Comment on Compliance Rule and SRO

April 18, 2003 Jonathan G. Katz, Secretary U.S. Securities and Exchange Commission 450 Fifth Street NW Washington DC 20549-0609 Re: File No. S7-03-03, Release Nos. IC-25925, IA-2107 Proposed Rule on Compliance Programs of Investment Companies and Investment Advisers Dear Mr. Katz: 1The North American Securities Administrators Association, Inc. (NASAA) appreciates the opportunity to comment on File No. S7-03-03, Release Nos. IC-25925 and IA-2107, proposed rule on “Compliance Programs of Investment Companies and Investment Advisers.” NASAA supports the objective of this proposal to require each investment company and investment adviser registered with the Commission to adopt and implement policies and procedures reasonably designed to prevent violations of securities laws, review those procedures regularly for their adequacy and effectiveness, and appoint a chief compliance officer. The rules as they apply to Commission-registered investment advisers are particularly significant because they further harmonize the requirements applicable to both federal and state-registered investment advisers. NASAA has for a number of years encouraged states to adopt a rule requiring “Written procedures to supervise the activities of employees and investment adviser representatives that are reasonably designed to 2achieve compliance with applicable securities law and regulations.” Another model rule declares it to be an unethical business practice ...