Adviser Ethics Comment - March 04

March 15, 2004 Jonathan Katz, Secretary Via e-mail to rule-comments@sec.gov Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549-0609 Re: File No. S7-04-04; Release Nos. IA-2209, IC-26337 Investment Adviser Codes of Ethics Dear Mr. Katz: 1 The North American Securities Administrators Association, Inc. (NASAA) is pleased to submit comments regarding the above-referenced rulemaking. We appreciate the opportunity to comment on the Commission’s request for ideas on new rule 204A-1, and related rule amendments, proposed under the Investment Advisers Act of 1940, requiring advisers to adopt and enforce a code of ethics applicable to supervised persons. NASAA supports the Commission’s desire to keep advisers from committing unethical business practices and hold them accountable for violations of their fiduciary obligations to their clients. NASAA supports advisers having a written Code of Ethics as a best practice. However, we do not believe that a regulatory mandate of a written Code of Ethics is the most appropriate method for ensuring compliance with the existing fiduciary duties of investment advisers. NASAA also fears that advisers may characterize the Code of Ethics as an official imprimatur from regulators that a firm has been recognized as meeting a higher standard of conduct. By itself, the creation of a Code of Ethics amounts to a cosmetic method of addressing the real problem: conflicts of ...