Barney Frank will move to scrap amendment that would expand Finra's reach

House Financial Services Committee Chairman Barney Frank, D-Mass., will try to strip a controversial amendment from the proposed Investor Protection Act that would give Finra power over a quarter of all federally-registered investment advisory firms. The amendment, which was sponsored by the ranking Republican member of the committee, Rep. Spencer Bachus, R-Ala. was contained in the bill approved today by 41-28 vote of the committee. The bill now goes to the full House, where Frank intends to oppose the provision. “He will offer an amendment on the floor to reverse this amendment,” Steven Adamske, Mr. Frank's press secretary, told InvestmentNews this afternoon. Advisory groups, consumers and state regulators have pressed to have the amendment removed, saying it could weaken fiduciary duties that apply to advisers who provide personalized advice to investors. “That is a fantastic bit of information,” said Texas Securities Commissioner Denise Voigt Crawford, reacting to the news of Mr. Frank's opposition. “We could not be happier,” she said. Ms. Crawford is president of the North American Securities Administrators Association Inc., which opposes Finra oversight of investment advisory firms. Among other provisions, the bill that was approved today would give the Securities and Exchange Commission new enforcement powers, including the ability to offer bounty money to tipsters on fraud cases and the power to bar violators of the law from employment in any securities-related industry. It would also double the SEC's budget over the next five years. Rep. Paul Kanjorski, D-Pa., who chairs the Capital Markets Subcommittee, drafted the legislation leading the panel's investigation into the government's failure to uncover Bernard Madoff's massive fraud scheme for nearly two decades. Madoff was sentenced in June to 150 years in prison. “In the last five years, there's been a significant change and a greater sophistication in the financial service industry than has ever happened in the history of mankind," Mr. Kanjorski said.. "So we're going to have to change fast." The bill will be combined with other financial service regulatory reform bills, including bills regulating derivatives, govern executive pay, and create a Consumer Financial Protection Agency, and go before the full House for a vote during the first week of December. The Associated Press contributed to this article