Podcast Center
Video Center
Webcasts
Resource Center
Events
May 30, 2012 at 09:34 AM
A non-partisan government reform group is assailing a House legislative proposal that would shift oversight of investment advisors to a self-regulatory organization, most likely the Financial Industry Regulatory Authority.
In a letter to the chairman and ranking minority member of the House Financial Services Committee, the Project On Government Oversight (POGO) raised “serious concerns” about H.R. 4624, a bill that would authorize one or more SROs to oversee the investment advisor industry.
The legislation is sponsored by Rep. Spencer Bachus, R-Ala., chairman of the House Financial Services Committee, and Rep. Carolyn McCarthy, D-N.Y. The FSC will hold a hearing on the bill June 6, and a markup of the legislation is tentatively scheduled for June 28.
But POGO said that, like several other groups, it opposes the legislation, especially because the most likely SRO to which oversight of investment advisors would be shifted from the Securities and Exchange Commission would be FINRA.
In a letter to Bachus, and Rep. Barney Frank, D-Mass., the ranking minority member of the House FSC, POGO officials said that FINRA’s regulatory effectiveness is undermined “by its inherent conflicts of interest, its lack of transparency and accountability, its lobbying expenditures, and its executive compensation packages, among other issues.
The letter also cited a recent analysis by the Boston Consulting Group, which, POGO officials said, “underscored the costs associated with authorizing FINRA or a new SRO to regulate investment advisers.”
The letter was signed by Angela Canterbury, POGO director of public policy, and Michael Smallberg, investigator.
The letter suggests that, instead of delegating additional authority to private self-regulatory groups, Congress should reduce the SEC’s current reliance on FINRA and other SROs, work to improve FINRA’s transparency and accountability policies, and provide sufficient funding to the SEC to ensure that it is able to carry out its important regulatory duties on its own.
