WASHINGTON - Lawmakers in the House and Senate are drafting legislation that would amend federal pension law to let small investment advisers manage pension fund money even after they are no longer registered with the Securities and Exchange Commission, Robert E. Plaze, associate director of the SEC's investment management division, said at a meeting last month.
Sen. Jim M. Jeffords, chairman of the Senate Labor and Human Resources Committee, and Rep. William F. Goodling, chairman of the House Education and the Workforce Committee, hope to introduce the legislation soon, committee staffers confirmed.
Mr. Goodling's committee is putting the finishing touches to the draft legislation, and Sen. Jim M. Jeffords hopes to circulate companion legislation to other senators soon, an aide said.
The legislation amending the Employee Retirement Income Security Act is required because investment advisers with less than $25 million in assets will no longer be regulated by the SEC under a securities law enacted last year. Instead, small investment advisers will be supervised solely by state securities agencies.
Under the federal pension law, professional money managers can only invest pension assets if they are registered with the SEC or are banks or insurance companies. Because of changes in the securities laws, as many as 16,000 investment advisers could lose their SEC registration, said SEC Chairman Arthur Levitt in an April 7 letter to lawmakers urging a speedy change in ERISA.
The new SEC rules implementing the National Securities Markets Improvement Act kicks in July 8, though lawmakers have until Oct. 12, 1998, to make the change because of a two-year delay in the effective date for that provision. Still, lawmakers are hoping to quickly enact the non-controversial legislation. The measure is expected to have broad bipartisan support because investment advisers are worried that they may not be able to land new pension plan clients, and existing pension plan clients may not renew investment contracts if their status as "investment managers" is up in the air, a House committee staffer said.
Mr. Levitt's letter to lawmakers reiterated this concern.
"Some advisers think the harm they could suffer, even before the expiration of the sunset provision next year, could be irreparable and it is easy to see why," he wrote to lawmakers, and to E. Olena Berg, the Labor Department's top pension official.