Investment advisory firms would have to pay fees to cover the cost of SEC examinations under draft legislation released last week by a senior lawmaker.
Investment advisory firms would have to pay fees to cover the cost of SEC examinations under draft legislation released last week by a senior lawmaker.
The draft Investor Protection Act of 2009 issued Thursday by Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, instructs the Securities and Exchange Commission to collect fees “designed to help recover the cost of inspections and examinations of registered investment advisers.”
The level of fees is not specified in the draft legislation.
Charging advisers a fee “deserves consideration,” said Neil Simon, vice president of government relations for the Investment Adviser Association, which represents advisory firms registered with the SEC.
However, the fee should only be charged “in lieu of a requirement that advisers fund a [self-regulatory organization],” Mr. Simon commented.
Adviser groups are fighting a push by the Financial Industry Regulatory Authority Inc. to bring advisory firms under its oversight.
Mr. Kanjorski's draft legislation does not include setting up a separate self-regulatory organization for investment advisory firms, but it requires that the SEC hire an independent consulting firm to study the need for “comprehensive reform” of the SEC and self-regulatory organizations.
Imposing a separate fee on advisory firms to cover the cost of examining the firms could help provide more resources for the SEC to step up its oversight of advisers, Mr. Simon said.
