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- ICI Comment Letters
ICI Supports Measures to Improve Compliance with Securities Laws
Washington, DC, April 17, 2003 - The Institute supports the SEC’s goal of ensuring that each investment company has a rigorous internal compliance program. In a recent comment letter, the Institute recommended a number of revisions to the proposed new rule 38a-1, including:
- a clarification that a fund may rely on the compliance policies and procedures of its service providers (i.e., its investment adviser, principal underwriter, and administrator) that govern the services they provide to the fund;
- a requirement that each fund and service provider identify in an annual report to the board the entity’s relevant compliance policies and procedures, together with the person(s) within the entity charged with the primary responsibility for implementation;
- the inclusion of a safe harbor expressly providing that no person would be liable under the rule solely because a violation of the securities laws occurs if he or she had a reasonable basis to believe that the compliance policies and procedures adopted pursuant to the rule were not deficient and reasonably discharged his or her obligations under the rule.
The Institute also commented on four initiatives identified by the SEC to involve the private sector in fostering compliance by investment companies and investment advisers with the federal securities laws, including:
- periodic compliance reviews by a third party,
- expanded fund audits,
- the creation of one or more self-regulatory organizations, and
- the imposition of a fidelity bonding requirement.