July 27, 2012
--- The Financial Planning Coalition welcomed the Investment Adviser Examination and Improvement Act of 2012, while the Bachus self-regulatory organization (SRO) bill got shelved. ---
The Adviser Examination
Act—introduced by Rep. Maxine Waters (D-Calif.), and co-sponsored by House
Financial Services Committee Ranking Member Barney Frank (D-Mass.) and Rep.
Michael Capuano (D-Mass.)—would authorize the Securities and Exchange
Commission (SEC) to collect user fees to increase examinations of registered
investment advisers (RIAs).
By
comparison, the Investment Adviser Oversight Act of 2012—introduced by
Committee Chairman Spencer Bachus (R-Ala.) and Rep. Carolyn McCarthy (D-N.Y.),
would authorize one or more SROs. (See “Bipartisan
Bill Seeks Expanded Oversight of Advisers.”)
However, with the financial
adviser industry so sharply divided over whether to create a new SRO, or rely
on FINRA or the SEC, the Bachus bill has reportedly been shelved.
On the one hand, the Investment
Adviser Association and the Financial Planning Coalition (FPC) support the
Waters bill. “Creating a new SRO is not the right solution,” FPC said. “The
burden of excessive regulation and cost would fall unfairly on small business
owners, while many larger firms would be exempt and would go unaffected.”
On the other hand, the
Financial Services Institute (FSI) is supporting the Bachus bill. Thus, a
consensus is nowhere near at hand. “We’ve said from day one that this was a
multi-year process,” said FSI spokesman Chris Paulitz. “What is encouraging
with the release of Rep. Waters’ bill, is that now everyone agrees the status
quo is not acceptable, and we must increase examination to protect investors.”
Lee Barney