WASHINGTON -- A group representing investment advisers wants lawmakers to tidy up a 1996 securities law to eliminate the lack of uniformity in regulations among the states.
A goal of the Investment Advisers Supervision Coordination Act of 1996, a part of the National Securities Markets Improvement Act, was to make it easier for large money managers to operate in different states without complying with a patchwork of regulations.
Under the 1996 changes in the law, managers with more than $25 million in assets need comply only with federal securities regulations for the most part and are regulated only by the Securities and Exchange Commission. Federally regulated investment advisers still must file some basic paperwork in the states in which they operate.
But some states aren't complying with the changes in the law, according to Karen L. Barr, general counsel of the Investment Counsel Association of America, Washington.
"While the vast majority of the states have taken steps to comply with the 1996 law, the lack of true uniformity undercuts the goal of the law to reduce unnecessary and duplicative regulation of the investment advisory business," she said.
The association has sent its wish list to Sen. Phil Gramm, R-Texas, chairman of the Senate Banking Committee, who is expected to begin drafting catch-all securities legislation later this month along with Democrats on the committee.
The Securities Markets Enhancement Act will be based on requests from various securities markets participants and regulators, according to a Republican committee spokeswoman.
For starters, the association would like an exemption for federally regulated investment advisers from filing notices if they have fewer than six clients in any state. All of the states except five have such a standard now, Ms. Barr said. Nebraska, New Hampshire, Texas and Vermont have no such exemption, "so that even if you have one client in that state you have to file, and register the representative," Ms. Barr said. New York exempts money managers only if they have fewer than 41 clients in the state.
The association also would like the law to be amended so states could not impose notice filings and fees on investment adviser representatives of federally registered advisers who do not have a place of business in the state. Two states -- Oklahoma and Texas -- impose such fees.
The association also would like to clarify that states might require investment advisers to only provide the Form ADV and attachments, filed with the SEC, as opposed to asking for other documents also filed with the SEC.
Finally, the group wants to prohibit states from imposing notice filing and fee requirements on SEC-registered representatives unless the states participate in a centralized database and filing system being developed by the federal securities regulator and the states.
Meanwhile, the Senate Banking Committee has received wish lists from the SEC, the North American Securities Administrators Association, the Bond Market Association and various stock exchanges, but the spokeswoman declined to discuss what those organizations have asked for, saying the committee is still assessing requests.
