RIAs brand SRO a 'job killer'

Bachus bill denounced at TD Ameritrade conference; momentum shifting?

Jun 13, 2012 @ 3:19 pm

By Dan Jamieson

TD Ameritrade Institutional served up some raw meat for the troops Wednesday by presenting speakers at its annual Elite conference that bashed the so-called Bachus bill.

The bill, introduced by Rep. Spencer Bachus, R-Ala., would require most retail investment advisers to join an SRO.

“The bill is designed by Finra,” said Neil Simon, vice president of government relations with the Investment Adviser Association.

The Financial Industry Regulatory Authority Inc. has been actively lobbying to take on investment adviser oversight. Advisers generally oppose oversight by Finra, fearing excessive fees and broker-dealer style regulation they say hasn't worked.

The Bachus bill “would give broad authority for exams [to an SRO] and let them develop regulations and enforce them.” Mr. Simon said.

Finra has retained Michael Oxley, former chairman of the House Committee on Financial Services, to lobby Congress on the SRO issue, said Duane Thompson, president of Potomac Strategies LLC.

“There's a portrait in the [House] hearing room” of Mr. Oxley, “which is a reminder of the clout Finra has on this issue,” Mr. Thompson said.

But in an email to InvestmentNews, Finra shot back at its critics."It's unfortunate but not surprising that some IA advocacy groups are pushing to maintain the status quo of registered IAs being examined only once every 10 to 13 years, with almost 40% never having been examined at all,” noted spokeswoman Michelle Ong.

She added that, of 4,400 Finra member firms, 1,700 pay less than $1,000 in fees to the regulator

Mr. Thompson urged the TD Ameritrade RIAs to call the Congressional switchboard and tell their representative that the Bachus bill is “a job killer. That's a well-worn phrase, but it gets attention.”

“It would be a significant burden on small business,” said Russ Iuculano, executive director of the North American Securities Administrators Association Inc.

NASAA, which represents state regulators, is most worried about a provision in the bill that requires the adviser SRO to report to Congress on how well states are meeting mandates to examine advisory firms.

“It's an attack on the principle of federalism,” Mr. Iuculano said. “It's a question of whether this provision is indeed constitutional.”

After a hearing last week on the bill, opponents are feeling a bit more optimistic. “The hearing didn't go according to the script of its sponsors,” Mr. Thompson said. “It doesn't seem to be the steamroller it once was.”

The bill's opponents say their message that the bill would hurt small business seems to be resonating with some Republican House members.


What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Featured video


The #MeToo movement and the financial advice industry

Attendees at the Women to Watch luncheon commend the #MeToo movement for raising awareness about the issue of sexual harassment and bringing women together.

Latest news & opinion

What to watch for next with the DOL fiduciary rule

Much hinges on whether the Labor Department appeals the 5th Circuit decision by April 30.

Social Security benefits losing buying power

Low inflation combined with rising Medicare costs threaten the adequacy of seniors' income.

Finra looks to streamline broker-dealer exams

CEO Robert Cook says three examination teams may be consolidated.

The 401(k) robo-revolution is here

Could human advisers be displaced as digital-advice firms use technology to deliver services to plan sponsors and participants?

SEC forging ahead on fiduciary rule despite DOL rule decision in 5th Circuit

Chairman Jay Clayton says 'the sooner the better' when asked when an SEC fiduciary rule will be ready.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print