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March 15, 2012 at 05:53 AM
Two “interesting” items in the news recently, both with implications for the broker/advisor reregulation currently underway in Washington, have left me feeling as if I’ve entered into Bizarro World. The first involves the SEC continuing its “crackdown” on RIAs; the second is House Republicans under Rep. Spencer Bachus, R-Ala., withholding additional funding for the SEC. A skeptical mind might even see a connection between them.
As it might possibly be the cause of bizarro issue #2, today lets tackle the House Financial Services Committee’s rejection of the Obama Administration’s proposal to increase the SEC’s funding next year (as reported by AdvisorOne’s Melanie Waddell on March 7). The Committee turned down an amendment by Rep. Barney Frank, D-Mass., to increase the SEC’s budget some 18.5% (to $1.56 billion) largely along party lines. No, that’s not the weird part; it gets worse.
Rather than arguing against such a sizeable increase at a time when the Federal Government is hemorrhaging red ink in increasing volumes (which at least would have been understandable), it seems that the Republican lawmakers’ penny-pinching was intended to punish the SEC for its failure to prevent recent financial scandals (including Bernie Madoff) and for wasting its time on “non-mandatory rulemakings, such as the imposition of a fiduciary standard of care for broker-dealers,” pointing out that the Commission had failed to “adequately justify” its recommendations on the issue.
Where does one even begin to deconstruct this argument?
Perhaps I missed something, but didn’t Section 913 of the Dodd Frank Act specifically require the SEC to submit to Congress a study of the issues involved in a broker fiduciary standard, along with its recommendations for implementation of such a standard?
