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August 03, 2017 at 11:15 AM
The Securities and Exchange Commission will not pursue a third-party audit rule for advisors, according to the agency’s regulatory agenda, released in late July.
David Grim, head of the agency’s Division of Investment Management, which was responsible for drafting the third-party audit rule designed to boost the number of advisor exams, said Thursday that he plans to leave his post in September after more than 20 years at the agency.
IM oversees the $70 trillion asset management industry, which includes mutual funds, exchange-traded funds, closed-end funds, variable insurance products, business development companies and investment advisors.
Former SEC Chairwoman Mary Jo White told ThinkAdvisor before her departure in January that she’d hoped the next chair and commission would advance the third-party audit rule.
White said at the time that “a completed proposal” was before her two fellow commissioners. “I’ve stated this publicly: I think it’s very important to advance it.”
The controversial third-party advisor exam idea, which White called “independent compliance reviews” for advisors, was billed as complementing SEC exams, and designed to remedy the advisor exam shortfall.
In 2016, under White’s leadership, the SEC reassigned approximately 100 examiners from broker-dealer exams to advisor exams.
SEC Chairman Jay Clayton told lawmakers in late June that his goal is to achieve a “further 5% increase in the number of investment advisor exams” in fiscal 2018.
Also dropped from the SEC’s plans according to its regulatory agenda are stress tests for larger advisors as well as target date fund disclosure updates.
Notable potential new rule additions include a rule on auditor independence with respect to loans or debtor-creditor relationships, which would amend Reg S-X, as well as a rule to require that the Investment Advisers Act conform to the Fixing America’s Surface Transportation Act, or FAST Act.
