RIA Compliance Blog
Congressman Spencer Bachus (R – Ala), Chairman of the House Financial Services Committee, recently published draft legislation and held hearings concerning whether a self-regulatory organization (SRO) should regulate registered investment advisers. In addition to assigning regulatory responsibilities for SEC-registered firms to an SRO, Bacchus’s bill would apparently do the same for state-regulated advisers. In the recently passed Dodd-Frank Act, the SEC was assigned the task of studying the concept of extending SRO oversight to IA firms.
IA groups are split on whether an SRO should replace all or part of current SEC/State oversight . For example, the Financial Planning Coalition, comprised of the CFP Board, the FPA and NAPFA, said in September that an SRO “is not the solution” to improve and increase IA examinations. However, the Financial Services Institute (FSI) has encouraged adoption of such a plan.
Congressman Bacchus’s bill has also drawn sharp reaction from others. NASAA President Jack Herstein, the Nebraska securities director, has expressed his opposition, saying the bill is “an over-reaching solution to enhancing the regulation of investment advisers by allowing industry to police itself.” FINRA, on the other hand, has expressed strong support to expand its own model of SRO regulation to include investment advisers.
The bill does not identify a specific SRO. Some of FINRA’s public statements indicate it is interested in such a role, and University of Mississippi law professor Mercer Bullard has also created a new nonprofit organization ostensibly for the purpose of becoming the IA SRO.
Parker MacIntyre provides legal and compliance services to investment advisers, broker-dealers, registered representatives, hedge funds and issuers of securities, among others. Our regulatory practice group assists financial service providers with the complex issues that arise in the course of their businesses, including compliance with federal and state laws and rules.