House panel approves bills to adjust regulations for small RIAs, protect senior investors

Legislation heads to floor as part of bipartisan package designed to modernize regulation

Jul 11, 2018 @ 2:14 pm

By Mark Schoeff Jr.

The House Financial Services Committee approved a bill Wednesday that could adjust regulations to better fit small investment advisory firms

The panel also approved a measure that would require the Securities and Exchange Commission to establish an internal task force on protecting senior investors.

Both bills were passed by voice vote and are included in a package of legislation intended to modernize regulation that will head to the House floor.

A bill designed to ease annual audit costs for small broker-dealers that had been on the agenda was withdrawn by its backers Tuesday night so they could try to build more Democratic support. The committee could act on that legislation later in the month.

The House committee approved the Investment Adviser Regulatory Flexibility Improvement Act, which would require the SEC to revise its definition of a "small business" when assessing the impact of its regulations. Under the bill, the SEC must look beyond assets under management and include other factors, such as employment at an advisory firm.

The SEC currently considers an advisory business "small" if it has $25 million in assets under management. But the threshold for SEC registration is $100 million. That means that no SEC-registered adviser is deemed "small" under the existing Regulatory Flexibility Act, which requires agencies to scale regulations to the size of the business being regulated and consider alternatives to reduce regulatory burdens.

A study by the Investment Adviser Association showed that more than 7,000 investment advisory firms employ fewer than 10 nonclerical employees.

"This legislation is one of these bills that's targeted, it's reasonable and it can still have a nice impact for real people," said the bill's author, Rep. Gwen Moore, D-Wisc. "A lot of these [advisory firms] are eight to 10 people and small businesses. A whole lot of these firms are, in fact, women- and minority-owned businesses."

The measure was co-sponsored by Rep. Bill Huizenga, R-Mich., and drew praise from Rep. Jeb Hensarling, R-Tex., chairman of the committee.

"This entire package of bills is aimed at small-business capital formation to make sure we are modernizing and rationalizing all of our regulatory infrastructure to ensure that we remain competitive and continue to have a strong economy," Mr. Hensarling said.

He weighed in from a personal angle on the National Senior Investor Initiative Act, which would require the SEC to set up an interagency task force to focus on challenges facing senior investors.

Mr. Hensarling said the issue hits close to home because he helps his 85-year-old mother manage her nest egg.

"I am appalled by the number of hucksters and scamsters who every day try to separate my mother from the lifetime of savings that my father put together for her," he said. "It is an area that the SEC should continue to focus on, and with this legislation, I know that they will."

Earlier this year, Congress approved legislation that encourages financial advisers to report senior exploitation.

0
Comments

What do you think?

View comments

Recommended for you

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

Events

3 Questions to ask yourself when making your succession plan

Michael Futterman from Janus Henderson Investors has sage advice for advisers as they approach retirement.

Latest news & opinion

Genstar Capital buys majority stake in Cetera Financial Group

The private-equity firm has previously invested in such companies as Mercer Advisors and AssetMark.

Cetera Financial Group close to announcing its acquisition by private equity

Details of sale to one or more P-E firms could be announced as early as today.

10 best states for retirement

When it comes to places to retire, here are the 10 best states for enjoying your golden years.

CFA Institute adding crypto, blockchain to curriculum

Subjects will be added to its Level I and II coursework for the first time next year.

Trump tax plan making dividend ETFs hot

Funds that are seeing inflows largely steer clear of sectors like utilities.

X

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.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print