STATE BOARD OF ADMINISTRATION
1801 HERMITAGE BOULEVARD
ROBERT F. MILLIGAN
June 13, 2000
Jonathan G. Katz, Secretary
United States Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549-0609
Re: File No. S7-10-00 - Proposed Amendments to Form ADV & Electronic Filing
Dear Mr. Katz:
The Florida State Board of Administration (SBA) appreciates the opportunity to comment on the SEC's proposed changes to Form ADV and creation of an electronic Investment Adviser Registration Depository (IARD). As the investment manager for the Florida Retirement System Trust Fund (FRS) and its 800,000 participants, we welcome the SEC's efforts to increase disclosures and modernize the investment advisor registration system. The SBA strongly believes that investor confidence in the markets is closely tied to an investor's receipt of meaningful information upon which to make informed decisions.
Specific Comments in Support of Proposal:
- The SBA especially favors efforts to require investment advisors to disclose proxy voting policies, practices and procedures. There are surely cases in which investment advisors have conflicts-of-interests when it comes to their proxy voting decisions. As detailed in Footnote 193 of the proposal, the Department of Labor's Interpretive Bulletin 92-4 requires ERISA pension plans to vote all proxies in line with written policies and maintain records of those votes. Other institutional investors, specifically mutual funds, should also be required to disclose their proxy voting policies, practices and procedures. Incorporating this information, as a segment of an electronic version of Form ADV will undoubtedly improve the quality of information advisers must provide to their existing and prospective clients. Proxy voting practices will allow investors to determine how their interests in voting decisions are being accomplished.
- The SBA fully supports the creation of an electronic database-called the Investment Advisor Registration Depository. Through electronic access, investors will be able to analyze relevant information about their investment advisors and it will make advisor registration more streamlined and encourage uniform disclosures.
- The SBA fully supports the requirement of a "plain-English" brochure to be published by investment firms and updated at least annually. We especially favor the disclosure of personal trading practices, soft dollar-commission recapture-directed brokerage practices and historical disciplinary information on firm personnel. We recommend that a discussion of the firm's code-of-ethics be included in its brochure. In addition, we recommend that the SEC reconsider the 10-year time limit on disciplinary activity disclosures. The SBA believes that any designated time limit may conceal information that investors would find relevant in their selection and analysis of investment advisors. Therefore, we recommend the time limit be abolished.
The SBA fully supports the SEC's proposals to Form ADV and establishment of Electronic Filing within the `IARD' system and we thank you for the opportunity to comment on the proposals.
All of the proposed revisions will serve to enhance the Form and make it a more useful document. Please do not hesitate to contact me directly if you have any questions or would like to discuss the above comments.