FSI calls for a self-regulator for investment advisers

“FSI supports a self-funded industry-informed regulator for investment advisers,” FSI general counsel and director of government affairs David Bellaire said in an interview today. “We believe that should be a separate entity” from the Securities and Exchange Commission, although the adviser SRO should be supervised by the SEC, he said.

Mr. Bellaire, whose organization represents about 120 broker-dealers, stopped short of endorsing the Financial Industry Regulatory Authority Inc. as the SRO for advisers, as has been suggested by some in recent months “No one’s really laid out a plan for how they would take on that role,” Mr. Bellaire said.

Advisers’ groups strongly oppose setting up a separate SRO, fearing that Finra would become their regulator. They argue that Finra is better suited to regulate the brokerage industry, which comes under different regulations than investment advisory firms.

The Financial Planning Coalition, made up of the Financial Planning Association, the National Association of Personal Financial Advisors and the Certified Financial Planner Board of Standards Inc., has called for creating a separate professional regulatory organization to oversee financial planners and financial planning.

About 120 representatives of dually registered broker-dealers and investment advisers represented by the FSI lobbied members of Congress during a Washington meeting last week on the SRO issue, Mr. Bellaire said.

Draft legislation released Oct. 1 by Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, calls for imposing new fees on investment advisory firms to cover the cost of SEC inspections. The FSI opposes that, Mr. Bellaire said.

“The SEC’s got too much on their plate. What we need is a separate, distinct entity that can focus on investment adviser supervision, exams and enforcement,” he said.