Keep Investment Adviser Oversight with SEC, Congress Urged

Jack Humphrey, Regulatory journalist
April 30, 2012 /

The American Institute of CPAs (AICPA) is opposing the Investment Adviser Oversight Act of 2012, urging the US Congress to keep the oversight of investment advisers with the Securities and Exchange Commission.

The Investment Adviser Oversight Act aims to transfer the oversight of investment advisers from the US SEC to a Self-Regulatory Organization (SRO). The bill was introduced in the House of Representatives on April 25.

“We oppose this move,” AICPA CEO Barry Melancon said.

“The AICPA is the world’s largest association representing the accounting profession. Our members provide audit, tax, retirement consulting, plan administration, and financial planning services. Many of our members work for a firm that is registered as, or affiliated with, a registered investment adviser,” Melancon stressed.

Melancon added: “We believe that the SEC’s core mission to protect investors requires adequate regulation of the investment advisory profession. The SEC remains the proper regulatory body to protect the public’s best interest.”

Dodd-Frank Act Section 914 gives the SEC the power to review and analyze the need to enhance the examination and enforcement resources of investment advisers.

On January 19, 2011, the SEC concluded in its staff report that the current SEC-registered investment adviser examination program faces significant capacity and funding challenges.

It recommended three options: impose “user fees” on SEC-registered investment advisers to fund oversight; authorize one or more SROs to examine investment advisers, with oversight from the SEC; or authorize FINRA to examine dual registrants for compliance with the Investment Advisers Act of 1940.

A study by The Boston Consulting Group in December found that the cost of creating a SRO for investment advisers is twice the cost of funding an enhanced SEC examination program.

The report further found that funding a SRO would likely cost twice as much for each investment advisory firm as paying user fees to the SEC and that, given the SEC would still have to oversee the SRO, any cost savings to the SEC through creation of a SRO would be minimal.

Melancon continued: “Providing the SEC with resources to properly enforce their rules is the best solution for investors and the public.”


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