In general. Each registered investment company,
and each underwriter, broker, dealer, or investment adviser that is a
majority-owned subsidiary of such a company, shall maintain and preserve
such records (as defined in section 3(a)(37) of the Securities Exchange
Act of 1934 [15 USCS § 78c(a)(37)]) for such period or periods as the
Commission, by rules and regulations, may prescribe as necessary or appropriate
in the public interest or for the protection of investors. Each investment
adviser that is not a majority-owned subsidiary of, and each depositor
of any registered investment company, and each principal underwriter for
any registered investment company other than a closed-end company, shall
maintain and preserve for such period or periods as the Commission shall
prescribe by rules and regulations, such records as are necessary or appropriate
to record such person's transactions with such registered company.
Minimizing compliance burden. In exercising
its authority under this subsection, the Commission shall take such steps
as it deems necessary or appropriate, consistent with the public interest
and for the protection of investors, to avoid unnecessary recordkeeping
by, and minimize the compliance burden on, persons required to maintain
records under this subsection (hereafter in this section referred to as
"subject persons"). Such steps shall include considering, and requesting
public comment on--
feasible alternatives that minimize
the recordkeeping burdens on subject persons;
the necessity of such records in view
of the public benefits derived from the independent scrutiny of such
records through Commission examination;
the costs associated with maintaining
the information that would be required to be reflected in such records;
the effects that a proposed recordkeeping
requirement would have on internal compliance policies and procedures.
Examinations of records.
In general. All records required to be maintained
and preserved in accordance with subsection (a) shall be subject at any
time and from time to time to such reasonable periodic, special, and other
examinations by the Commission, or any member or representative thereof,
as the Commission may prescribe.
Availability. For purposes of examinations
referred to in paragraph (1), any subject person shall make available
to the Commission or its representatives any copies or extracts from such
records as may be prepared without undue effort, expense, or delay as
the Commission or its representatives may reasonably request.
Commission action. The Commission shall exercise
its authority under this subsection with due regard for the benefits of
internal compliance policies and procedures and the effective implementation
and operation thereof.
Limitations on disclosure by Commission. Notwithstanding
any other provision of law, the Commission shall not be compelled to disclose
any internal compliance or audit records, or information contained therein,
provided to the Commission under this section. Nothing in this subsection
shall authorize the Commission to withhold information from the Congress or
prevent the Commission from complying with a request for information from
any other Federal department or agency requesting the information for purposes
within the scope of the jurisdiction of that department or agency, or complying
with an order of a court of the United States in an action brought by the
United States or the Commission. For purposes of section 552 of title 5, United
States Code, this section shall be considered a statute described in subsection
(b)(3)(B) of such section 552.
Definitions. For purposes of this section--
the term "internal compliance policies and
procedures" means policies and procedures designed by subject persons
to promote compliance with the Federal securities laws; and
the term "internal compliance and audit record"
means any record prepared by a subject person in accordance with internal
compliance policies and procedures.
Regulatory authority. The Commission may, in the
public interest or for the protection of investors, issue rules and regulations
providing for a reasonable degree of uniformity in the accounting policies
and principles to be followed by registered investment companies in maintaining
their accounting records and in preparing financial statements required pursuant
to this title.
Exemption authority. The Commission, upon application
made by any registered investment company, may by order exempt a specific
transaction or transactions from the provisions of any rule or regulation
made pursuant to subsection (e), if the Commission finds that such rule or
regulation should not reasonably be applied to such transaction.
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