Testifying before the
Additionally, the chairman weighed in on the challenges the
'TIME IS NOW TO ACT'
"As the head of the agency, I look at what I think we need to be doing for investors and to fulfill our duties at the
She quickly added that many questions need to be resolved before the commission might move ahead with such a plan, including the selection of an appropriate third-party organization to take on advisor exams, the criteria those reviews would cover, costs and the determination of which advisors would be subject to the program.
Nonetheless, White said that the proposal, imperfect as it may be, is worth pursuing. "I do think the time is now to act," she said.
White told members of the committee that she has been endeavoring to reallocate resources within the commission to free up the exam staff for advisor reviews, and aiming to do a better job of dispatching examiners to the areas of the industry that pose the greatest risk. Even with those changes, however, OCIE was only able to examine about 10% of all registered advisors in fiscal 2014, though those practices accounted for 30% of all assets under management in the RIA space, White said.
In making her case for the
"Specifically, this budget would permit us to further address the pressing need for additional examination coverage of registered investment advisors and investment companies to better protect investors and our securities markets," White said.
Some Republicans on the Financial Services Committee challenged the
"The facts are that the
Hensarling and others also took White to task for not having yet completed rulemaking proceedings mandated under the JOBS Act, which she conceded had proved to be a more complex task than commission staff anticipated.
On the uniform fiduciary standard, an issue that investor advocates and some trade groups have been lobbying for, White acknowledged some of the challenges that will emerge as the commission crafts a proposal, including how to define the standard and issuing clear guidance so advisors and brokers can determine what business practices will be permitted under the rules.
Some advocacy groups have warned against what they describe as a campaign by representatives of the brokerage industry to water down any fiduciary standard that would apply to that sector, cautioning that any rules the
"I'm pleased that you support a harmonized fiduciary duty rule that will protect America's investors and retirees," Waters said. "But the devil is in the details, and we must take care not to weaken existing protections in pursuit of a uniform standard."
Several representatives challenged White on the timing of her announcement of support for a uniform fiduciary standard, suggesting that she might have been swayed by the recent move by the
White insisted that she came to her decision independently, saying that she has long been concerned about the disparity in regulation of brokers and advisors and the potential for investor confusion that it creates.
"When you have essentially identical conduct regulated differently — particularly in the retail investor space — you've got to think long and hard about why that regulation shouldn't be the same," she said.
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