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Regulation and Compliance > Federal Regulation > SEC

SEC to Move Examiners From BDs to RIAs in 2016: Chief White

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Securities and Exchange Commission chief Mary Jo White on Friday said she will shift 100 broker-dealer examiners to advisor exams “throughout” the year. This shift would be in addition to the 102 advisor/investment company examiners that would be hired with new funds in President Barack Obama’s proposed 2017 budget, White told reporters at the annual Practising Law Institute’s SEC Speaks conference.

Obama’s last budget request to Congress, released in early February, is a $4.1 trillion plan for fiscal 2017 that would double funding for the SEC and the Commodity Futures Trading Commission by 2021, with the SEC getting an 11% increase to $1.8 billion in 2017.

The SEC would use the 11% increase above the enacted 2016 level to hire 250 additional staffers, including 127 new examination staffers, of which 102 would be added to examine investment advisors and investment companies.

(The CFTC would get a 32% increase to $330 million in 2017.)

The 102 additional IA/IC examiners would be in addition to the 100 examiners that the agency is looking to shift from broker-dealer exams to advisor exams. With the additional examiners, the SEC hopes to increase its advisor exam rate — currently 10% of advisors per year — to 12%.

The SEC hopes to bolster frequency of advisor exams closer to broker-dealer coverage, which is about 50% per year between SEC and the Financial Industry Regulatory Authority exams.

White also said Friday at the SEC Speaks event at the Ronald Reagan Building in Washington that while the Commission now includes just three members, herself along with Commissioners Kara Stein and Michael Piwowar, “as has occurred in the past – we can carry forward all of the business of the Commission.” She said the Commission looks forward to welcoming new colleagues, Hester Peirce and Lisa Fairfax, once confirmed by the Senate.

White said she would continue this year to “work to develop support from my fellow Commissioners for a uniform fiduciary duty for investment advisors and brokerdealers, and to bring forward a workable program for third-party reviews to enhance the compliance of registered investment advisors.”

The agency will also “aim to finalize rules updating the intrastate offering exemption,” which were issued in December and include proposed amendments to existing Securities Act Rule 147 to modernize the rule for intrastate offerings to further facilitate capital formation, including through crowdfunding. 

In enforcement, White said the agency will focus this year on financial reporting; market structure; and the structuring, disclosure and sales of complex financial instruments.  

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