NASAA Statement on SEC Study on Investment Adviser Oversight

WASHINGTON (January 20, 2011) – The following is a statement from David Massey, President of the North American Securities Administrators Association (NASAA) and North Carolina Deputy Securities Administrator, following the release of a study by the Securities and Exchange Commission staff examining the regulatory oversight of investment advisers. The study is available on the SEC website here.

“We urge Congress to continue its commitment to investors by maintaining the strong system of governmental oversight of investment advisers and ensuring that the SEC has the resources it needs to operate an effective oversight program. Accordingly, we prefer a legislative approach that allows investment adviser oversight to remain under governmental authority because we believe that this approach is in the best interest of protecting investors.

“The oversight of investment advisers has always been an effective partnership between state and federal regulators, both of which are transparent and directly accountable to the investing public. This should not change.

“We share the SEC staff’s concerns about the disadvantages inherent in allowing industry to regulate itself. Our primary concerns with the creation of a new self-regulatory organization (SRO) for the oversight of investment advisers are the lack of accountability, the lack of transparency and the conflicts of interest inherent to the SRO model of regulation.

“The SEC has decades of experience examining investment advisers and enforcing the Investment Advisers Act of 1940. An SRO lacks that experience and expertise and it could lead to a watering down of standards that now apply to investment advisers, such as the fiduciary duty of care and loyalty that advisers owe to their clients. Now is not the time for Congress to consider outsourcing the SEC’s regulatory authority and expanding the financial service industry’s self-regulatory regime to include investment advisers.”

NASAA was founded in 1919 and is the voice of securities agencies responsible for grass-roots investor protection and efficient capital formation. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Canada, Mexico and Puerto Rico.

For more information:
Bob Webster, Director of Communications

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