Waters set to reintroduce SEC user fee bill

Says agency needs funds to boost oversight of advisers; first attempt died in '12

Mar 13, 2013 @ 4:11 pm

By Mark Schoeff Jr.

SRO, SEC, maxine waters, user fee, legislation
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Rep. Maxine Waters, D- Calif.

Rep. Maxine Waters, D-Calif., again will offer legislation that would authorize the Securities and Exchange Commission to assess user fees on investment advisers to fund agency examinations.

Last year, Ms. Waters introduce an identical measure that countered a bill that would have shifted adviser oversight from the SEC to a self-regulatory organization — likely the Financial Industry Regulatory Authority Inc., the broker regulator.

Both bills died last year after failing to receive a vote in the House Financial Services Committee before the end of the congressional session in December.

“We will be reintroducing that very shortly; it's a matter of days,” Ms. Waters said in an interview today. “I consider that one of the important and meaningful bills I introduce.”

Ms. Waters is the top-ranking Democrat on the House Financial Services Committee. She introduced the user fee bill last year with the then-ranking Democrat, Rep. Barney Frank, D-Mass. Mr. Frank has retired and Ms. Waters said she has not yet signed co-sponsors for this year's bill.

She said the SEC needs the user fee option to fund exams because it is doing too little oversight of investment advisers. She referred to a 2011 SEC study that showed that the agency examines about 8% of registered advisers annually. That was about 12,000 at the time. About 40% of registered advisers have never been examined.

“That is not good,” Ms. Waters said. “If we have user fees, we can expand that substantially. We want to make sure we do everything we can to increase [SEC] funding so they can do their job. This user fee is in line with that.”

Although the SEC has eked out modest funding gains over the last few years and now has a budget of approximately $1.3 billion, the agency has told lawmakers that it does not have the resources it needs.

Supporters of the SRO bill said that an industry-run organization would augment SEC adviser oversight and increase investor protection. Investment advisers stridently opposed the measure, saying that it would be a costly additional layer of regulation. They embraced Ms. Waters' bill.

The sponsor of the SRO bill was Rep. Spencer Bachus, R-Ala., who was chairman of the House Financial Services Committee last year. He stepped down due to term limits imposed by House Republicans. The new committee chairman, Rep. Jeb Hensarling, R-Tex., has not expressed any interest in SRO legislation.

“That bill is dead,” Ms. Waters said of the SRO measure. “That does not determine anything about our bill. We're going to introduce it anyway.”

One of the strongest supporters of Ms. Waters' bill will be the Investment Adviser Association.

“Rep. Waters should be applauded for her keen appreciation of the challenges facing the SEC and for her appreciation for the need for the SEC to keep its oversight of investment advisers,” said Neil Simon, IAA's vice president for government relations.

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