Speech by SEC Staff:
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Thank you and good morning. It is a pleasure to be here with all of you today at this annual conference focusing on investment adviser compliance issues. Let me start by making the standard disclosure that the views that I express here today are my own and do not necessarily reflect the views of the Commission or my colleagues on the staff.
As I am sure you know, we are awaiting the naming of a new SEC Chairman by President Bush. A new SEC Chairman will shape the agenda for the regulation of the investment management industry in the months and years ahead. There will be plenty of issues awaiting our new Chairman in the investment management area.
Clearly, the investment management area is a tremendously important part of the Commission's responsibilities. At the end of last year, there were over 7,400 investment advisers registered with the Commission, with assets under management totaling $17.5 trillion. Over 50 million U.S. households, representing 51% of all households, today own mutual funds. Mutual funds, which are the largest segment of the investment company industry, have assets of over $6.6 trillion under management, surpassing the total financial assets of commercial banks, currently $6 trillion.
This morning I thought it would be interesting and useful for you if I discussed some of the challenging issues that we are dealing with as a result of legislative and technological developments, issues raised by products that are becoming an increasing segment of the investment management landscape, some compliance concerns in the investment adviser area and efforts we are pursuing to modernize the investment adviser regulatory framework.
The financial services industry, and the investment management industry in particular, are in the midst of a transformation. Today, change is accelerating at an extraordinary pace, spurred by a variety of forces. Legislative action has been a major driver of this revolution, with the enactment of financial services reform legislation (Gramm-Leach-Bliley), breaking down the barriers between the securities, banking and insurance industries; the Electronic Signatures in Global and National Commerce Act, which facilitates the ability of investment advisers to conduct virtually all aspects of their business electronically, including establishing and servicing client accounts, obtaining instructions, delivering documentation and maintaining records; and the Commodity Futures Modernization Act, which allows for the creation and sale of new securities futures products and provides new flexibility for investment advisers and commodity trading advisers with regard to giving advice regarding securities and commodities futures.
Increased competition, new products, as well as trends toward consolidation and globalization of the investment management industry are also forces driving the revolution. And of course, technology is another driver of change, with the Internet bringing new ways of offering and delivering financial services.
Let me first start with the changes that have been brought about by legislative action.
A. Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act ("GLB") contains a number of provisions that affect the investment management business. GLB amended various terms in both the Investment Company Act and the Investment Advisers Act, and gave the SEC new regulatory authority to enable the SEC to address issues presented by greater involvement of banks in the investment management business. For example, the Investment Advisers Act currently excludes banks from the definition of "investment adviser". GLB amended the definition of "investment adviser" to include a bank within the definition of investment adviser, if it acts or serves as an investment adviser to a registered investment company. A bank may register its entire corporate structure as an investment adviser or it may choose to register only a separate division or department of the bank. Consequently, for the first time the SEC will be able to inspect bank advisers to registered investment companies. Previously, the Commission had authority only to inspect the registered investment company's records.
The Investment Company Act definition of "bank" was amended in such a way that now thrift institutions can sponsor common and collective trust funds, exempt from registration under the Investment Company Act. However, the definition of bank in the Investment Advisers Act was not amended to exempt thrifts from the Advisers Act. We recognize that to place thrifts on a level playing field with banks regarding offering common and collective trust funds, it seems appropriate to use our rulemaking authority to exempt thrifts from the Advisers Act, to the extent that they engage in bona fide fiduciary activity. Consequently, we have been working on an exemptive rule for thrifts in this area.
Finally, GLB requires registered investment advisers to provide investors with an initial and annual notice of the adviser's privacy policies, and to provide clients with an opportunity to "opt out" or block an advisory firm from sharing "non-public personal financial information" with non-affiliated third parties. Moreover, advisers are required to adopt procedures reasonably designed to protect client records and information. I understand that yesterday you discussed Regulation S-P, which the Commission recently adopted to implement the privacy provisions of GLB. Since the Commission adopted Regulation S-P last year, investment advisers and investment companies have sought guidance in interpreting the regulation. To address many of the questions regarding Regulation S-P, the Division recently issued a set of questions and answers regarding Regulation S-P. These Q&As address the scope of the regulation, consumer/customer relationship issues, issues regarding delivery of the privacy notices, exceptions to the opt out provisions and the monitoring of third parties. One of our inspection priorities will be monitoring implementation of the privacy rules.
B. Commodity Futures Modernization Act
The Commodity Futures Modernization Act overhauls the Commodities Exchange Act, amends the federal securities laws, and reforms the country's commodities futures and derivatives laws. The legislation lifts the ban on single stock futures and narrow-based stock index futures in recognition of the fact that these instruments can have utility as portfolio management tools. The logic of the legislation is that "securities futures" are both futures contracts under the Commodity Exchange Act and securities under the federal securities laws. Consequently, Section 202 of the Investment Advisers Act was amended to add definitions of the term "securities future" and "narrow-based securities index" and to include the term "securities future" in the definition of the term "security". The provisions governing advisory activities relating to securities futures are especially significant because they introduce a very broad new "passport" approach to cross-product advisory activities that goes beyond advice concerning securities futures. The effect of the legislation is that persons providing advisory services concerning securities futures products are deemed investment advisers under the Advisers Act and commodity trading advisers under the Commodity Exchange Act. However, a new Section 203(b)(6) was added to the Advisers Act to exempt from registration any investment adviser that is regulated with the CFTC as a commodity trading adviser, whose business does not consist primarily of acting as an investment adviser and that does not act as an investment adviser to a registered investment company. Consequently, it will be necessary for the SEC to adopt a rule defining when a commodity trading adviser is "primarily acting" as an investment adviser as defined in the Advisers Act for purposes of this provision. The CFTC will have to engage in parallel rulemaking under the Commodity Exchange Act, since an exemption was added to the Commodity Exchange Act to exempt from registration any commodity trading adviser that is registered with the SEC as an investment adviser whose business does not consist primarily of acting as a commodity trading adviser and who does not act as a commodity trading adviser to a commodity pool. Thus, for the first time, the Advisers Act will permit CFTC registered commodity trading advisers to provide securities advice that is incidental and secondary to their futures advisory services without SEC registration. Also, an SEC registered investment adviser may provide futures trading advice that is incidental and secondary to its securities advice, without being subject to commodity trading adviser registration.
C. Electronic Signatures in Global and National Commerce Act
The Electronic Signature in Global and National Commerce Act (E-Sign) establishes for the first time national standards governing the validity of electronic signatures, contracts and records. Consistent with the purpose and goals of E-Sign, the Commission recently proposed rule amendments to expand the circumstances under which investment advisers may keep their records on electronic storage media. The Commission has permitted advisers to preserve records electronically since the mid-1980s. Our current rules, however, are limited to records that are created electronically; records that originate on paper are not covered. However, the Division has issued no-action letters that permit funds and advisers to store hard copy originals in an electronic format. The Commission's proposed amendments to the recordkeeping rules incorporate these no-action letters, eliminating many of the conditions reflected in those letters and therefore subject electronic records, regardless of how they originated, to uniform requirements. I would also point out that the standard for electronic recordkeeping that we proposed for advisers was different from rules we adopted for broker-dealers, which require brokerage records to be preserved in a non-rewritable, non-erasable ("WORM") format. Since most advisers would have to invest in new electronic recordkeeping technology to adopt the WORM format, we did not feel that the cost could be justified in light of the limited problems we have experienced with advisers altering stored records.
Under E-Sign, a firm's recordkeeping requirements may be met by retaining electronic records that accurately reflect the information set forth in the record, and remain accessible to all persons who are entitled to access, in a format that can be accurately reproduced. E-Sign allows us to interpret this provision pursuant to our authority under the Advisers Act. We anticipate that upon adoption of these amendments, we will interpret E-Sign as requiring advisers to comply with Rule 204-2 when they keep electronic records. As a result, compliance with Rule 204-2 would be the exclusive means by which advisers could comply with E-Sign's standards of accuracy and accessibility. We are moving quickly to analyze the comments on the rule proposal, as the Commission needs to act on the E-sign rules by the end of this month.
A. Internet Advisory Services
The Internet has spurred a flurry of new products and ways of offering and delivering investment advisory services. Indeed, it is probably an understatement to say that the Internet is a fundamental development affecting all aspects of the investment management business. Yet the explosive growth of the Internet and the movement of investors and advisers online does not mean that our statutes do not apply to products and services offered on the web; they apply irrespective of the medium used to deliver these services. Unfortunately, the expanded use of the Internet has been accompanied by a rise in Internet fraud. Consequently, the Commission has devoted significant resources to fighting Internet securities fraud and brought well over 200 actions since we began policing the Internet in 1995. The recently settled suit against Yun Soo Oh Park, better known as "Tokyo Joe", illustrates our concern.
Mr. Park, formerly the manager of a burrito restaurant, had become an online celebrity, first giving stock picks away for free in chat rooms and then selling them to subscribers to a web site he created. In the Complaint, the Commission alleged that Park defrauded his clients by engaging in illegal scalping (purchasing securities that he was recommending and planning to sell his shares into the buying flurry and price rise created by his recommendations), touting (or recommending a stock of a company without disclosing that he had received shares of stock in the company in exchange for his recommendation), and computing his advertised investment returns using winning trades that he did not actually make. Before submitting his settlement offer, Park moved to dismiss the Commission's complaint, arguing primarily that, since he dispensed his stock picks and investment advice over the Internet, he was not an "investment adviser" within the meaning of the Investment Advisers Act and that the antifraud provisions of that Act could not be constitutionally applied to him. The District Court denied Park's motion to dismiss in its entirety and held that the Commission's complaint sufficiently alleged that Park was an "investment adviser" under the Advisers Act and that Park was subject to that Act's antifraud provisions. In the settlement, Park was required to give up all illegal profits and pay a penalty of more than $400,000. This case is significant because of its precedential value, as it relates to the scope of the bona fide publisher exception in the Investment Advisers Act, but also because it sends a strong message that the Commission will not tolerate fraudulent conduct by those offering investment advice over the Internet.
Our Office of Compliance Inspections and Examinations is currently engaged in a review of Internet advisers, to better understand how these advisers operate and to monitor their compliance with the federal securities laws. Among other issues, we are examining whether these programs are providing individualized investment advice and ascertaining whether they are operating outside Rule 3a-4 under the Investment Company Act.
A number of these services provided over the Internet are designed to provide discretionary portfolio management services to a large number of clients, with relatively low minimum account size requirements. Under these programs, clients with similar investment objectives often receive the same investment advice and may hold substantially the same securities in their accounts. Issues are raised as to whether these programs meet the definition of investment company under the Investment Company Act and can be deemed to be issuing securities for purposes of the Securities Act of 1933.
Here is the analysis:
Section 3(a)(1) of the Investment Company Act defines the term investment company generally to include any "issuer" which is engaged primarily in the business of investing, reinvesting, or trading in securities. The definition of issuer includes any organized group of persons, whether or not incorporated, that issues or proposes to issue any security. An investment advisory program could be considered to be an issuer because the client accounts in the program, taken together, could be considered to be an organized group of persons. Investors in the program could be viewed as purchasing securities in the form of investment contracts. If an investment advisory program is deemed to be an "issuer," it also would be deemed to be an investment company because it is engaged in the business of investing, reinvesting, or trading in securities.
In 1997, the Commission adopted Rule 3a-4, a non-exclusive safe harbor from the definition of investment company for certain investment advisory programs. A note to the rule states that there is no registration requirement under the Securities Act with respect to investment advisory programs that are organized and operated in compliance with provisions of the rule.
The rule contains conditions designed to ensure that each client receives individualized treatment, including sufficient contact with the client to elicit the information necessary to provide the advice. The rule provides that: (1) each client's account must be managed on the basis of the client's financial situation and investment objectives; (ii) the sponsor of the program must obtain sufficient information from each client to be able to provide individualized investment advice to the client; (iii) the sponsor and portfolio manager must be reasonably available to consult with each client; (iv) each client must have the ability to impose reasonable restrictions on the management of the client's account; and (v) each client must retain certain indicia of ownership of all securities and funds in the account.
These conditions were designed to delineate a key difference between clients of investment advisers and investors in investment companies. A client of an investment adviser typically is provided with individualized advice that is based on the client's financial situation and investment objective. In contrast, the investment adviser of an investment company need not consider the individual needs of the company's shareholders when making investment decisions and thus has no obligation to ensure that each security purchased for the company's portfolio is an appropriate investment for each shareholder.
Since Rule 3a-4 is a nonexclusive safe harbor, an Internet advisory program that is not organized and operated in a manner consistent with the rule does not necessarily meet the Investment Company Act's definition of investment company. However, any program operating outside the requirements of Rule 3a-4 we will scrutinize carefully.
In 1995, the Commission brought an enforcement action, In the Matter of Clarke Lanzen Skalla Investment Firm, Inc., in which it was alleged that the pooling of nominally separate accounts constituted a defacto unregistered investment company, and that interests in the program were unregistered securities, offered and sold in violation of the Securities Act.
In this case, the investment adviser directed the allocation and investment of clients monies into no-load mutual funds. Once each client chose an investment strategy, the clients assets were invested identically with all the assets of other clients who had chosen the same strategy. When the adviser determined to change the mix of mutual funds in a given strategy that decision was made simultaneously for all clients invested in that strategy. Upon the opening of an account in this program, each client's assets were sent to a custodian which deposited the assets into a common, omnibus account. Clients were interviewed concerning their resources and investment objectives before opening an account. But there was no request for clients to contact the adviser to discuss changes in investment needs or goals. At the time each account was opened, clients were provided prospectuses of the mutual funds in which the clients would immediately invest. Thereafter, clients in the program did not receive prospectuses of the mutual funds in which the assets were subsequently invested, nor did they receive proxies or semi-annual reports from the funds. Under the program, clients could not pledge, hypothecate or unilaterally request the withdrawal or place restrictions on the mutual funds in their accounts.
The Commission concluded that since clients in the program did not receive individualized advisory services and did not retain sufficient indicia of rights traditionally associated with individual ownership of the securities purchased for their accounts, the pool of nominally separate client accounts in the program was an investment company and securities were issued in violation of the Securities Act.
Again, we are currently engaged in a review of advisory programs, particularly those offered over the Internet, to determine if any of these programs are essentially unregistered investment companies.
B. Web-Based Baskets of Securities
The development of so-called web-based baskets of securities has caused some concern in the mutual fund industry; with the Investment Company Institute asserting that certain of these products are also unregistered investment companies and prompting a rule making petition to regulate these products under the Investment Company Act. We are analyzing whether these products are appropriately regulated and how they fit within the federal securities laws. In the case of these products, the legal issue for the Commission to decide is whether the baskets of stocks offered to investors through these products constitute the creation of new securities and result in the creation of an investment company within the statutory definitions. Some of the providers of these products are broker-dealers and another issue is whether the nature of these products requires investment adviser registration or whether the advice provided is incidental to their brokerage services so that they qualify for the broker-dealer exclusion in the Advisers Act. We will move expeditiously to analyze the issues raised by these new products.
I thought I would also mention some compliance issues that are at the top of our priority list.
A. Hedge Funds
Later today there will be a focus on hedge funds and other private investment companies. Clearly there may be reasons to have a place in your firms for private investment funds. During the past year there has been significant growth in hedge funds. However, if one needs a reason to appreciate the regulatory framework governing the mutual fund industry, you need only look to the recent miniboom we have experienced in hedge fund fraud. The SEC has brought a number of cases this past year exposing schemes that siphoned hundreds of millions of dollars from investors in these largely unregulated funds. Some have mistakenly concluded that hedge funds are beyond our reach, because they are not subject to registration or reporting requirements. Nonetheless, hedge funds are subject to the antifraud provisions of the federal securities laws. While it is difficult to prevent those otherwise intent on engaging in fraudulent activity from doing so, I submit that the regulatory framework governing the mutual fund industry makes such types of fraud more difficult to commit and easier to detect.
We also have observed that more and more mutual fund managers and investment advisers are sponsoring and advising hedge funds and other alternative investments. Firms are doing this for a variety of reasons including the higher fees charged by hedge funds, to meet the needs of wealthy investors and to retain star portfolio managers. These new opportunities raise conflict of interest issues and the potential for abuse, which we are monitoring carefully in our inspection process. Management arrangements for hedge funds can be structured to enable portfolio managers to participate directly in the profits generated by the funds that they manage. The conflicts in these arrangements result from the differing fee structures of hedge funds and mutual funds and traditional private accounts, and the fact that greater profits can be earned by the adviser from the performance based compensation of a hedge fund. The differing fee structures create a real risk of favoring a hedge fund over a mutual fund or other accounts when making investment decisions. Conflicts can also arise when hedge fund effect short sales of securities, if such securities are held long by mutual funds or private accounts managed by the same advisory firm. Such trades could adversely affect long positions held by the other accounts. Or mutual fund or private account trades could be used to benefit a hedge fund, when the long positions of these accounts are sold after the hedge fund sells the same security short. We expect firms to have compliance procedures in place to address these concerns and we will look to examine these procedures in the inspection process.
B. Trade Allocation
Another area that we focus on in the inspection process is trade allocation practices. This is an area where there is a potential for clients to be harmed or defrauded if allocations are not done fairly or contrary to the clients' expectations. We have seen situations in which an adviser's clients have been disadvantaged when it disproportionately allocates hot initial public offerings to favored clients, without adequate disclosure of this practice. We have seen inequitable allocation of IPOs involving proprietary accounts; accounts that pay performance fees, accounts that have relatively poor performance and new investment companies (in order to boost performance to attract additional assets). We have also seen clients disadvantaged by advisers deciding to allocate a trade among its clients based on subsequent market movements. Trades were allocated to favored clients, if the price movement was favorable or if unfavorable, allocated to other less favored accounts. We have also seen instances of adviser's with inadequate policies to assure fair allocation of prices paid when allocating securities to accounts participating in bunched trades. Clearly, these are areas where advisers should adopt and implement strong trading and allocation policies.
C. Adviser Performance Advertising
The most common type of serious problem that we find in our examinations of investment advisers is fraudulent advertising, as well as the leading type of enforcement case that we bring against investment advisers. We carefully scrutinize an adviser's performance claims, calculations and supporting documentation because clients and potential clients may consider the adviser's past performance an important factor in selecting an adviser. Types of performance claims that we have found problematic include:
Finally, we see advisers that advertise performance that they can't support with documentation. In the Jennison letter, we notified advisers that advertise their performance that they can facilitate examinations by the SEC staff by maintaining records prepared by third parties (such as custodial or brokerage statements) that confirm the accuracy of client account statements and other performance related records or by using independent auditors to verify advertised performance. Unfortunately, in the advisers advertising area, we see too many issues, and we have had to make too many examples through enforcement actions.
We are currently engaged in revisiting our regulatory approach on many issues under the Advisers Act, in a comprehensive effort to modernize our regulations to respond to change affecting the investment advisory industry.
One of our more important priorities and a major step in modernizing the advisory regulatory regime is completion of our Investment Adviser Registration Depository (IARD) and revisions to Form ADV. IARD has completed four months of operations and, by all accounts, has been successful, with most advisers having completed the transition to the new system. We have had an extremely positive reaction to the relative ease with which the Form can be completed on-line. The system, which is designed as a one stop filing system for investment advisers, will eventually accommodate electronic filing of Part 2 of Form ADV and Form U-4s for investment adviser representatives. We are still analyzing the comments on Part 2 of Form ADV, and are working toward a recommendation to the Commission to finalize the Form. In the proposal to modify Part 2 of Form ADV, we suggested a requirement to update the brochure whenever information in the document became "materially inaccurate." We suggested this because we viewed the annual offer to deliver the brochure as ineffective in communicating important changes in an adviser's operations to its clients. We received some critical comments on this proposal. While we continue to believe that there is a better way than the annual offer of the brochure to communicate updated information to advisory clients, we are studying various alternatives suggested by commenters.
We also proposed that there be a brochure supplement for supervised persons who regularly communicate investment advice, formulate investment advice for, or make discretionary investment decisions on behalf of, clients. This supplement would describe the person's educational, business and disciplinary background. Some commenters indicated to us that the brochure supplements would provide clients very useful information about the individuals on whom they rely for investment advice. Others contended that, administratively, it would be too difficult to prepare supplements and keep them current for the range of supervised persons proposed to be covered. We think it is important that advisory clients receive background information on the persons for whom they rely on for investment advice, but we are studying ways to reduce the burden of providing this information as contemplated by the proposal. In any event, we are anxious to move forward with Part 2 of Form ADV, as we believe the plain English narrative brochure format will greatly benefit investment advisory clients.
B. Principal Transactions
We are also working on a rule proposal to present to the Commission that would allow certain types of principal transactions. Greater liquidity in certain types of securities and transparency in certain types of transactions minimize the dangers that principal transactions presented when the Advisers Act was written. In addition, the rapid pace of today's market transactions often renders the written consent provisions of the Advisers Act a de facto prohibition on such transactions. Crafting relief in this area is one of our top priorities.
C. Broker-Dealer Rule
Also on our priority list for investment adviser regulation is a recommendation to the Commission to adopt a final rule that would exempt certain broker-dealers from the definition of "investment adviser" under the Advisers Act. Our proposal seeks, through a functional approach, to identify characteristics that can be appropriately used to distinguish the services advisers provide from the advice inherent in the provision of brokerage services. The proposed rule creates a distinction between brokerage accounts and advisory accounts based on the nature of the services provided, rather than the form of compensation. Specifically, it provides that if the broker does not have discretionary authority to trade securities in an account, the Advisers Act generally would not apply to that account. If the broker does have discretionary authority and charges an asset-based fee, the account would not qualify for the exemption from the Advisers Act.
The proposed rule would also require that all advertisements for the accounts and all agreements and contracts governing the operation of the accounts contain a prominent statement that the accounts are brokerage accounts. We expect that our recommendation to the Commission for a final rule will include more specific disclosure regarding the nature of the accounts.
One thorny issue that the rule proposal raised related to the regulatory treatment of commission-based, discretionary brokerage accounts. Currently full-service brokerage firms may charge commissions for their discretionary brokerage accounts, and not be subject to the Advisers Act. The proposed rule does not alter that fact. But because the rule proposes using discretion as the indicia for determining whether asset-based accounts are subject to the Advisers Act, the proposal creates an anomaly: a broker can exercise discretion over an account and not be subject to the Advisers Act if it charges commissions, but not if it charges an asset-based fee. This does not make sense to me and we are considering ways to eliminate this anomaly.
D. Advertising Rule
The current rule governing adviser advertising - Rule 206(4)-1, which was adopted in 1962, contains a specific "laundry list" of practices that are defined to be per se fraudulent and therefore are prohibited. This list includes testimonials and partial lists of recommendations. Rather than making certain practices per se fraudulent, I would like to see the rule revised to mirror a general antifraud standard like that set forth in Rule 156 under the Securities Act of 1933, governing investment company advertising. The revised rule could prohibit advisers from using advertising that is materially false or misleading and provide general guidance on factors and kinds of information and statements that may make an advertisement false or misleading, depending on the context in which it is used and how it is presented.
I believe such an approach could improve communications between advisers and clients. Such an approach also would eliminate inconsistent regulatory treatment of advertising practices by investment advisers as compared to other providers of financial services, such as investment companies and broker-dealers.
We also want to explore the issue of performance reporting. We know that many firms use the voluntary guidelines adopted by the Association for Investment Management and Research ("AIMR") in computing and presenting performance, but we want to determine if there is a need for additional guidance regarding advisers' advertising of performance information and a need to establish baseline standards for adviser performance reporting. Perhaps additional guidance is necessary in this area since, as I mentioned earlier, fraudulent performance claims are the most common type of serious problems we find in our examination of advisers.
E. Books and Records Rule
In addition to the electronic storage and maintenance of records, our rules regarding advisers' books and records are in need of modernization to require the maintenance of only the records necessary for the Commission to carry out is oversight responsibilities. Updating these rules must be a priority for us.
F. Custody Rule
Rule 206(4)-2, the Custody Rule under the Advisers Act, needs to be substantially revised. Quite frankly, one cannot easily determine when a firm has custody from reading the language of the rule. We want to explore ways to simplify the rule, clearly define when an adviser is deemed to have custody and to set forth workable standards that provide meaningful protections for advisory clients.
G. Other Issues
We are also giving active consideration to the following under the Investment Advisers Act:
We will examine these and other issues as we seek to modernize and improve the investment adviser regulatory regime.
Finally, I wanted to mention that we are focusing on how we can do a better job in the Division of Investment Management. Because of the turnover rate at the SEC, it can be a real challenge in getting the Division's work done. While we have a dedicated, hard-working staff, we should seek ways to be more responsive and more effective in carrying out our responsibilities. I have asked the Division's Deputy Director, Cindy Fornelli, to review our systems and procedures and to make recommendations as to how we can improve the way in which we service registrants, respond to investors and fulfill our responsibilities. The goal will be to identify steps we can take to improve the quality and efficiency of our operations. This review will be comprehensive, covering how we process requests for no-action and interpretive letters, exemptive applications, and disclosure filings, and how we proceed with rule making. We welcome your thoughts and suggestions as to how we can improve our operations.
I hope this discussion of some of the issues that we are focusing on has been useful to you. We welcome your input and ideas as we work through the challenges that lie ahead. Thank you.
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