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July 11, 2014 at 11:41 AM
Citing the Securities and Exchange Commission’s “abysmal examination record” on investment advisors, Rep. Maxine Waters, D-California, ranking member on the House Financial Services Committee, on Friday called on the committee’s chairman, Rep. Jeb Hensarling, R-Texas, to convene a full committee hearing to consider “various legislative proposals” to boost the number of advisor exams.
One of the proposals that Waters said should be considered is H.R. 1627, the Investment Adviser Examination Improvement Act, authored by Waters and Rep. John Delaney, D-Maryland.
Waters’ bill, which has been co-sponsored by 17 of the 28 Democrats on the committee and would authorize the SEC to collect user fees from advisors to improve examination frequency, has been languishing in the House since she reintroduced it last April.
Waters noted that her bill has been endorsed by the SEC’s Investor Advisory Committee, the advisor community and investor advocates.
In her letter, Waters wrote that “even though the SEC is responsible for overseeing 11,000 advisors that manage nearly $50 trillion in assets, the agency examines these advisors only once every 12 years, and 40% of advisers have never been examined.”
She continued: “To put this in perspective, brokers and dealers registered with the Financial Industry Regulatory Authority (FINRA) are examined every other year. Though the vast majority of investment advisors operate with integrity, Congress, the advisor community, investor advocates and the SEC all agree that the SEC’s levels of examination need to improve to help restore trust in our financial markets.”
