Washington INsider

Washington INsiderblog

Mark Schoeff Jr. looks at what's really happening on Capitol Hill - and the upshot for advisers.

SEC's plan for adviser SRO has left the building, along with Walter

Vocal backer of self-regulatory organization for advisers being replaced by Stein; could be out by August

Jul 16, 2013 @ 1:14 pm

By Mark Schoeff Jr.

Within a matter of weeks, a new SEC will most likely be in place. That could mean a change in atmosphere for an issue important to investment advisers.

Nominees for two Securities and Exchange Commission positions — Democrat Kara Stein and Republican Michael Piwowar — should have smooth sailing to their confirmations. Currently Senate aides, they faced no opposition in a Senate Banking Committee hearing last month.

A committee vote on them — and several other nominees — was postponed from today until Thursday. Ms. Stein and Mr. Piwowar are likely to be okayed unanimously by the panel. The full Senate will probably vote soon.

“They're going to get approved by the Senate with overwhelming bipartisan support,” said Neil Simon, vice president for government relations at the Investment Adviser Association. “It's just a question of how and when.”

Similar strong backing on Thursday in the committee and later on the Senate floor also is likely for SEC Chairman Mary Jo White, who is up for a term expiring in June 2019. Her confirmation earlier this year was only for a term lasting through June 2014, the end of her predecessor Mary Schapiro's five-year appointment.

Ms. Stein will replace SEC Commissioner Elisse Walter, who has been the leading proponent for establishing a self-regulatory organization to oversee investment advisers.

In forthright speeches and congressional testimony, Ms. Walter minced no words in asserting that the commission lacks the resources to sufficiently oversee advisers and arguing that an SRO would be the best way to augment the shortfall. Advisers are not fond of the idea of SRO oversight, especially if it's the broker regulator, the Financial Industry Regulatory Authority Inc, doing the overseeing.

Perhaps as early as August, Ms. Walter will no longer be on the commission to push the matter. “It's certainly going to degrade the issue for the moment,” said Mark Calabria, director of Financial Services Regulation at the Cato Institute, a Washington think tank. “The biggest champion on the commission is leaving.”

It's not clear where Ms. Stein and Mr. Piwowar, who would replace Troy Paredes, stand on adviser oversight. But it's safe to say that their arrival adds more uncertainty to the SRO debate.

Ms. White has been pushing Congress for a substantial increase in SEC funding so that the agency can hire 250 more adviser examiners. But she maintains that she is agnostic about an SRO.

In Congress, there's no momentum toward authorizing an SRO or giving the SEC more funding to oversee advisers.

“Since there is no urgency, you're going to see the status quo for a while,” Mr. Calabria said.


What do you think?

View comments

Recommended for you

Featured video


What's the first thing advisers should do when they get home from a conference?

After attending a financial services conference, advisers can be overwhelmed by options, choices and tools. What's the first thing they should do when they get back to their office?

Latest news & opinion

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

Galvin's DOL fiduciary rule enforcement triggers industry plea for court decision

Plaintiffs warned the Fifth Circuit that Massachusetts' move against Scottrade signaled that the partially implemented regulation can raise costs for financial firms.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.

Is Fidelity competing with retirement plan advisers?

As the Boston-based mutual fund giant expands the products and services it brings to the retirement market, some financial advisers say the firm is encroaching on their turf.


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