Institute Comments on SEC Proposed Rules Re Canadians' Retirement Accounts

Washington, DC, June 1, 1999 - The Institute filed a comment letter with the Securities and Exchange Commission on proposed Rules 237 under the Securities Act of 1933, 7d-2 under the Investment Company Act of 1940, and proposed amendments to Rule 12g3-2 under the Exchange Act of 1934. The SEC's proposals are designed to allow Canadians now residing in the United States to actively manage their Canadian tax-advantaged retirement accounts. The proposed rules would permit non-U.S. securities, including Canadian investment company securities, to be offered and sold to U.S. participants in certain Canadian tax-deferred retirement accounts without the securities being subject to registration, and without the investment company being subject to registration, under the U.S. federal securities laws.

The letter states the Institute is sympathetic to the concerns of Canadians now residing in the United States who are unable to continue to actively manage their Canadian tax-advantaged retirement accounts. The letter states the Institute, accordingly, has no objection to granting relief to these investors so long as any relief under Section 7(d) of the 1940 Act is appropriately limited and the SEC retains the ability to monitor compliance with the rule.

The Institute's letter points out that U.S. citizens who reside in Canada and have interests in U.S. tax-advantaged retirement accounts, such as IRAs and 401(k) accounts, face similar constraints under Canadian securities laws in actively managing these accounts. While the Canadian Securities Administrators issued a proposed National Instrument in 1997 which would provide relief comparable to that proposed by the Commission, the proposed National Instrument has not yet been adopted. The Institute's letter indicated the SEC should urge the Canadian Securities Administrators to go forward with adoption of the National Instrument in order to provide comparable, reciprocal relief for U.S. citizens, broker-dealers, and issuers.