SEC Testifies on Year 2000 Disclosure Obligations

Washington, DC, October 30, 1997 - Brian Lane, Director of the SEC's Division of Corporation Finance, testified on October 22nd before the Senate Subcommittee on Financial Services and Technology Committee on Banking, Housing, and Urban Affairs about the disclosure obligations of public operating companies, investment advisers, and investment companies presented by the Year 2000.

In his testimony, Lane explained that investment advisers and investment companies are required under current law to disclose the impact of the Year 2000 problem: (1) if there is a reasonable likelihood that the adviser will not become Year 2000 compliant in time, and (2) if there is a substantial likelihood that the Year 2000 problem would affect the adviser's ability to fulfill its contractual obligations to the investment company. Lane added that, for the time being, the Commission has decided against adopting specific rules requiring companies to make a statement about the status of their Year 2000 compliance. Lane also pointed out that earlier this month, the Commission issued Staff Legal Bulletin No. 5 to remind public operating companies, investment advisers, and investment companies to consider their disclosure obligations relating to anticipated costs, problems, and uncertainties associated with the Year 2000 issue. Lane noted that as a follow-up to the legal bulletin, the staff will be reviewing all fund prospectus disclosures regarding Year 2000 issues.