Rep. Maxine Waters (D-CA) has been elected by the House Democratic Caucus as the Ranking Member of the Financial Services Committee in the 113th Congress, replacing the retiring Rep. Barney Frank (D-MA). Rep. Waters vowed to defend and implement the Dodd-Frank Act and to work with Committee Chair-designate Jeb Hensarling (R-TX) to pass legislation reforming the government-sponsored entities.
On the issue of how
best to regulate and inspect SEC-registered
investment advisers, Rep. Waters opposed the creation of an SRO for
investment advisers, a position espoused by Committee Chair Spencer Bachus (R-AL)
in favor of raising fees on advisers to pay for more SEC inspections. The
Committee is trying to address a situation in which the SEC currently examines
approximately eight percent of investment advisers annually out of
approximately 11,000 advisers registered with the Commission.
Rep. Waters introduced
the Investment Adviser Examination Improvement Act of 2012, H.R. 6204, which provides
a dedicated funding source to the SEC to pay for a robust investment adviser
oversight program, consistent with a recommendation in an SEC staff paper
required under Section 914 of the Dodd-Frank Act. Rep. Waters called H.R. 6204
the approach that provides the simplest, most efficient solution to the problem
of inadequate oversight of investment advisers.
The bill would direct
the SEC to collect an annual fee from registered investment advisers to defray
the cost of SEC inspections and examinations. The bill would exempt
state-regulated investment advisers from the requirement to pay an annual fee.
H.R. 6204 also declares
the sense of Congress that the SEC should increase the number and frequency of
examinations of investment advisers.
The legislation prescribes a fee calculation formula and requires the SEC to
make the formula publicly available on its website along with the factors used
to reach the fee determination. The Comptroller General would have to audit
biennially the use of such fees, SEC reviews of the fee formula, and any
adjustments to it.
Section 914 mandated an SEC staff
study, which resulted in the SEC offering Congress three options: 1) authorize the SEC to impose user fees
on SEC-registered investment advisers to fund their examinations by the SEC’s
Office of Compliance Inspections and Examinations; 2) authorize one or more
SROs to examine, subject to SEC oversight, all SEC-registered investment
advisers; or 3) authorize FINRA to examine dual registrants for compliance with
the Investment Advisers Act. In
the view of Chairman Bachus, of the three, an SRO for investment advisers is
the most comprehensive and streamlined approach to address the regulatory