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SEC Adopts Investment Advisors Rules

May 13, 1997|From Reuters

WASHINGTON — The Securities and Exchange Commission on Monday adopted new rules that in two months will place large investment advisor firms under federal oversight while leaving the smaller ones under state authority.

"This division of authority reflects my long-standing belief that the states should have a greater role in regulating and overseeing financial planners and small advisory firms that have primarily local business," SEC Chairman Arthur Levitt said.

The commission said it expects about two-thirds of the 23,500 investment advisors currently registered with the commission to withdraw their registrations and be regulated by state securities regulators.

The rules and amendments approved unanimously will establish the infrastructure for the new approach to the regulation of investment advisors, Levitt said.

Still, both the SEC and the states will be able to bring enforcement actions for violation of anti-fraud laws, an issue of importance to both state and federal regulators.

The rules, effective July 8, are part of a provision of the National Securities Markets Improvement Act, a sweeping securities reform legislation designed to do away with overlapping state and federal regulations of advisors.

The SEC will retain oversight of investment advisors with more than $25 million in assets under management.

Under the new rules, big investment advisors will be examined by the SEC every four to five years, an improvement from the current eight- to nine-year standard.

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