As part of its mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) is reviewing and analyzing the need for enhanced examination and enforcement resources for investment advisers.
In conducting this study (called for in Section 914 of the Dodd-Frank Act), the SEC is required to consider whether it should seek congressional authorization “to designate one or more self-regulatory organizations to augment the Commission’s efforts in overseeing investment advisers.”
The SEC must submit a report to Congress, including recommendations for regulatory or legislative action, by Jan. 21, 2011. To help prepare its study, the SEC has sought comments from the public and NASAA replied late last month.
I’d like to share with you the key points of our Nov. 22 comment letter, which urges the SEC to join state securities regulators in reaffirming our commitment to investors by recommending the retention of full jurisdiction over investment adviser registrants.
When it comes to the important subject of investment adviser regulation, there is no system better than governmental collaboration between the states and the SEC.
We also noted the proven track record of the states regarding investment adviser regulation, citing the investment adviser examination programs and resources that were documented in the comprehensive report that NASAA previously supplied the SEC in connection with its Section 913 fiduciary duty study.
Among other arguments, we pointed out that in light of the anticipated increase in budget and resources for the SEC and the concurrent decrease in investment adviser firms that will be registered with the agency, the question of designating one or more SROs over investment advisers to improve the frequency of examinations is premature for consideration.