[Federal Register Volume 63, Number 141 (Thursday, July 23, 1998)]
[Rules and Regulations]
[Pages 39505-39508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19565]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 276
[Release No. IA-1732]
Interpretation of Section 206(3) of the Investment Advisers Act
of 1940
AGENCY: Securities and Exchange Commission.
ACTION: Interpretation.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
publishing two interpretive positions under Section 206(3) of the
Investment Advisers Act of 1940. Section 206(3) prohibits any
investment adviser from engaging in or effecting a transaction on
behalf of a client while acting either as principal for its own
account, or as broker for a person other than the client, without
disclosing in writing to the client, before the completion of the
transaction, the adviser's role in the transaction and obtaining the
client's consent. The first interpretive position identifies the points
at which an adviser may obtain its client's consent to a principal or
agency transaction. The second interpretive position identifies certain
transactions for which an adviser would not be acting as broker within
the meaning of Section 206(3).
DATES: Release No. IA-1732 is added to the list in Part 276 as of July
17, 1998. The first interpretive position in Release No. IA-1732 is
effective on September 21, 1998. The second interpretive position in
Release No. IA-1732 is effective on July 23, 1998.
FOR FURTHER INFORMATION CONTACT: Douglas Scheidt, Associate Director
and Chief Counsel, Karrie McMillan, Assistant Chief Counsel, or Eileen
Smiley, Senior Counsel, 202/942-0660, Mail Stop 5-6, Division of
Investment Management, 450 Fifth Street, N.W., Washington, D.C. 20549.
SUPPLEMENTARY INFORMATION:
I. Introduction
Section 206(3) of the Investment Advisers Act of 1940 \1\ makes it
unlawful for any investment adviser, directly or indirectly ``acting as
principal for his own account, knowingly to sell any security to or
purchase any security from a client, or acting as broker for a person
other than such client, knowingly to effect any sale or purchase of any
security for the account of such client, without disclosing to such
client in writing before the completion of such transaction the
capacity in which he is acting and obtaining the consent of the client
to such transaction.'' \2\ Section 206(3) thus imposes a prior consent
requirement on any adviser that acts as principal in a transaction with
a client, or that acts as broker (that is, an agent) in connection with
a transaction for, or on behalf of, a client.\3\
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\1\ 15 U.S.C. 80b-1, et seq. (the ``Advisers Act'').
\2\ Section 206(3) expressly excludes any transaction between a
broker or dealer and its customer if the broker or dealer is not
also acting as an investment adviser in relation to the transaction.
15 U.S.C. 80b-6(3).
\3\ We and our staff have applied Section 206(3) to apply not
only to principal and agency transactions engaged in or effected by
any adviser, but also to certain situations in which an adviser
causes a client to enter into a principal or agency transaction that
is effected by a broker-dealer that controls, is controlled by, or
is under common control with, the adviser. Staff no-action letter,
Hartzmark & Co. (available Nov. 11, 1973) (applying Section 206(3)
when an adviser effects transactions through its broker-dealer
parent). See also Advisers Act Release No. 589 (June 1, 1977) [42 FR
29300] (``Release No. 589'') (when adopting Rule 206(3)-2 under the
Advisers Act, the non-exclusive safe harbor available for certain
agency transactions, we expanded the rule to cover transactions
effected through such affiliated broker-dealers).
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In a principal transaction, an adviser, acting for its own account,
buys a security from, or sells a security to, the account of a client.
In an agency transaction, an adviser arranges a transaction between
different advisory clients or between a brokerage customer and an
advisory client. Advisory clients can benefit from both types of
transactions, depending on the circumstances, by obtaining a more
favorable transaction price for the securities being purchased or sold
than otherwise available. Principal and agency transactions, however,
also may pose the potential for conflicts between the interests of the
adviser and those of the client.
The wording and legislative history of Section 206(3) indicate that
Congress recognized that both principal and agency transactions create
the potential for advisers to engage in self-dealing.\4\ Principal
transactions, in particular, may lead to abuses such as price
manipulation or the placing of
[[Page 39506]]
unwanted securities into client accounts.\5\ When an adviser engages in
an agency transaction on behalf of a client, it is primarily the
incentive to earn additional compensation that creates the adviser's
conflict of interest.\6\ In adopting Section 206(3), Congress
recognized the potential for these abuses, but did not prohibit
advisers entirely from engaging in all principal and agency
transactions with clients. Rather, Congress chose to address these
particular conflicts of interest by imposing a disclosure and client
consent requirement in Section 206(3) of the Advisers Act.
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\4\ See Investment Trusts and Investment Companies: Hearings on
S. 3580 Before the Subcomm. of the Comm. on Banking and Currency,
76th Cong., 3d Sess. 320 (1940) (statement of David Schenker, Chief
Counsel, Securities and Exchange Commission Investment Trust Study)
(hereafter ``Senate Hearings'') (``I think it is the Commission's
recommendation that all self-dealing between the investment
counselor and the client should be stopped.'').
\5\ See Senate Hearings at p. 322 (``[I]f a fellow feels he has
a sour issue and finds a client to whom he can sell it, then that is
not right * * * .'') (Statement of David Schenker).
\6\ Rule 206(3)-2 [17 CFR 275.206(3)-2] under the Advisers Act
reflects the significance of an adviser's receipt of compensation in
agency transactions effected by the adviser. The rule requires that
the prospective client consent form and all subsequent trade
confirmations indicate that the adviser will receive compensation in
connection with any agency transaction. See Release No. 589.
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Certain of our settled enforcement actions \7\ have raised
questions regarding our interpretation of specific aspects of Section
206(3). We are concerned that unless we clarify these issues, advisers
will unnecessarily avoid engaging in principal and agency transactions
that may serve their clients' best interests. Thus, we are taking this
opportunity to clarify that: (1) an adviser may obtain client consent
for purposes of Section 206(3) to a principal or agency transaction
after execution, but prior to settlement, of the transaction; and (2)
an adviser is not ``acting as broker'' within the meaning of the
Section if the adviser receives no compensation (other than its
advisory fee) for effecting a particular agency transaction between
advisory clients.
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\7\ See In the Matter of Piper Capital Management, Inc.,
Advisers Act Release No. 1435 (Aug. 11, 1994) (``Piper Capital'').
See also In the Matter of Dimitri Balatsos, Advisers Act Release No.
1324 (Aug. 18, 1992) (``Balatsos''); In the Matter of Micael L.
Smirlock, Advisers Act Release No. 1393 (Nov. 29, 1993)
(``Smirlock'').
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II. An Adviser Must Obtain the Informed Consent of Its Client to a
Section 206(3) Transaction Before Settlement of the Transaction
Section 206(3) prohibits any adviser from engaging in or effecting
a principal or agency transaction with a client without disclosing in
writing to the client, ``before the completion of such transaction,''
the capacity in which the adviser is acting and obtaining the client's
consent. The Advisers Act, however, does not define when a transaction
is ``completed'' for purposes of section 206(3).
In Piper Capital,\8\ we found that an adviser violated Section
206(3) in two ways: in some instances, the adviser failed to provide
the necessary disclosure to clients; in other instances, the adviser
failed to obtain client consent before the completion of principal
transactions. Footnote 1 in the Piper Capital Order states that ``the
phrase `completion of such transaction' under Section 206(3) of the
Advisers Act * * * mean[s] prior to the execution of the transaction.''
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\8\ See Piper Capital, id.
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A. Practical Concerns
The footnote in the Piper Capital Order has raised concern among
investment advisers who assert that it effectively requires investment
advisers to obtain client consent prior to executing a principal or
agency transaction, a point in time earlier than investment advisers
previously had interpreted Section 206(3) to require. Advisers argue
that obtaining client consent prior to execution of a transaction
raises practical compliance difficulties for investment advisers.
Finally, advisers assert that the Piper Capital position has raised
confusion among investment advisers regarding their disclosure
obligations with respect to principal and agency transactions with
clients.\9\ It is our understanding that advisers find it difficult to
satisfy their disclosure obligations under Section 206(3) prior to the
execution of a transaction because of the practical difficulties of
contacting some clients within a relatively short time, during which
the market can move.
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\9\ In 1945, our General Counsel took the position that, under
Sections 206(1), (2) and (3) of the Advisers Act, an investment
adviser must disclose to an advisory client any adverse interest
that the adviser might have, ``together with any other information
in his possession which the client should possess'' to facilitate an
informed decision by the client whether to consent to a principal
transaction. See Advisers Act Release No. 40 (Jan. 5, 1945) [11 FR
10997] (``Release No. 40''). In the view of our General Counsel at
the time, that information included, at a minimum: (1) the capacity
in which the adviser proposed to act; (2) the cost of the security
to the adviser if sold to a client; (3) the price at which
securities could be resold if purchased from a client; and (4) the
best price at which the transaction could be effected, if more
advantageous to the client than the actual transaction price (``best
price''). In a subsequent release adopting a rule creating a limited
exemption from Section 206(3) for certain broker-dealers, we took
the position that whether the specific items identified in Release
No. 40 must be disclosed depends upon their materiality to a
particular transaction, and the extent to which the client is
relying on the adviser concerning that transaction. See Advisers Act
Release No. 470 (Aug. 20, 1975) [40 FR 38158] (adopting Rule 206(3)-
1) [17 CFR 275.206(3)-1] (``Release No. 470'').
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Representatives of the investment advisory industry have expressed
concern to us and our staff that the practical difficulties caused by
the Piper Capital position have discouraged advisers from engaging at
all in principal transactions with clients, contrary to the intent of
Congress in enacting Section 206(3).\10\ Industry representatives thus
have sought clarification of our interpretation of the phrase ``before
the completion of such transaction'' so that they can reconcile the
timing of disclosure and consent with the types of disclosure that they
must provide to clients when soliciting consent to a principal or
agency transaction.
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\10\ Although Section 206(3) applies to both principal and
agency transactions, the investment advisory industry has raised
questions about the operation of the Section primarily in the
context of principal transactions. We believe that this result may
reflect the operation of an existing rule under the Advisers Act.
Advisers seeking to engage in agency transactions typically rely on
Rule 206(3)-2 [17 CFR 275.206(3)-2] under the Advisers Act, which
provides a non-exclusive safe harbor for certain agency
transactions. Our interpretive position in Part II of this release
applies to both principal transactions and to those agency
transactions for which an adviser does not rely on Rule 206(3)-2 [17
CFR 275.206(3)-2].
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B. The Disclosure and Consent Required Under Section 206(3) of the
Advisers Act
We are taking this opportunity to clarify our view as to aspects of
the disclosure obligation of an adviser seeking to engage in a
principal or agency transaction with an advisory client. In response to
the practical concerns discussed above, we also are clarifying when an
adviser may obtain client consent to a principal or agency transaction
as required by Section 206(3).
1. The Adviser Must Disclose Potential Conflicts of Interest To Ensure
That a Client's Consent Is Informed
Section 206(3) expressly requires that a client be given written
disclosure of the capacity in which the adviser is acting, and that the
adviser obtain its client's consent to a Section 206(3) transaction.
The protection provided to advisory clients by the consent requirement
of Section 206(3) would be weakened, however, without sufficient
disclosure of the potential conflicts of interest and the terms of a
transaction. In our view, to ensure that a client's consent to a
Section 206(3) transaction is informed, Section 206(3) should be read
together with Sections 206(1) and (2)\11\ to require the adviser to
disclose
[[Page 39507]]
facts necessary to alert the client to the adviser's potential
conflicts of interest in a principal or agency transaction.\12\
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\11\ Sections 206(1) and 206(2) of the Advisers Act also impose
on advisers an affirmative duty of good faith with respect to their
clients and a duty of full and fair disclosure of all facts that are
material to the advisory relationship with their clients. See
Release No. 470, supra, n. 9 (whether Sections 206(1) and (2)
require disclosure of specific facts about a transaction depends on
the ``materiality of such facts in each situation and upon the
degree of the client's trust and confidence in and reliance on the
adviser with respect to the transaction.''). See also Note to Rule
206(3)-1 [17 CFR 275.206(3)-1] (the exemption from Section 206(3)
for certain broker-dealers does not relieve an investment adviser of
``any disclosure obligation which, depending upon the nature of the
relationship between the investment adviser and the client, may be
imposed by subparagraph (1) or (2) of Section 206 * * *'').
\12\ In three separate releases, we or our staff have identified
certain categories of relevant information that advisers may be
required to disclose when they execute principal or agency
transactions with advisory clients. See Release Nos. 40 and 470,
supra n. 9. See also Advisers Act Release No. 557 (Dec. 2, 1976) [41
FR 53808] (``Release No. 557'') (in proposing rule 206(3)-2, the
non-exclusive safe harbor for certain agency transactions, we
identified certain categories of information that generally should
be disclosed by an adviser when executing a principal transaction
with a client). This release supplements the three prior releases by
identifying the information specified in those releases that
advisers may not be able to provide to a client prior to the
execution of a Section 206(3) transaction. This release discusses
comparable information that may be disclosed instead when an adviser
seeks to obtain client consent prior to the execution of a Section
206(3) transaction.
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2. The Timing of Consent
Section 206(3) requires that an adviser disclose to its client in
writing before the ``completion'' of a Section 206(3) transaction the
capacity in which it is acting and obtain the client's consent to the
transaction. We believe that, for purposes of Section 206(3), a
securities transaction is completed upon settlement, not upon
execution. This interpretation is consistent with the express terms of
Section 206(3) and the legislative intent underlying the Section.
Implicit in the phrase ``before the completion of such transaction'' is
the recognition that a securities transaction involves various stages
before it is ``complete.'' The phrase ``completion of such
transaction'' on its face would appear to be the point at which all
aspects of a securities transaction have come to an end. That ending
point of a transaction is when the actual exchange of securities and
payment occurs, which is known as ``settlement.'' \13\ The date of
execution (i.e., the trade date) marks an earlier point of a securities
transaction at which the parties have agreed to its terms and are
contractually obligated to settle the transaction.\14\ Interpreting the
phrase ``completion of such transaction'' to mean at the time of
settlement of the transaction is consistent with Congress' intent in
enacting Section 206(3) by facilitating disclosure by advisers of
material information about a transaction and informed consent by
advisory clients. Thus, in our view, an adviser may comply with Section
206(3) either by obtaining client consent prior to execution of a
principal or agency transaction, or after execution but prior to
settlement of the transaction.
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\13\ See, e.g., 6 L. Loss & J. Seligman, Securities Regulation
Ch. 7, p. 29d9 (3d ed. 1990).
\14\ The interpretive positions expressed in this release apply
only to an adviser's disclosure obligations under Section 206(3) of
the Advisers Act. Other provisions of the federal securities laws,
including the antifraud provisions of the Securities Exchange Act of
1934 (``Exchange Act''), require that material information about
certain transactions be communicated to investors prior to execution
of the transaction. See, e.g., Exchange Act Release No. 33743 (Mar.
9, 1994) [59 FR 12767, 12772 n. 49] (in proposing amendments to Rule
10b-10 under the Exchange Act, which governs the duty of brokers to
send confirmations of trades to clients, we stated that ``[t]he fact
that a broker-dealer has met the requirements of Rule 10b-10 should
begin the analysis, not end it. The confirmation is delivered after
the contract is created. Thus, irrespective of the content of the
confirmation, specific terms of the transaction that may affect the
customer's investment decision should be disclosed at the time of a
purchase or sale of a security.''). See also Radiation Dynamics,
Inc. v. Goldmuntz, 464 F.2d 876, 891 (2d Cir. 1972) (court held
that, for purposes of insider trading liability under Rule 10b-5
under the Exchange Act, the time of a ``purchase or sale'' of
securities is determined by reference to when the parties are
obligated to perform the terms of the transaction, not when final
performance occurs.).
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a. Obtaining pre-execution consent. Because of market movements, an
adviser may not be able to provide its client with a final execution
price, or best price or final commission charges as contemplated by
Release Nos. 40, 470 and 557 when soliciting pre-execution consent to
an agency or a principal transaction. In these circumstances, however,
an adviser should provide comparable information that is sufficient to
identify and explain the potential conflicts of interest arising from
the capacity in which the adviser is acting, that is as principal or
agent, when engaging in or effecting a Section 206(3) transaction. For
instance, prior to obtaining pre-execution consent, an adviser could
transmit to the client the current quoted price for a proposed
transaction, and, if applicable, current best price information \15\
and proposed commission charges. Under these circumstances, because the
client has been informed about the potential conflicts of interest, and
can refuse to consent to a proposed transaction before it is executed,
the adviser has satisfied its disclosure obligation under Section
206(3).
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\15\ Consistent with its obligations under Section 206(3), an
adviser, in lieu of disclosing best price information, could
undertake to its client to match or better the best price in the
market at the time that the adviser receives the client's consent.
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b. Obtaining post-execution, pre-settlement consent. In our view,
in order for a post-execution, pre-settlement consent mechanism to
comply with Section 206(3), it must serve the purposes underlying
Section 206(3). We believe that a post-execution, pre-settlement
consent mechanism would satisfy the requirements of Section 206(3) if
it provides both sufficient information for a client to make an
informed decision, and the opportunity for the client to consent to a
Section 206(3) transaction.
(i) Sufficiency of Information
When soliciting a client's post-execution, pre-settlement consent
to a Section 206(3) transaction, an adviser should be able to provide
the client with sufficient information regarding the transaction,
including information regarding pricing, best price and final
commission charges, to enable the client to make an informed decision
to consent to the transaction. In our view, if after execution but
before settlement of a Section 206(3) transaction, an adviser also
provides a client with information that is sufficient to inform the
client of the conflicts of interest faced by the adviser in engaging in
the transaction, then the adviser will have provided the information
necessary for the client to make an informed decision for purposes of
Section 206(3).\16\
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\16\ As stated above, in three earlier releases, we or our staff
have identified certain categories of relevant information that
advisers may be required to disclose to identify these potential
conflicts of interest when executing principal or agency
transactions with advisory clients. See n.9 and n.12, supra.
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(ii) Client's Ability to Withhold Consent
One of the concerns cited by Congress when enacting Section 206(3)
was the practice of advisers placing unwanted securities in client
accounts.\17\ An adviser that executes a transaction before obtaining
its client's consent must ensure that its client understands that the
client is under no obligation to consent to the transaction. In our
view, post-execution, pre-settlement consent generally would be
effective in addressing the concerns underlying Section 206(3), so long
as the adviser has not structured the procedures for obtaining consent
in such a manner that the client has no choice but to consent.\18\
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\17\ See n.5 and accompanying text, supra.
\18\ We understand that, prior to Piper Capital, some advisers
seeking to comply with Section 206(3) generally disclosed to their
clients, before effecting or engaging in any principal or agency
transactions, that the adviser would be engaging in the transactions
with its clients in the course of providing advisory services to the
clients. Prior to the settlement of a specific Section 206(3)
transaction, these advisers would provide their clients with the
prices at which transactions were executed and, if applicable, best
price information. Some of these advisers appear to have interpreted
Section 206(3) as not requiring an adviser to bear any loss in the
value of securities involved in a principal or agency transaction
between the time of execution and the time of client consent. These
advisers followed the practice of conditioning a client's refusal to
provide post-execution, pre-settlement consent on the client's
incurring any loss in the value of the securities between the time
of execution and the client's refusal to consent to the transaction.
Although we agree that Section 206(3) by its terms does not require
that an adviser engaging in or effecting a principal or agency
transaction with a client bear any loss in value of the securities,
we seriously question whether a consent mechanism that conditions a
client's refusal to provide post-execution, pre-settlement consent
on the client's incurring any loss in the value of the securities is
consistent with our interpretation of Section 206(3). In such a
case, it appears to us that the consent procedure could, in effect,
undermine the client's right to choose whether or not to consent to
a Section 206(3) transaction.
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III. An Investment Adviser is not ``Acting as Broker'' With Respect
to a Particular Agency Transaction Between Advisory Clients if the
Adviser Receives No Compensation for Effecting the Transaction
As stated above, Section 206(3) applies when an adviser, ``acting
as broker for a person other than * * * [a] client,'' causes the client
to buy or sell a security from that other person. The Advisers Act,
however, does not define when an investment adviser is ``acting as
broker'' with respect to a particular agency transaction.
Industry representatives have raised questions with our staff about
our interpretation of when an adviser is acting as broker for purposes
of Section 206(3). In one settled enforcement action, we found that a
portfolio manager caused an investment adviser to violate Section
206(3) by failing to obtain client consent to an agency transaction
between advisory clients,\19\ even though the adviser received no
compensation (other than its advisory fee) for effecting the
transaction.\20\ In Smirlock,\21\ a subsequent settled enforcement
action involving similar circumstances, we made no finding that the
portfolio manager caused the investment adviser to violate 206(3).
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\19\ By the phrase ``agency transaction between advisory
clients,'' we mean an agency transaction arranged by an investment
adviser whereby one advisory client sells a security to a different
advisory client of the investment adviser.
\20\ See Balatsos, supra n.7 (the portfolio manager arranged an
agency transaction between two advisory clients to ``reallocate''
newly issued securities prior to settlement after realizing that the
selling client had previously instructed him to liquidate all of the
holdings in its account before the later-than-anticipated settlement
date of the securities).
\21\ See Smirlock, supra n.7 (the portfolio manager directed an
unaffiliated broker-dealer to effect agency transactions between
advisory clients).
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We have concluded that if an investment adviser receives no
compensation (other than its advisory fee), directly or indirectly, for
effecting a particular agency transaction between advisory clients, the
adviser would not be ``acting as broker'' within the meaning of Section
206(3).\22\ As we note above, it is primarily the incentive to earn
additional compensation that creates the adviser's conflict of interest
when effecting an agency transaction between advisory clients. This
release confirms the interpretive position underlying the Smirlock
Order.
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\22\ Sections 206(1) and (2) of the Advisers Act impose a
fiduciary duty on advisers with respect to their clients and a duty
of full and fair disclosure of all material facts. See n.11, supra.
Thus, even though an adviser may not be ``acting as broker'' within
the meaning of Section 206(3), Sections 206(1) or (2) may require
the adviser to disclose information about agency transactions that
are not subject to Section 206(3).
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IV. Conclusion
For the reasons discussed above, we are clarifying, only for
purposes of Section 206(3) of the Advisers Act, that: (1) the phrase
``before the completion of such transaction'' means prior to settlement
of the transaction; and (2) an investment adviser is not ``acting as
broker'' if the adviser receives no compensation (other than its
advisory fee) for effecting a particular agency transaction between
advisory clients.\23\
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\23\ To the extent that the positions expressed in this release
are inconsistent with earlier positions, such as those announced in
Piper Capital and Balatsos, those earlier positions are superseded.
For example, in a staff no-action letter, Salomon Brothers Asset
Management, Inc (available Oct. 10, 1990) (``Salomon Brothers''),
our staff took the position that Section 206(3) applied to agency
transactions in certain tax-exempt securities effected by an adviser
even though the adviser would receive no compensation for effecting
the transactions. This release also supersedes that position taken
by the staff in Salomon Brothers.
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V. Effective Date
The Administrative Procedure Act (``APA'') establishes procedures
for agency rulemaking. Section 551 of the APA defines a ``rule'' to
include an ``agency statement of general or particular applicability
and future effect designed to implement, interpret, or prescribe law or
policy * * *'' \24\ The Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA'') requires that all final agency rules, as
defined by Section 551 of the APA, be submitted to Congress for review
and requires generally that the effective date of a major rule be
delayed sixty days pending Congressional review. A major rule may
become effective at the end of the sixty-day review period, unless
Congress passes a joint resolution disapproving the rule.\25\ Because
this release is an agency statement designed to interpret the law, and
because it does not fall within one of three exceptions to the
definition of a rule for purposes of SBREFA, we have concluded that it
is a rule for purposes of SBREFA.\26\
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\24\ 5 U.S.C. 551(4).
\25\ Pub. L. No. 104-121, Title II, 100 Stat. 857 (1996). Under
SBREFA, a rule is ``major'' if it is likely to result in (1) an
annual effect on the economy of $100 million or more, (2) a major
increase in costs or prices for consumers or individual industries,
or (3) significant adverse effects on competition, investment, or
innovation. 5 U.S.C. 804(2).
\26\ 5 U.S.C. 804(3)(A)--(C) (exceptions to the definition of a
``rule'' for purposes of SBREFA).
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The first interpretive position in this release regarding the
points at which an adviser may obtain client consent to a Section
206(3) transaction will become effective September 21, 1998. The Office
of the Management and Budget (``OMB'') has determined that this first
interpretive position is a ``major'' rule under Chapter 8 of the
APA,\27\ which was added by SBREFA. The second interpretive position in
this release regarding transactions for which an investment adviser
would not be ``acting as broker'' within the meaning of Section 206(3)
will become effective July 23, 1998. OMB has determined that this
second interpretive position is a ``minor'' rule under SBREFA.
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\27\ 5 U.S.C. 801
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List of Subjects in 17 CFR Part 276
Securities.
Amendments to the Code of Federal Regulations
For the reasons set forth above, the Commission is amending Title
17, Chapter II of the Code of Federal Regulations as follows:
PART 276--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT
ADVISERS ACT OF 1940 AND THE GENERAL RULES AND REGULATIONS
THEREUNDER
Part 276 is amended by adding Release No. IA-1732 and the release
date of July 17, 1998, to the list of interpretative releases.
By the Commission.
Dated: July 17, 1998.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-19565 Filed 7-22-98; 8:45 am]
BILLING CODE 8010-01-P
