WASHINGTON -- Securities and Exchange Commission Chairman Arthur Levitt yesterday endorsed a bipartisan Senate bill aimed at reducing state regulation of mutual funds, investment advisers and companies' securities offerings.
Levitt's testimony at a Senate Banking Committee hearing gives impetus to a bill that congressional aides predict will sail through the Senate after a committee vote in the next few weeks.
A similar House measure with some additional sections favored by Levitt and Wall Street groups is expected to pass later this month. The White House hasn't commented on either bill.
Levitt, who has been pushing for a broad easing of securities regulations, said yesterday that the Senate's Securities Investment Promotion Act would help eliminate duplication between state and SEC regulation.
"It's a very good bill," he said. "[It] would more clearly define the partnership of shared responsibilities between federal and state securities regulators."
The Senate legislation would assign to the SEC the regulation of mutual funds, large investment advisers and large companies' offerings, leaving the states with oversight of small advisers and small-company offerings.
The states' enforcement authority over broker-dealers would remain intact.
Levitt urged the panel to add a section in the House bill, which he also has endorsed, that would lift restrictions on borrowing by broker-dealers and provide access to potentially better interest rates. Brokers would not only be able to borrow from commercial banks, as they do now when trying to finance trades, but also from other broker-dealers, insurance companies and pension funds.
Levitt also lauded a House provision that would subject brokerage firms to uniform books and record-keeping requirements rather than differing standards among 50 states.
The bill was sponsored by New York Republican Alfonse D'Amato, Connecticut Democrat Christopher Dodd, Nevada Democrat Richard Bryan, Texas Republican Phil Gramm and Illinois Democrat Carol Moseley-Braun.
"The legislation dusts the cobwebs off laws that now have only antique value," said D'Amato, chairman of the Banking Committee.
The Senate bill would:
Give the SEC sole registration authority over securities offerings by companies listed on the New York Stock Exchange, the Nasdaq Stock Market and the American Stock Exchange.
Remove states' regulatory authority over mutual fund prospectuses and literature, leaving the SEC with full oversight of this area.
Remove states' regulatory authority over investment advisers who manage more than $25 million in assets. The SEC would regulate the larger investment advisers, while the states would continue to regulate those with less than $25 million.
Allow individuals with investments worth at least $5 million to participate in investment pools and hedge funds that now are limited to 100 members. These pools are exempt from registration and other disclosure requirements.
One part of the original draft was spun off and is to be introduced as a separate bill by D'Amato and Gramm. This legislation would reduce companies' regulatory filing fees while seeking to stabilize congressional appropriations for the SEC. The White House has objected to a similar House bill.
Pub Date: 6/06/96