NASAA Statement on the Investment Adviser Examination Improvement Act Introduction

WASHINGTON (July 25, 2012) – The following is a statement from Jack E. Herstein, president of the North American Securities Administrators Association (NASAA) and Assistant Director of the Nebraska Department of Banking & Finance, Bureau of Securities, regarding the ‘‘Investment Adviser Examination Improvement Act of 2012” introduced today by Rep. Maxine Waters (D-CA) and co-sponsored by House Financial Services Committee Ranking Member Barney Frank (D-MA) and Rep. Michael Capuano (D-MA). The legislation would amend the Investment Advisers Act of 1940 to enable the Securities and Exchange Commission to collect an annual fee from investment advisers that are subject to inspection or examination by the Commission to defray the cost of inspections and examinations.

“State securities regulators commend Reps. Waters, Frank and Capuano for developing legislation that provides an appropriate response to the Dodd-Frank Act’s intent of strengthening the examination of investment advisers registered with the Securities and Exchange Commission (SEC).

“The best way to improve oversight of federally registered investment advisers is to provide the SEC with the resources needed to do the job, either through increased appropriations or by authorizing the SEC’s Office of Compliance Inspections and Examinations to collect user fees from the investment advisers it examines – an alternative preferred by the SEC staff in its January 2011 study mandated by Section 914 of the Dodd-Frank Act.

“In its report, the SEC staff concluded that that shifting the cost of regulation to investment advisers themselves would avoid the need for the SEC to use its resources to fund and staff an expanded SRO examination program. The study also said imposing user fees ‘would avoid the difficult scope of authority, membership, governance, and funding issues raised by an SRO’.”

“The regulation of investment advisers long has been the shared responsibility of state and federal securities regulators, answerable to the investing public and not private, industry-funded organizations. As a matter of efficiency and cost, authorizing the SEC to fund enhanced oversight of federally registered investment advisers through targeted user fees makes more sense than establishing a costly new self-regulatory organization for federal- and state-registered investment advisers.

“The Waters bill, which is supported by the investment adviser industry, answers the Dodd-Frank Act’s call for enhanced oversight of federally registered investment advisers and avoids doing do at taxpayers’ expense.”

A copy of NASAA’s letter of support for the Investment Adviser Examination Improvement Act of 2012 is available here


For more information:

Bob Webster
Director of Communications

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