NASAA Statement on SEC Investor Advisory Committee’s Recommendation Regarding SEC Investment Adviser Exam Funding

WASHINGTON (November 22, 2013) – The following is a statement from Andrea Seidt, president of the North American Securities Administrators Association (NASAA) and Ohio Securities Commissioner, regarding the recommendation approved today by the Securities and Exchange Commission’s Investor Advisory Committee (IAC) calling for legislation to fund investment adviser examinations.

“NASAA shares the concerns of the IAC and SEC Chair Mary Jo White that existing SEC resources are inadequate to detect or credibly deter frauds that might occur in federally-registered investment advisers. To hear the SEC Chair say, five years after the financial meltdown, that approximately 40 percent of SEC-registered investment advisers (who collectively manage $50 trillion) still have not received their first SEC examination should be a wake-up call to everyone.

“NASAA understands the SEC has made a reasonable request to add 250 examiners to its Office of Compliance Inspections and Examinations (OCIE) in order to respond to this critical situation. Although this would be the easiest and least expensive way to get the SEC back on track, the IAC does not believe Congress will support the funding request needed to proceed.

“By authorizing the SEC to use revenue derived from the self-funding of examinations to augment OCIE’s exam program, the legislation recommended by the IAC would permit the SEC to establish and maintain a robust adviser examination program that periodically adjusts to correspond to changes in its examination responsibilities. It would appear to create a viable, long-term solution to a problem that has plagued the SEC for decades.

“NASAA applauds the IAC’s efforts to keep the examination fix a top priority for the SEC and Congress. I look forward to working with the SEC and the investment adviser industry on moving toward an efficient, cost-effective way to improve the oversight of federally registered investment advisers without adding to our nation’s deficit.”

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.

For More Information:
Bob Webster | Director of Communications
202-737-0900 

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