More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
The top lobbyist for the Investment Adviser Association said Friday that he believes House Financial Services Committee Chairman Spencer Bachus, R-Ala., will release a revised discussion draft of his bill calling for a self-regulatory organization (SRO) for advisors this year, in the second session of the 112th Congress.
“If Bachus is determined to push [his SRO] legislation, he can get it through his committee—maybe on a party-line vote—but he can get it to the floor of the House,” said Neil Simon, VP for government relations at IAA, during IAA’s annual compliance conference in Arlington, Va, just outside Washington.
While action on the floor of the House “is uncertain” as the SRO issue is not a high priority for lawmakers in this presidential election year, it’s “extremely likely there will be renewed interest [in the SRO issue] in the next Congress.”
In the Senate, while there’s been little interest on the SRO issue, Simon (left) predicts Sen. Jack Reed, D-R.I., chairman of the Senate Banking Committee’s Subcommittee on Securities, Insurance, and Investment, may likely hold a hearing on Section 914 of Dodd-Frank this year.
In its study mandated under Section 914 of Dodd-Frank, the SEC put forth three recommendations to help the agency better oversee advisors: impose user fees on registered investment advisors to help fund their exams; authorize one or more SROs to examine advisors; or authorize the Financial Industry Regulatory Authority to examine dual registrants for compliance with the Investment Adviser Act.
IAA has been a staunch opponent of the idea of creating an SRO for advisors, and has advocated for the user-fee route. Simon urged compliance officers attending the IAA event to educate lawmakers on Capitol Hill about the impact of an SRO for advisors, especially if that SRO turns out to be FINRA, which has been lobbying hard to be the SRO.
“FINRA has a significant in-house government relations staff that is focused on this [SRO] issue,” Simon said. “We have a significant long-term challenge. You need to stay tuned and get involved.”