Bachus Backtracks After Democrats Introduce Bill Saying SEC Should Regulate RIAs; A Surprising Turn Of Events But Debate Will Likely Drag Into 2013

Wednesday, July 25, 2012 19:41
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Bachus Backtracks After Democrats Introduce Bill Saying SEC Should Regulate RIAs; A Surprising Turn Of Events But Debate Will Likely Drag Into 2013

Tags: Advisor businesses | FINRA | RIA compliance | RIAs

On a day when major news broke about the regulation of Registered Investment Advisers, Investment News’s Mark Schoeff Jr. yesterday did the best job of reporting on new developments in one of the biggest stories currently affecting private wealth advisors. Schoeff got a statement from Spencer Bachus, Republican chairman of the House Financial Services Committee, and Bachus made some surprising comments.  

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“From the beginning, I have been willing to listen to and work with anyone who has an idea about how to correct the current lack of examinations,” Bachus said in a prepared statement. “Our only goal should be to deter bad actors and to protect American investors. I see no way to do that without timely examinations."

 

Then Bachus added a surprise, “Who conducts those examinations and how is still open for debate, as far as I'm concerned.”

 

Moreover, Bachus put his own bill to regulate RIAs which would put FINRA in charge of overseeing examinations of RIAs — on hold indefinite hold, as Schoeff reported in his lead.

 

Bachus backtracked on his own bill! Is his support for making FINRA the regulatory body responsible for RIA examinations wavering?

 

Schoeff gives no indication, and since Washington politics is not my specialty, I wouldn’t venture a guess.

 

The timing of Bachus’s backtracking could not have been more curious, however. As Schoeff mentions, it came just hours after legislation was introduced Wednesday morning by Rep. Maxine Waters (D-Calif.) that would allow the SEC to charge user fees for exams -- an approach backed by RIAs not affiliated with a Broker-Dealer. Waters’ bill would maintain the Securities and Exchange Commission's purview over investment advisers and RIAs would pay fees to fund the required regulatory regime and bureaucracy.

 

Schoeff reminds us that time is running out for Washington to arrive at a decision on how to regulate RIAs.  

 

This is typical Washington politics. It will be the end of September before you know it, time for the election-year recess. Nothing will get done.

 

As reported here many months ago, it’s unlikely an decision will be made on the issue of RIA regulation until after the fall election, and then, depending on who wins the presidential race, a decision might wait until after January.

 

Schoeff’s reporting outdid other magazines most popular with RIAs that have a Washington correspondent. Neither AdvisorOne nor Financial Planning published Bachus’s prepared statement.

 

If any readers have insight into what Bachus is thinking, please speak up.

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