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.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
Planning groups are at odds over a bill, H.R. 1062, that passed the House on Friday requiring the Securities and Exchange Commission to conduct more rigourous cost-benefit analyses prior to any rulemaking.
The bill—the SEC Regulatory Accountability Act, which was written by Rep. Scott Garret, R-N.J., and codifies the cost-benefit analysis requirements of the president’s Executive Order No. 13563—passed the House by a 235-161 vote.
The bill’s chances of passing in the Senate, however, are slim.
In order to implement the bill, the SEC’s operating costs would spike by $23 million over five years, according to the Congressional Budget Office.
However, Dale Brown, president and CEO of the Financial Services Institute, says that the bill has “the potential to save Main Street investors and financial services providers significantly more," as "unclear and inefficient regulations drive up compliance costs and increase litigation expenses for those serving the financial and securities industry, and this in turn raises the cost of investment and retirement planning for investors.”
But the Financial Planning Coalition said in a statement Friday that the legislation would effectively create “additional obstacles to SEC rulemaking,” specifically the SEC’s rule to put brokers under a fiduciary mandate. The coalition argues that a fiduciary rule would “help restore and strengthen public trust in financial advisers—both investment advisers and broker-dealers.”
SEC Chairwoman Mary Jo White told members of the House Financial Services Committee on Thursday that while she’s “a firm supporter of economic analysis," she has "concerns about this bill.” Not only would it add additional requirements but it would put the agency’s rules “under constant challenge.”
Twelve public interest groups—including the North American Securities Administrators Association, CalPERS and the Consumer Federation of America—issued a joint letter Thursday saying the bill subjects the SEC to “massive new cost-benefit analysis requirements (on top of the plentiful requirements that already apply),” and that HR 1062 “would invite a flood of litigation and effectively give Wall Street veto power over rules it dislikes.”
Read FSI Backs Bill Requiring SEC Cost-Benefit Analysis on AdvisorOne.