As House Financial Services Chairman Spencer Bachus, R-Ala., confirmed that his bill calling for a self-regulatory organization (SRO) to oversee advisors, H.R. 4624, would not be marked up this month, new hopes are emerging that other options like user fees and more funding for the Securities and Exchange Commission (SEC) still have a chance to become reality.
The Senate Appropriations Committee voted 16 to 14 on a party-line vote to report its appropriations bill to the full Senate, subject to amendment, according to a spokesman for Sen. Dick Durbin, D-Ill., the second highest ranking Democrat in the Senate, who chairs the appropriations subcommittee. The bill includes a boost in funding for the SEC.
Bachus’ recently announced committee schedule for the remainder of June omitted a markup of the bill that industry officials expected to take place late in the month. These same officials predicted after a June 6 hearing on H.R. 4624, the Investment Adviser Oversight Act of 2012, that the date would be pushed back.
However, Dan Barry, managing director of government relations and public policy for the Financial Planning Association (FPA), says Bachus’ bill could come up for a vote in July. “The expectation is still that Chairman Bachus intends to move the bill forward through committee,” Barry told AdvisorOne on Thursday. “The timing depends on how quickly they can address some of the issues that have been raised through amendments.”
For instance, Barry said, “how state [registered] advisors are dealt with under the bill is one of the most contentious and challenging issues.”
Duane Thompson, senior policy analyst with fi360, agrees that Bachus’ bill “will pass [the] committee, just later than expected and with some additional tweaks. Possibly a couple no votes by Republicans on final passage from committee.”
At the June 6 hearing, Rep. Maxine Waters, D-Calif., announced that she plans to introduce legislation to allow the SEC to collect user fees to fund advisor exams. The yet-to-be-named bill would allow the SEC to determine the amount of the user fees based on an advisor’s size—including assets under management and the number and types of clients, as well as the advisor’s risk characteristics.
While the best approach to improving advisor oversight is to “build on the current SEC program,” says Barry of FPA, “paying a user fee to the SEC is a better concept than paying it to an SRO.”