SEC Regulation of Foreign-Domiciled Investment Advisers: A Study of the Policy Vision Inspiring the Unibanco Letter

Abstract

This Article focuses on the policy vision that inspired the Unibanco letter, and continues to be reflected in its progeny. The Unibanco letter, this Article suggests, was motivated by a multi-faceted policy vision that appeared unevenly in the public record. Some of its elements were made explicit, some appeared only as tantalizing hints that require further explanation to be understood, and some were practically invisible. To explore the SEC's development of this policy vision this Article relies on interviews with the leading SEC participants. With interviews it has been possible to more fully identify the pressures working on the agency and the vision that inspired its response. Beyond the worthy goal of adding to our understanding of this important area of international regulation, understanding the policy vision inspiring the Unibanco letter will enhance our ability to interpret and apply it, and its progeny, as developments in the wider world continue to unfold. After this Introduction, Part I of this Article summarizes the Act, the SEC's regulatory regime for advisers, and how the agency established an early border regime that was consistent with the primary contemporary mode of communication, i.e., the mails. Part II discusses the challenges to this regime that arose in the 1980s, in the wake of new technologies and internationalization, the efforts of the SEC staff to respond through an informal staff position known as the Richard Ellis letter, and the pressures that built against that position through the need for foreign enforcement cooperation, the threat of foreign multi-lateral intervention during the Uruguay Round of trade negotiations, and business pressures from foreign advisers that wished to enter the U.S. market. Part III discusses the critical moment in this narrative, when the SEC staff reconsidered its policy and issued the Unibanco letter. Part IV discusses the continuing relevance of the policy vision of the Unibanco letter, up to and including the new regulatory information issued in March 2017. The Article concludes that the Unibanco letter and its progeny should be understood and applied in light of the policy vision that inspired the agency action.