Skip to main content

Exit WCAG Theme

Switch to Non-ADA Website

Accessibility Options

Select Text Sizes

Select Text Color

Website Accessibility Information Close Options
Close Menu

State Securities Regulators Are Poised to Receive More Authority to Oversee Advisory Firms

If the Senate adopts the financial reform legislation, many investment advisory firms regulated by the SEC will be regulated by state securities regulators.

Industry observers do not know of any opposition to raising the asset threshold, while concerns have been asserted about states’ ability to regulate additional advisory firms.

Furthermore, the core idea of financial reform has some bipartisan support in Congress. Within days after the health reform legislation prevailed in March, Democratic and Republican key players announced that they expected the Senate to pass a financial reform bill.

The National Securities Market Improvement Act of 1996 gave the SEC the power to increase the asset threshold, but the SEC has never done so.

The Investment Adviser Association estimates that an additional 4,000 plus advisory firms would fall under state jurisdiction with a higher ceiling. Proponents of the higher ceiling have claimed that it would lighten some of the burden on an over-taxed SEC.

For its fiscal year ended last September, the SEC examined less than 10% of federally registered advisers. In a normal year, the SEC examines about 33% of firms that have been identified as high-risk, but in fiscal 2009, only 22% of high-risk firms were reviewed.

Overall, if this legislation passes the Senate and becomes law, this should prove a good day for the public investor. The last several years have taught us that investment advisory firms require more and better regulation.

Facebook Twitter LinkedIn

By submitting this form I acknowledge that form submissions via this website do not create an attorney-client relationship, and any information I send is not protected by attorney-client privilege.

Skip footer and go back to main navigation