More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
The House Appropriations Committee plans to mark up on Wednesday its fiscal year 2015 Financial Services and General Government Appropriations Bill, which includes President Barack Obama’s 2015 budget proposal giving the Securities and Exchange Commission $1.7 billion, a 26% boost from the agency’s 2014 enacted level.
Obama’s budget would allow the agency to add 316 staffers to the agency’s Office of Compliance Inspections and Examinations, with 240 of those examiners devoted solely to overseeing advisors.
SEC Chairwoman Mary Jo White told lawmakers in late April that the SEC’s 2015 budget request “would permit the SEC to increase its examination coverage of investment advisors, who everyday investors are increasingly turning to for investment assistance with retirement and family needs.”
White gave the lawmakers stark statistics about the limited number of examiners the agency has to oversee advisors.
White underscored the importance of boosting the number of advisor exams, stating that from fiscal 2001 to fiscal 2014, advisors’ assets under management jumped almost 200% to $55 trillion. In 2004, she said, the SEC “had 19 examiners per trillion dollars in investment advisor assets under management. Today, we have only eight.”
Advisors lobbied Congress on Thursday to support the Investment Adviser Examination Improvement Act of 2013, which would allow the SEC to collect fees from advisor to fund their exams. Rep. Maxine Waters, D-Calif., sponsored the bill.
The “great thing” about the user fees bill, according to Skip Schweiss, president of TD Ameritrade Trust Co. and managing director of advisor advocacy and industry affairs at TD Ameritrade Institutional, is that the fees that would be assessed do not end up in the “general pot” at the SEC. Fees that advisors would pay “have to be earmarked to examine advisory firms.” The Waters bill “was well written in that regard,” he told ThinkAdvisor.
Neil Simon, vice president of government affairs for the Investment Adviser Association, told ThinkAdvisor on Thursday that while IAA members voiced their support for Waters’ user fees bill, “action on the bill in the House does not look likely.” That’s why IAA and a fairly broad coalition of advisory groups, Simon said, still remain focused on getting a bipartisan bill that mirrors Waters’ bill introduced in the Senate.
“The best opportunity to get [a user fees bill] enacted into law is a bipartisan bill in the Senate,” Simon said.
White has called SEC Commissioner Daniel Gallagher’s recently floated idea to require advisors to get third-party exams “creative,” but David Tittsworth, president and CEO of IAA, recently told Gallagher and White that while the idea is “worthy of debate,” IAA would prefer that the SEC shift its current resources to boost advisor exams.
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