House panel seeks to freeze SEC budget

Subcommittee set to vote on funding as adviser group hits Capitol Hill to lobby for more

Jun 10, 2015 @ 1:45 pm

By Mark Schoeff Jr.

The House Appropriations Committee introduced a bill Wednesday that would hold Securities and Exchange Commission funding flat for the next fiscal year.

The fiscal year 2016 Financial Services and General Government Appropriations bill would provide $1.5 billion for the SEC in fiscal 2016, the same budget level the agency is operating on this year. That number is $222 million less than the Obama administration requested.

The bill targets funding toward information technology projects at the agency but prohibits the SEC from spending money out of a reserve fund established by the Dodd-Frank financial reform law.

Overall, the bill provides $20.2 billion, including funding for the Treasury Department and several other financial services agencies — $1.3 billion less than fiscal 2015 and $4.8 billion below the administration's request.

A subcommittee is expected to approve the bill Thursday. Republicans lead the committee.

The funding level for the SEC is significantly less than SEC Chairwoman Mary Jo White has told Congress the agency needs to increase investment adviser exams from the current annual level of about 10% of the approximately 11,500 registered advisers.

IAA URGES MORE FUNDING

As the House spending panel released the bill, members of the Investment Adviser Association were meeting with lawmakers and congressional staff on Capitol Hill, urging increased funding for the SEC so it can examine more advisers.

“We're going to keep working on it,” said Neil Simon, IAA vice president for government relations. “This is an important argument for us to make.”

The IAA wants the SEC to maintain oversight of investment advisers rather than farm out exams to a third party, a move the agency is considering. The IAA fears the Financial Industry Regulatory Authority Inc. might become the organization that conducts adviser oversight.

The IAA also is advocating for legislation, not yet introduced in the current Congress, to allow the SEC to charge user fees for exams.

But the IAA has failed to gain traction on its preferred approaches to adviser oversight, said Skip Schweiss, managing director of adviser advocacy and industry affairs at TD Ameritrade Institutional.

“We have to find realistic ways to [increase adviser exams] and not ways that we've been discussing for years but have gone nowhere,” said Mr. Schweiss, who participated in IAA's Capitol Hill meetings.

“We should be talking about third party exams,” he added. “We should be talking about raising the $100 million [in AUM] threshold for SEC registration so that more advisers go to the states. We should be having conversations about … pushing all the dually registered [firms] under Finra so that Finra examines the broker-dealer activities and the RIA activities.”

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