On January 19, 2011, the SEC submitted to Congress the much anticipated Study on Enhancing Investment Adviser Examinations, as required by Section 914 of the Dodd-Frank Act. The Study gives Congress three options for improving the SEC’s examination program to address the challenges it faces as a result of the increase in number of registered advisers and the additional obligations imposed on the SEC by the Dodd-Frank Act. The three approaches set forth in the Study are: (1) impose “user fees” on Sec-registered that would be used by the SEC to fund the examination program; (2) authorize one or more self-regulatory organizations (SROs) to examine all SEC-registered investment advisers; or (3) authorize FINRA to examine advisers that are dually-registered as broker-dealers. The Study stops short of calling on FINRA to become the SRO for investment advisers, which FINRA has expressed an interest in and which has been fiercely resisted by many in the industry. Nevertheless, the prospect of establishing an SRO for advisers is still strongly opposed throughout the industry. Of the three options, imposing user fees has arguably the strongest support and the least opposition, although a proposal to impose similar fees was introduced in 1992, which was never adopted. Click here to view the public comments on the Study submitted thus far. The issue now is in the hands of Congress, which must determine which approach to take with regard to enhancing investment adviser examinations.
Comments on the recent Study may be submitted electronically using the SEC’s Web Comment Form or by sending an email to firstname.lastname@example.org, subject line: DF Title IX – Enhancing IA Examinations. For additional information regarding the Study on Enhancing Investment Adviser Examinations and the implications of the various options, please contact us at (619) 278-0020.