Insights from the experts in investment fiduciary responsibility.

Fiduciary Links: Mary Jo White’s Honeymoon Short-lived?

Posted by Duane Thompson on May 20, 2013

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>>>>New SEC Chairman Mary Jo White’s honeymoon with Congress may be rapidly drawing to a close. Not that it was expected to last forever.  Last week the former Wall Street lawyer, in office for only a month, testified before the House Committee on Financial Services about the need for more resources to examine investment advisers. The SEC’s fiscal year 2014 budget would add 325 IA examiners, or nearly half of all new staff hires at the Commission. About 250 of the examiners would inspect traditional advisers with the remainder focused on advisors to newly registered hedge and private equity funds. 

Adding a political wrinkle to the hearing was former committee chairman Spencer Bachus’s comments that it would be “pennywise and pound-foolish for there not to be some bipartisan agreement for a [SEC] funding increase.” Bachus was the primary backer of a bill last year to create a private sector self-regulatory organization for investment advisers, most likely administered by FINRA, the SRO for broker-dealers. A statement by Bachus in support of increased SEC funding, rather than for a privately funded SRO, is another signal that the House GOP has little appetite to expand FINRA’s jurisdiction to investment advisers – at least for now.

However, it’s not likely the SEC will get the 18 percent increase in funding for a 2014 budget of $1.674 billion that the Obama Administration is asking for the Commission.  Part of White’s plea for more examiners has to do with the sudden influx of 1,500 new hedge and private fund advisors since the Dodd-Frank reform act added the new registration requirement, and the fact that only one in 10 advisors registered with the Commission are inspected each year.  Dodd-Frank was supposed to alleviate some of the strain on SEC resources by de-registering some 4,000 smaller investment advisers, and relegating them state oversight.  However, only about 2,000 actually de-registered from the SEC.  In reality, this trade-off leaves the SEC with fewer resources, given the complexity and time consumed in private fund inspections.

In addition to likely shunning the SEC’s full budget request, the House passed a bill (H.R. 1062) May 17, by a largely partisan vote of 235-161, requiring the SEC to enhance its economic analysis of new regulatory proposals.  A recent impasse with the courts over legal challenges involving other cost-benefits analyses by the SEC has left an anticipated fiduciary rule for brokers in limbo.  The Obama administration and SEC chairman oppose the House bill, signaling the end of the honeymoon of Mary Jo White with House Republicans, if there ever was one.

Now on to the rest of the best links from last week:

News and columns from the leading trade, consumer, and mainstream media:

From the organizations/associations/government/academia: 

From the blogs:

Articles your clients are reading (or should be):

Have a link we missed? Leave them in the comments section or email us at For more of the best links during the week, make sure you follow us on Twitter.  

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