Industry trade groups, consumer advocates and advisor partners are gearing up for the House Financial Services Committee’s hearing Wednesday on Rep. Spencer Bachus’ bill calling for a self-regulatory organization (SRO) to oversee advisors.
Their collective rallying cry: an SRO isn’t needed—particularly if that SRO is the Financial Industry Regulatory Authority (FINRA). What to do instead? Fund the Securities and Exchange Commission (SEC) so that it can conduct more frequent advisor exams.
But FINRA will have a chance to defend itself as an official from the regulator is slated to testify. Others testifying include David Tittsworth, executive director of the Investment Adviser Association (IAA), as well as officials from the Financial Services Institute (FSI), the Securities Industry and Financial Markets Association (SIFMA), the North American Securities Administrators Association (NASAA), and the National Association of Insurance and Financial Advisors (NAIFA).
Charles Schwab and TD Ameritrade Institutional were both encouraging advisors who custody assets with the firms to “get involved” and write their representatives telling them why an SRO for advisors is a bad idea.
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Bernie Clark, executive vice president and head of Schwab Advisor Services, sent a letter May 30 to all of the principals at each of the 7,000 firms that custody at Schwab, telling them that he would be joining the IAA’s annual lobbying day Thursday on Capitol Hill.
This year’s focus, says Tittsworth: “voicing opposition to the Bachus SRO bill,” the Investment Advisor Oversight Act of 2012, H.R. 4624.
Clark asked advisors in his letter to write, e-mail or tweet their representatives about the negative effects of an SRO.
The “resolution” of whether there should be an SRO for advisors “could have a substantial impact on your business,” Clark said in the letter. “Most notably, Bachus’ proposed legislation—if passed—would subject advisors to oversight by an SRO and regulation very similar to that which broker-dealers face.”