Technical Amendments Under the Investment Advisers Act of 1940

1See Rules Implementing Amendments to the Investment Advisers Act of 1940, Investment Advisers Act Release No. 1633 (May 15, 1997) [62 FR 28112 (May 22, 1997)], at section II.I.1. 2 17 CFR 275.204–1(d) (1995). 3 15 U.S.C. 80b–4. Section 204 requires SEC￾registered advisers generally to ‘‘make and keep for prescribed periods’’ certain records, to furnish copies of those records as required by Commission rule, and to ‘‘make and disseminate such reports as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.’’ Section 204 also grants Commission representatives authority to inspect the records of SEC-registered advisers. Id. 4 15 U.S.C. 80b–7. Section 207 makes it unlawful for any person willfully to make any untrue statement of a material fact or to omit to state any material fact required to be stated ‘‘in any registration application or report’’ filed with the Commission under section 203 or 204. Id. 5 17 CFR 270.202(a)(1)–1. Section 205(2) prohibited certain advisers from entering into, extending, or renewing any advisory contract that allowed an assignment of the advisory contract without consent of the party to the contract. See
Section 205 of the Advisers Act [15 U.S.C. 80b–5
(1985)].
6 100 Pub. L. 181, 111 Stat. 1249 (Dec. 4, 1987) (codified in scattered sections of 15 U.S.C.). The amendments to section 205 and other sections of the federal securities laws also were part of a bill to extend authorization of appropriations to the Commission. Id. Congress also amended section 205 in 1996, among other reasons, to grant the Commission the ability to exempt any person or transaction from section 205(a)(1). Pub. L. No. 104– 296, 110 Stat. 3416 (1996). SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 275 [Release No. IA–1780; File Nos. S7–31–96; S7–7–86] RIN 3235–AH59 Technical Amendments Under the Investment Advisers Act of 1940 AGENCY: Securities and Exchange Commission. ACTION: Corrections to final regulations. SUMMARY: The Commission is making technical corrections to rules 204–1 and 202(a)(1)–1 under the Investment Advisers Act of 1940 (‘‘Advisers Act’’). Rule 204–1 was published Thursday, May 22, 1997 (62 FR 28112), under the Investment Advisers Act of 1940 (‘‘Advisers Act’’). Rule 204–1 relates to the investment adviser application for registration with the Commission. Rule 202(a)(1)–1 was published on Wednesday, September 17, 1986 (51 FR 32906), under the Advisers Act. Rule 202(a)(1)–1 relates to certain transactions not deemed ‘‘assignments’’ for purposes of section 205 of the Advisers Act. EFFECTIVE DATE: The rule corrections will become effective on January 15, 1999. FOR FURTHER INFORMATION CONTACT:
Jeffrey O. Himstreet, Attorney, at (202) 942–0533, Task Force on Investment Adviser Regulation, Division of Investment Management, Securities and Exchange Commission, 450 Fifth Street, N.W., Mail Stop 5–6, Washington, D.C. 20549. SUPPLEMENTARY INFORMATION:
A. Rule 204–1
Rule 204–1 sets forth the circumstances that require the filing of an amended investment adviser registration form. Last year, the Commission adopted amendments to rule 204–1 to require that, among other things, an adviser file an amended
Schedule I annually within 90 days of
the end of the adviser’s fiscal year.1 In adopting that amendment and renumbering the provisions of the rule, paragraph (d) of rule 204–1 was inadvertently omitted from the rule. Prior to effectiveness of the implementing rules, rule 204–1(d) 2 stated that every document required to be filed with the Commission pursuant to rule 204–1 shall constitute a ‘‘report’’ for purposes of sections 204 3 and 207 4 of the Advisers Act. This correction restores the language contained originally in paragraph (d) by placing this language in new paragraph (c) of rule 204–1. B. Rule 202(a)(1)–1 Rule 202(a)(1)–1 provides that a transaction that does not result in a change of control or management of an adviser is ‘‘not an assignment for purposes of section 205(2) of the Act.’’ 5 In 1987, Congress amended and renumbered section 205 of the Advisers Act,6 and, as a result rule 202(a)(1)–1 contains an incorrect reference. The Commission is correcting this reference.
II. Certain Findings
Under the Administrative Procedure Act (‘‘APA’’), notice of proposed rulemaking is not required when the agency for good cause finds ‘‘that notice

Federal Register / Vol. 64, No. 10 / Friday, January 15, 1999 /Rules and Regulations 2567 7 5 U.S.C. 553(b). 8See Rules Implementing Amendments to the Investment Advisers Act of 1940, Investment Advisers Act Release No. 1601 (Dec. 20, 1996) [61 FR 68480 (Dec. 27, 1996)]. 9 5 U.S.C. 553(d). and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’’ 7 Because these technical amendments adopted today merely corrects the inadvertent omission of paragraph (d) of rule 204– 1, and make a technical, conforming amendment to rule 202(a)(1)–1, the Commission finds that publishing the amendment for comment is unnecessary. Regarding rule 204–1, when the Commission proposed amendments to rule 204–1 in 1996, it did not propose to delete paragraph (d) of rule 204–1.8 It thus appears unlikely that any commenter considered the deletion of paragraph (d) of rule 204–1 at any time during the comment period. Finally, if these changes to rule 204–1 were delayed to allow for notice and opportunity for comment, there may be confusion among advisers regarding whether an amendment to Form ADV would be considered a ‘‘report’’ for purposes of sections 204 and 207 of the Advisers Act. Publication of a substantive rule not less than 30 days before its effective date is required by the APA except as otherwise provided by the agency for good cause.9 For the same reasons as described above with respect to notice and opportunity for comment, the Commission finds that there is good cause for having these correcting amendments become effective on January 15, 1999. List of Subjects in 17 CFR Part 275 Reporting and recordkeeping requirements, Securities.
PART 275—RULES AND
REGULATIONS, INVESTMENT
ADVISERS ACT OF 1940
Accordingly, 17 CFR part 275 is corrected by making the following correcting amendments:

1. The authority citation for part 275
   continues to read in part as follows:
   Authority: 15 U.S.C. 80b–2(a)(17), 80b–3, 80b–4, 80b–6(4), 80b–6a, 80b–11, unless otherwise noted.

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§ 275.202 [Amended]
2. In § 275.202(a)(1)–1, following the
word ‘‘section,’’ the reference to ‘‘205(2)’’ is corrected to read ‘‘205(a)(2)’’.
3. In § 275.204–1, add paragraph (c) to
read as follows:
§ 275.204–1. Amendments to application for registration.

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(c) Every document required pursuant to this section shall constitute a ‘‘report’’ within the meaning of sections 204 and 207 of the Act [15 U.S.C. 80b– 4, 80b–7]. By the Commission. Dated: January 7, 1999. Margaret H. McFarland, Deputy Secretary. [FR Doc. 99–920 Filed 1–14–99; 8:45 am] BILLING CODE 8010–01–P