ICI Comments on SEC Proposal Regarding Fund Transactions with Certain Affiliates

Washington, DC, July 23, 2002 - In a recent letter to the SEC, the Institute commented on proposed amendments to the Investment Company Act rules that deal with funds’ transactions with portfolio and subadviser affiliates. In May, the Institute submitted a package of proposals to improve investment company regulation in which it recommended that the SEC revise the disclosure requirements in cases of affiliated transactions, and codify the relief granted to funds that permits a separately managed portion of a multi-managed fund to invest in securities issued by a subadviser to another portion of the fund.

In its recent comment letter, the Institute comments on a number of the proposed revisions, including:

• the term “financial interest”;
• the rule’s “lookback” provisions;
• a proposed provision that would prohibit subadvisers for different portions of a fund from consulting with each other about the fund’s securities transactions; and
• a proposed provision that would permit funds to purchase securities during an underwriting or selling syndicate in which one of its subadvisers is a participant.