Washington, D.C. – The Financial Planning Coalition applauds Rep. Spencer Bachus (R-AL), the Chairman Emeritus of the House Financial Services Committee, for becoming a co-sponsor of H.R. 1627, the Investment Adviser Examination Improvement Act.
This bill, introduced by Financial Services Committee Ranking Member Maxine Waters (D-CA) and Rep. John Delaney (D-MD), would authorize the Securities and Exchange Commission (SEC) to collect reasonable user fees from SEC-registered investment advisers for the sole purpose of increasing the dangerously low number of examinations the SEC currently conducts.
“We commend Rep. Bachus’ decision, as well as the decisions of the 14 additional Members of Congress who have recently signed on as co-sponsors of this important investor protection measure,” said the Coalition. “This support demonstrates that investor protection is not a partisan issue and we expect to see the number of co-sponsors on both sides of the aisle continue to grow. Further, their decisions highlight that a user fee is a sensible solution to the vexing resource problem at the SEC – a solution that industry supports and that has no impact on the federal budget. We look forward to continuing to support this legislation and to working with all Members of Congress who want to improve protections for American investors.”
The Financial Planning Coalition is a strong supporter of H.R. 1627 as the most cost-effective, efficient and industry-supported way of providing the SEC with the necessary resources to protect American investors – particularly in light of Congress’ failure to appropriate sufficient funds. Due to a chronic lack of resources, the SEC currently is able to examine only about nine percent of the approximately 11,000 investment advisers registered with the agency. This amounts to investment advisers being examined at the unacceptable rate of about once every 11 years.
H.R. 1627 is a targeted solution to the persistent resource gap at the SEC that would: 1) limit the use of collected fees to the SEC’s examination program; 2) require that the SEC determine the fees through a public rulemaking; 3) require the SEC to take into account factors such as the investment adviser’s size and assets under management when determining a fee; and 4) require the Comptroller General to conduct an audit of the funds’ use every two years.
Ted Knutson of Financial Advisor reports that several consumer advocates have forcefully criticized SEC Chair Mary Jo White for slow and weak investor protection rulemaking, including the Commission’s failure to adopt a uniform fiduciary standard.
Excerpt– Securities and Exchange Commission Chairman Mary Jo White was attacked for slow and weak investor protection rulemaking by several consumer advocates in e-mails and conversations with Financial Advisor magazine.
“Investor protection under Chair White has been virtually nonexistent. Her positions in the crowdfunding and private offering rulemakings and her false promises regarding the fiduciary duty reflect a strong anti-investor bent,” said SEC Investor Advisory Committee member and University of Mississippi Law Professor Mercer Bullard on Tuesday.
Mark Schoeff of Investment News reports that the spending bill passed by the House of Representatives on June 16 raises the SEC’s budget by $50 million, but is $300 million less than the SEC needs to strengthen investment adviser oversight. Efforts by Rep. Maxine Waters (D-CA) to attach an amendment allowing the SEC to charge user fees to make up for this budget shortfall were unsuccessful. The bill also includes an amendment barring the SEC from imposing a fiduciary standard on broker-dealers during the federal fiscal year beginning October 1.
Excerpt– The House of Representatives approved a spending bill Wednesday that denies the Securities and Exchange Commission the funding it says it needs to strengthen investment adviser oversight.
In a 228-195 vote, the House passed a $21.3 billion appropriations bill that funds the SEC, Treasury Department and many other agencies. The measure gives the SEC a $50 million budget increase, about $300 million less than the agency requested. Under the bill, the SEC would operate on a $1.4 billion budget in fiscal 2015, which begins on Oct. 1.
Financial Planning Coalition Responds to SEC official’s suggestion that it may not have enough data to support a fiduciary rulemaking
Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – issued the following statement in response to an SEC official’s suggestion that it may not have enough data to support fiduciary rulemaking:
“The Financial Planning Coalition has consistently urged the Securities and Exchange Commission (SEC) to move forward with a rulemaking requiring broker-dealers providing retail investment advice to adhere to a fiduciary standard of care – just as investment advisers are required to do under the Investment Adviser Act of 1940.
“This requirement is not only long overdue, but it is consistent with Section 913 of the Dodd-Frank Wall Street Reform and Investor Protection Act, which gave the SEC the authority to take this action.
“We fully support the SEC having sufficient information at its disposal to evaluate the need for such a rule. It is, however, disappointing to hear from a senior SEC official that the information the SEC has collected to date is ‘less than staff thought it was going to be.’
“There is convincing evidence in the existing record that demonstrates the need for this important rulemaking. In response to some concern that harm to consumers was not sufficiently supported in the record, the Financial Planning Coalition – and several other organizations – jointly submitted a supplemental letter to the SEC highlighting the evidence of harm in response to the SEC Request for Information.
“The information, the evidence and the data is there. It is time to move forward. The longer the SEC delays, the more harm will be done.”
Bill Would Increase Investment Adviser Examinations
Washington, D.C. – The Financial Planning Coalition – comprised of Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA) – urges Congress to enact the Investment Adviser Examination Improvement Act of 2013, introduced by Representative Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee with Representative John Delaney (D-MD) as an original co-sponsor.
Authorizing the U.S. Securities and Exchange Commission to collect user fees from advisers to increase examinations is a pragmatic and cost-effective solution to a significant investor protection problem. It will have no financial impact on taxpayers or the federal deficit and is supported by the investment adviser industry. Increasing adviser examinations is good for both consumers and advisers.
The Coalition plans to work with Reps. Waters and Delaney to support this needed piece of investor protection legislation and encourages other members of Congress to enthusiastically endorse this important measure.
Mark Schoeff of InvestmentNews reports that SEC official wants registered investment advisers to be forced to hire third-party contractors to conduct examinations, increasing the oversight of advisers.
Excerpt: Securities and Exchange Commission member Daniel Gallagher wants registered investment advisers to be forced to hire third-party contractors to conduct examinations.
In remarks at the Financial Industry Regulatory Authority Inc.’s annual conference in Washington, Mr. Gallagher recommended that the SEC write a regulation that would require advisers to hire an examiner to review their operations.