Reuters: Regulatory News: U.S. lawmakers to hear testimony on adviser oversight

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U.S. lawmakers to hear testimony on adviser oversight Jun 6th 2012, 14:11 By Suzanne Barlyn June 6 | Wed Jun 6, 2012 10:11am EDT June 6 (Reuters) - Two sides in an industry divided over how to best oversee investment advisers will face off on Wednesday before U.S. lawmakers considering a bill that could ramp up investor protections. The bill, the Investment Oversight Act of 2012, would require a self-regulatory organization for registered investment advisers. Lawmakers unveiled the bill in April because they believe U.S. Securities and Exchange Commission, which supervises investment advisers, lacks the resources to be effective. The bill is controversial because many in the industry don't believe all the options to fully empower the SEC to ramp up exams and enhance oversight have not been adequately explored. There are nearly 12,000 registered investment advisers (RIAs) in the United States under SEC oversight, according to the committee. One side, however, clearly has more firepower in the debate. The House Financial Services Committee will hear testimony on behalf of six organizations, four of whom support the bill. The testimony was published online on Tuesday. Among those making the case to advance the bill: Richard Ketchum, chairman of the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization that oversees Wall Street's retail brokerages. FINRA has been lobbying to extend its reach to investment advisers. Leaders from two groups will testify about their concerns regarding the bill. Among their worries is that RIAs would not be overseen directly by the SEC and that a self-regulator would lack transparency and present built-in conflicts of interest because it would be funded by the industry it regulates. The make-up of Wednesday's witness list has added to the fire storm of debate in recent weeks (ID:nL1E8GVFGP). "It's curious the committee has chosen to devote the bulk of their witness slots to broker-dealer representatives," said Barbara Roper, director of investor protection for the Consumer Federation of America, an advocacy group not asked to testify. "They have a valid point of view but not one that would seem to justify this over-representation at the hearing." Other witnesses testifying in favor of the controversial bill come from three trade groups: Securities Industry and Financial Markets Association, the Financial Services Institute, and the National Association of Insurance and Financial Advisors. Meanwhile, the Investment Adviser Association, a trade group, and the North American Securities Administrators Association will testify in opposition. Link this Share this Digg this Email Reprints

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