A bill to amend the Securities Exchange Act of 1934 to regulate the transactions of members of national securities exchanges, to amend the Investment Company Act of 1940 and the Investment Advisers Act of 1940 to define certain duties of persons subject to such acts.

(LATEST SUMMARY)

Requires the Securities and Exchange Commission to prescribe such rules and regulations as it deems necessary or appropriate in the public interest or for the protection of investors, to regulate or prevent trading on national securities exchanges by members thereof from on or off the floor of the exchange, directly or indirectly for their own account or for the account of any affiliated person or, in the case of floor trading, for any discretionary account.

States that it shall be unlawful for a member to effect, whether as a broker or dealer, any transaction on such exchange with or for its own account, the account of any affiliated person of such member, or any managed institutional account.

Provides that such provisions shall not apply to transactions effected during the following periods: (1) prior to the last date on which any national securities exchange maintains or enforces any rule fixing rates of commission, or prior to April 30, 1976, whichever is later; (2) for a period of twelve months following above date, if the total value of all such transactions effected by such member during such period on all national securities exchanges of which it is a member does not exceed 20 percent of the total value of all transactions effected by such member during such period on all such exchanges; and (3) for a period of twelve months, following the period specified, if the total value of all such transactions effected by such member during such period on all national securities exchanges of which it is a member does not to exceed 10 percent of the total value of all transactions effected by such member during such period on all such exchanges.

Provides that it shall be unlawful for a member of a national securities exchange to utilize any scheme, device, arrangement, agreement, or understanding designed to circumvent or avoid, by reciprocal means or in any other manner, the policy and purposes of this Act or any rule or regulations the Commission may prescribe as necessary or appropriate to effect such policy and purposes.

States that it shall not be deemed unlawful or a breach of fiduciary duty for an investment adviser or other person to cause or induce a registered investment company to pay a commission to a broker for effecting a transaction, which is in excess of commissions then being charged by other brokers for effecting similar transactions, if: (1) such investment adviser or other person determines in good faith that research services provided by such broker for the benefit of such investment company justify such payment; and (2) such registered investment company makes appropriate disclosures to its security holders of its policies and practices in this regard, at such times and in such manner as the Commission shall prescribe by rules or regulations.

Provides that an investment advisor or a corporate trustee performing the functions of an investment advisor of a registered investment company, or an affiliated person of such investment advisor or corporate trustee, may receive any amount or benefit in connection with a sale of securities of, or a sale of any other interest in, an investment advisor or a corporate trustee performing the functions of an investment advisor which results in an assignment of an investment advisory contract with such company.

States that it shall be unlawful for the directors of a registered investment company, in connection with their evaluation of the terms of any contract whereby a person undertakes regularly to serve or act as investment advisor of such company, to take into account the purchase price or other consideration any person may have paid in connection with a transaction which results in the assignment of an investment advisory contract with such investment company.