[Federal Register Volume 60, Number 149 (Thursday, August 3, 1995)] [Rules and Regulations] [Pages 39643-39645] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 95-19160] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION 17 CFR PART 200 [Release No. 34-36031] Establishment of Office and Delegation of Authority to Administer Functions AGENCY: Securities and Exchange Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Securities and Exchange Commission (``Commission'') is amending its Rules of Organization and Program Management to establish the Office of Compliance Inspections and Examinations (``OCIE'') and to delegate authority to administer its functions to the Director of OCIE. This reorganization is designed to improve efficiency and allow for an enhanced integration of functions by combining the inspection and examination operations of the Division of Market Regulation and the Division of Investment Management. EFFECTIVE DATE: September 5, 1995. FOR FURTHER INFORMATION CONTACT: James A. Chan, 202/942-0742; Matthew O'Toole, 202/942-0694; or Philip H. Oettinger, 202/942-0784. SUPPLEMENTARY INFORMATION: On March 22, 1995, the Chairman of the Securities and Exchange Commission announced the creation of a new office, OCIE, that would combine the inspections and examinations functions of the Division of Market Regulation and the Division of Investment Management. The goal of OCIE is to increase the efficiency of the inspection and examination process by integrating the functions and personnel of both Divisions. The Commission today is adopting Rules 19c and 30-18 of its Rules of Organization and Program Management to delegate responsibility for the examination and inspection of brokers, dealers, transfer agents, self-regulatory organizations, investment companies, and investment advisers to OCIE, and to establish the administrative and substantive responsibilities of the Office. The Commission has determined that this addition to its rules relates solely to the agency's organization, procedure or practice. Therefore, the provisions of the Administrative Procedure Act (``APA'') regarding notice of proposed rulemaking and opportunities for public participation,1 are not applicable. Similarly, the provisions of the Regulatory Flexibility Act,2 which apply only when notice and comment are required by the APA or other law, are not applicable. \1\ 5 U.S.C. 553. \2\ 5 U.S.C. 601 et seq. --------------------------------------------------------------------------- In the rare instances involving close questions or cases that may be potentially controversial, the staff would either consult with the Commission, or seek Commission authorization before acting.3 The staff believes that its experience with the issues that may arise in this area [[Page 39644]] reduces the need for day-to-day review by the Commission. \3\ Rule 30-18(i) states that ``[n]otwithstanding anything in the foregoing [delegations], in any case in which the Director of the Office of Compliance Inspections and Examinations believes it appropriate, the Director may submit the matter to the Commission.'' --------------------------------------------------------------------------- Effects on Competition Section 23(a)(2) of the Securities Exchange Act of 1934 (``Exchange Act'') 4 requires the Commission, in adopting rules under the Exchange Act, to consider the anti-competitive effects of such rules, if any, and to balance any impact against the regulatory benefits gained in terms of furthering the purposes of the Exchange Act. The Commission has considered the additions to its rules announced in this release in light of the standards cited in section 23(a)(2) and believes that their adoption would not impose any burden on competition not necessary or appropriate in furtherance of the Exchange Act. \4\ 15 U.S.C. 78w(a)(2). --------------------------------------------------------------------------- Statutory Basis of Rule The amendments to the Commission's rules are adopted pursuant to the authorities set forth herein. List of Subjects in 17 CFR Part 200 Administrative practices and procedures, Authority delegations (Government agencies), Organizations and functions (Government agencies). For the reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulations is amended as follows: PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION REQUESTS Subpart A--Organization and Program Management 1. The authority citation for Part 200, Subpart A continues, in part, to read as follows: Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 79t, 77sss, 80a-37, 80b-11, unless otherwise noted. * * * * * 2. Section 200.19c is added to read as follows: Sec. 200.19c Director of the Office of Compliance Inspections and Examinations. The Director of the Office of Compliance Inspections and Examinations (``OCIE'') is responsible for the compliance inspections and examinations relating to the regulation of exchanges, national securities associations, clearing agencies, securities information processors, the Municipal Securities Rulemaking Board, brokers and dealers, municipal securities dealers, transfer agents, investment companies, and investment advisers, under Sections 15C(d)(1) and 17(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5(d)(1) and 78q(b)), Section 31(b) of the Investment Company Act of 1940 (15 U.S.C. 80a-30(b)), and Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4). 3. Section 200.30-18 is added to read as follows: Sec. 200.30-18 Delegation of authority to Director of the Office of Compliance Inspections and Examinations. Pursuant to the provisions of Pub. L. 100-181, 101 Stat. 1254, 1255 (15 U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission hereby delegates, until the Commission orders otherwise, the following authority to the Director of the Office of Compliance Inspections and Examinations (``OCIE'') to be performed by the Director or by such other person or persons as may be designated from time to time by the Chairman of the Commission: (a) To administer the provisions of Sec. 240.24c-1 of this chapter; provided that access to nonpublic information as defined in such Section shall be provided only with the concurrence of the head of the Commission division or office responsible for such information or the files containing such information. (b) Pursuant to the Securities Exchange Act of 1934 (``the Exchange Act'') (15 U.S.C. 78a, et seq.): (1) To grant and deny applications for confidential treatment filed pursuant to Section 24(b) of the Exchange Act (15 U.S.C. 78x(b)) and Rule 24b-2 thereunder (Sec. 240.24b-2 of this chapter); and (2) To revoke a grant of confidential treatment for any such application. (c) Pursuant to Section 17(b) of the Exchange Act (15 U.S.C. 78q(b)), prior to any examination of a registered clearing agency, registered transfer agent, or registered municipal securities dealer whose appropriate regulatory agency is not the Commission, to notify and consult with the appropriate regulatory agency for such clearing agency, transfer agent, or municipal securities dealer. (d) Pursuant to Section 17(c)(3) of the Exchange Act (15 U.S.C. 78q(c)(3)), in regard to clearing agencies, transfer agents and municipal securities dealers for which the Commission is not the appropriate regulatory agency: (1) To notify the appropriate regulatory agency of any examination conducted by the Commission of any such clearing agency, transfer agent, or municipal securities dealer; (2) To request from the appropriate regulatory agency a copy of the report of any examination of any such clearing agency, transfer agent, or municipal securities dealer conducted by such appropriate regulatory agency and any data supplied to it in connection with such examination; and (3) To furnish to the appropriate regulatory agency on request a copy of the report of any examination of any such clearing agency, transfer agent, or municipal securities dealer conducted by the Commission and any data supplied to it in connection with such examination. (e) To administer the provisions of Section 24(d) of the Exchange Act (15 U.S.C. 78x(d)). (f) To notify the Securities Investor Protection Corporation (``SIPC'') of facts concerning the activities and the operational and financial condition of any registered broker or dealer which is or appears to be a member of SIPC and which is in or approaching financial difficulty within the meaning of Section 5 of the Securities Investor Protection Act of 1970, as amended, 15 U.S.C. 78aa, et seq. (g) Pursuant to Section 15(b)(2)(C) of the Exchange Act (15 U.S.C. 78o(b)(2)(C)): (1) To delay until the second six month period from registration with the Commission the inspection of newly registered broker-dealers that have not commenced actual operations within six months of their registration with the Commission; and (2) To delay until the second six month period from registration with the Commission the inspection of newly registered broker-dealers to determine whether they are in compliance with applicable provisions of the Exchange Act and rules thereunder, other than financial responsibility rules. (h) With respect to the Investment Advisers Act of 1940 (``Advisers Act'') (15 U.S.C. 80b-1, et seq.): (1) Pursuant to Section 203(h) of the Advisers Act (15 U.S.C.80b- 3(h)), to authorize the issuance of orders cancelling registration of investment advisers, or applications for registration, if such investment advisers or applicants for registration are no longer in existence or are not engaged in business as investment advisers; and (2) Pursuant to Rule 204-2(j)(3)(ii) (Sec. 275.204-2(j)(3)(ii) of this chapter), to make written demands upon non-resident investment advisers subject to the provisions of such rule to furnish to the Commission true, correct, complete, and current copies of any or all books and records which such non-resident investment advisers are required to make, keep current, or preserve pursuant to any provision of any rule or regulation of the Commission adopted [[Page 39645]] under the Advisers Act, or any part of such books and records which may be specified in any such demand. (i) Notwithstanding anything in the foregoing, in any case in which the Director of the OCIE believes it appropriate, the Director may submit the matter to the Commission. By the Commission. Dated: July 28, 1995. Margaret H. McFarland, Deputy Secretary. [FR Doc. 95-19160 Filed 8-2-95; 8:45 am] BILLING CODE 8010-01-P