Lisa Gray

ContactLisa Gray has been a wealth writer since 2001. She has been involved in the wealth management industry since 1988. She is the author of two bestselling books—The New Family Office and Generational Wealth Management.
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graymatter Strategies LLC

Congressional Hearing On Bachus-McCarthy Bill Yields Inconlusive Delay edit
Thursday, June 07, 2012 08:13

Tags: Congress | Dodd-Frank | FINRA | sec

Testimony during the Congressional hearing June 6 on the Bachus-McCarthy bill, the Investment Advisor Oversight Act of 2012, was divided along industry lines. The overall consensus was, however, that the bill was insufficient and would impose too great a cost burden on smaller firms.

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Additional funding for the SEC was another focal point of the discussion. The House Financial Services Committee, the same committee sponsoring the Bachus-McCarthy bill—approved additional funding for the SEC in 2013 the day before the hearing. Yet the amount was $195 million less than requested by President Obama.
 
Although the bill was submitted in bipartisan fashion, the witnesses seemed to be unevenly representative of the brokerage side. At least, consumer advocate Barbara Roper thought so, as we highlighted in the June 6 post. Those arguing in favor of the bill were:
 
Dale Brown, president/CEO of the Financial Services Institute (FSI)
Thomas Curry, past president of NAIFA
Chet Helck, head of Raymond James’ Global Private Client Group
Richard Ketchum, chairman and CEO of FINRA
 
Those arguing against the bill were:
 
John Morgan, Securities Commissioner of Texas and representing the NASAA
David Tittsworth, Executive Director of the Investment Advisors Association (IAA)
 
The argument for the bill was that the industry needs more oversight of retail investment advisors to better protect individual investors. It was also argued that the bill would restore oversight that is already mandated and which the SEC seems unable to provide instead of adding more regulation.
 
Opponents of the bill said it would unfairly penalize small firms and would add redundancy to the regulatory process for advisors subject to state oversight.
 
Mary Shapiro, head of the SEC, noted that with all the new regulatory mandates from the Dodd-Frank Act and the increased focus on the municipal market, she questions whether the SEC would have the wherewithal to adequately oversee FINRA, as well. FINRA has stepped forward in an attempt to garner the appointed SRO spot outlined by the Bachus-McCarthy bill.
 
The ultimate result of the hearing is that enough questions arose to delay its approval from the expected late June date to possibly fall. The hearing seemed to open the door for a great deal more commentary from the industry and also to input on how to improve the bill to make it truly effective and less burdensome.

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