Summary: H.R.578 — 103rd Congress (1993-1994)All Information (Except Text)

Bill summaries are authored by CRS.

Shown Here:
Passed House amended (05/04/1993)

Investment Adviser Regulatory Enhancement and Disclosure Act of 1993 - Amends the Investment Advisers Act of 1940 to authorize the Securities and Exchange Commission (SEC) to collect fees to cover specified costs of regulating investment advisers and their activities. Sets forth a sliding scale fee schedule. Authorizes the SEC to suspend the registration of any investment adviser for failure to pay the requisite fees.

Directs the SEC to: (1) establish and periodically revise a schedule for the regular inspection of investment advisers; and (2) report to the Congress on surveys regarding the failure of persons to register as mandated.

Authorizes the SEC to designate registered self-regulatory organizations to: (1) conduct periodic compliance examinations of members and their affiliates; (2) discipline them for non-compliance; and (3) collect examination fees.

Places limitations upon such designation authority with respect to affiliates of members (especially those whose primary business is investment advisory activities), and savings association affiliates of members.

Prohibits certain transactions by registered investment advisers, including the rendering of investment advice unsuitable to the client's financial situation and experience.

Requires registered investment advisers to disseminate to clients and prospective clients brochures disclosing specified investor protection information. Requires such advisers to provide each client periodically with a written statement of client-paid fees, and compensation arrangements with a third party regarding recommended transactions.

Directs the Commission to require the entity designated to administer certain fee collection and recordkeeping requirements to establish a toll-free telephone listing for inquiries about disciplinary and other information involving investment advisers.

Directs the SEC to promulgate investor protection rules setting bond requirements for certain investment advisers against larceny and embezzlement.

Prohibits: (1) a person convicted of a felony within the last ten years from registering as an investment adviser; or (2) an investment adviser from disclosing confidential client information.

Requires the Commission to report to the Congress an analysis of the risks to investors when an investment adviser is the sole recipient of communications from the investor's custodian, or when an investment adviser or its affiliate serves as the custodian.