ever that the Congress extend to all customers of investment advisers the same basic protections that now prevail throughout other segments of the securities industry.

[Copy of S. 2849 follows:]

[S. 2849, 94th Cong., 2d sess.]

A BILL To amend the Investment Advisers Act of 1940 to authorize the Securities and Exchange Commission to prescribe standards of qualification and financial responsibility for investment advisers, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Investment Advisers Act Amendments of 1975".

SEC. 2. Section 208 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-8) is amended by adding at the end thereof the following new subsections:

"(e) No investment adviser registered or required to be registered under section 203 of this title shall make use of the mails or any means or instrumentality of interstate commerce in connection with his business as an investment adviser unless such investment adviser and all natural persons associated with such investment adviser meet such standards of training, experience, competence, and such other qualifications, including minimum age and contractual capacity, as the Commission finds necessary or appropriate in the public interest or for the protection of investors. The Commission shall establish such standards by rules and regulations, which may

"(1) specify that all or any portion of such standards or qualifications shall be applicable to any class of investment advisers and persons associated with investment advisers; and

"(2) require persons in any class to submit to such tests or examinations as may be prescribed in accordance with such rules and regulations. The Commission, by rule, may prescribe reasonable fees and charges to defray its costs in carrying out this subsection, including, but not limited to, fees for any test administered by it or under its direction.

"(f) No investment adviser registered or required to be registered under section 203 of this title shall make use of the mails or any means or instrumentality of interstate commerce in connection with his business as an investment adviser in contravention of such rules and regulations as the Commission shall prescribe as necessary or appropriate in the public interest or for the protection of investors to provide safeguards with respect to the financial responsibility of investment advisers. The Commission, by rule, may prescribe reasonable fees and charges to defray its costs in carrying out this subsection.

"(g) The Commission is authorized, in connection with the promulgation of rules and regulations under subsections (e) and (f) of this section-

« AnteriorContinuar »