SEC to Demand Year-2000 Plans of Investment Firms

Intensifying its year-2000 focus, the Securities and Exchange Commission plans to require investment management companies to inform the agency of their compliance plans, a senior official said Monday.

Within 60 days the SEC will ask for progress reports on year-2000 technology issues as of a particular date, Barry P. Barbash, director of the SEC's investment management division, told a mutual fund industry conference. He called the rule an analog to a recent SEC letter urging investment managers to address year-2000 concerns.

"Many fund groups are focusing their attention on the issue," Mr. Barbash said. "We are about ready to take another step."

Speaking to a conference here on the globalization of mutual funds, Mr. Barbash said the year 2000 presents different issues for investment managers than for broker-dealers or banks, but did not elaborate. Though much attention has been paid to those two groups, the SEC's new rule would be tailored to investment companies, he said.

Taking technology as a theme for his keynote speech, Mr. Barbash also said the SEC plans to suspend a rule it adopted last year requiring fund directors to determine the safety and soundness of their foreign custodians and the mandatory depositories these custodians use.

"The complaint was that our rule is unrealistic," Mr. Barbash said. Custody banks "couldn't come up with the information to make a finding if their mandatory depositories are safe. In very short time, we will suspend operation of the foreign custody rule."

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