CFA Institute: SEC Should Regulate Investment Advisers

On Wednesday, the House Financial Services Committee is bracing for the kind of onslaught that the Financial Industry Regulatory Authority (FINRA) has been enduring for the last couple of years as it takes up the issue of investment adviser oversight. Specifically, the Committee will hold a hearing on the Independent Adviser Oversight Act of 2012 introduced by its chairman, Spencer Bachus (R-Ala), in April. Many of our members know about it — I know because I’ve heard from many of them about it — but we wanted to let you know what CFA Institute is doing.

Today, we have submitted a letter on the issue that will be introduced into the public record for the hearing. Our letter reiterates what we told the Securities and Exchange Commission in a letter back in December 2010, namely that our adviser members prefer — by a wide margin — to have the SEC continue conducting their exams, even if that means a higher- and more-frequent touch form of examination.

We also told the House Financial Services Committee that there is no good reason for requiring small firms (those with assets under management of less than $100 million) to join what the Act calls a “registered national investment adviser association.” These firms already must answer to state regulators as a consequence of Dodd-Frank and, therefore, would face redundant oversight and potentially significant costs for that redundant oversight.  

And finally, if you are interested in this topic and want to let your Congressional representative know how you think about it, now would be a good time to do so — the hearing is slated for Wednesday. To comment, you may send an e-mail to Chairman Bachus and/or to a specific member of the Committee who comes from your home district or home state. If you do send a comment, regardless of your perspective, please copy us on the e-mail at [email protected]  so that we know what you’ve said.