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.
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.
John D. Rogers, President and CEO of the CFA Institute discusses how the financial industry and investors would benefit if “an era of fiduciary capitalism emerges.”
Excerpt: Earlier this week, over 1,800 investment professionals took time out to visit Seattle for CFA Institute’s 67th Annual Conference. This was an important opportunity to join an initiative that is about the future of finance and shaping an industry that better serves society. Education has a crucial role to play in helping to restore to financial intermediaries a greater sense of social purpose, and that’s why CFA Institute and other professional organizations exist. A new mindset, one we could call fiduciary capitalism, is worth considering. The leaders here will likely include institutional investors – pension funds, endowments, foundations and sovereign wealth funds – as well as early adopters in the fund management industry. Based on a duty of care and loyalty and the obligation to place the needs of their beneficiaries above all other considerations, these investors share an agenda.
Ted Knutson of Financial Advisor reports that the SEC is not providing investors with “sufficient protection” against dishonest advisors because of budget shortfalls.
Excerpt: The Securities and Exchange Commission is not providing investors with “sufficient protection” against dishonest advisors because of budget shortfalls, SEC Chairman Mary Jo White told Congress today.
Noting that the SEC only has 19 examiners per trillion dollars in investment advisor assets under management, White appealed for money to hire 250 advisor examiners. The examiners are needed for better oversight of advisors, whom she said consumers are increasingly relying upon to deal with securities markets and retirement planning.
John G. Taft, CEO of RBC Wealth Management U.S., discusses the need to extend a uniform fiduciary standard of care across the financial planning profession.
Excerpt: There is a regulatory reform that will enable the wealth-management industry to better serve the investing public. It is a simple way to ensure that individual consumers of financial advice receive the same high level of regulatory protection — no matter which firm they walk into, which advisor they work with, what kind of advice they receive, or how they pay for it, and without compromising their access to products or services or otherwise limiting their investing choices.
In the Chicago Tribune, Gail Marks Jarvis stresses the need for investors to ensure that their financial planner is held to ethical standards and provides financial planning services pursuant to a fiduciary standard of care.
Excerpt: It’s a typical reaction: You don’t think you have the slightest idea how to invest your money for your future, so you figure you’ll go to an expert and get it right.
The trouble is that the investment business is full of conflicts of interest. And naive individuals, who go blindly for help, often end up getting dinged in the process. The more you need help, the more chance you will get taken.