The full FinServ Committee held a hearing today to consider legislation to establish a self-regulatory organization (SRO) for investment advisers.  Introduced by Reps. Bachus (R-AL) and McCarthy (D-NY), H.R. 4624, the Investment Adviser Oversight Act, would subject investment advisers to SRO examination in addition to SEC and state supervision.  Although FinServ Members agreed that more examinations are needed in light of a recent SEC report showing that the agency only examines eight to nine percent of investment advisers each year, there was a large gulf separating those who favored an expansion of the SEC’s examination program and those who supported an SRO model for the industry.  Ranking Member Frank (D-MA) warned GOP Members that this bill would be part of the discussion as Congress turns towards SEC and CFTC appropriations.  Rep. Waters (D-CA) announced that she would introduce a competing bill to impose a user fee on the investment adviser industry in order to enhance the SEC’s examination program.  This client report analyzes today’s hearing.

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