By Joseph A. Giannone
NEW YORK, Jan 12 (Reuters) - The U.S. brokerage industry's lead lobbying group wants the Securities and Exchange Commission to establish a comparable system of regulation for both brokers and investment advisers.
The Securities Industry and Financial Markets Association on Wednesday sent the SEC a letter calling for the agency to recommend that Congress create a regulatory system providing comparable oversight and examination for both groups.
'Putting into place a regulatory regime that puts clients' best interests first must also ensure there is comparable examination and enforcement of those providing personalized investment advice,' SIFMA General Counsel Ira Hammerman said in a statement.
Advisers and brokers, people who help individuals manage their finances, are often considered one and the same. Yet the two groups were born out of separate laws, subject to different standards and have been watched by different regulators.
The SEC is preparing to release two studies this month that could lead to major changes in how investment advisers and brokers who offer advice to retail customers are regulated. The studies are part of last year's Dodd-Frank regulatory reforms.
As early as Friday, the SEC may release a report to Congress on whether investment advisers need a new regulatory body. Next week, the SEC is to issue a second report that will conclude whether brokers should be subject to the fiduciary standard long applied to investment advisers.
(Click on to see a Reuters story on the studies.)
Investment advisers, a group that includes mutual fund managers and personal wealth advisers, have lobbied Congress to impose the a 'do no harm' standard on brokers. Brokers, who execute trades and help their companies sell securities, operate under a less strict 'suitability' standard.
Advisers vigorously oppose efforts that would place them under the watch of the Financial Industry Regulatory Authority, the brokerage industry's self-regulator. FINRA has strongly hinted it is ready, willing and able to serve as the adviser industry's regulator.
SIFMA contends that efforts to create a 'uniform' standard of care for both brokers and investment advisers must also be paired with comparable system of examination and enforcement. The brokerage group also says small, independent investment advisers are generally not subject to SEC supervision and do not have the resources to monitor regulatory compliance.
SIFMA, echoing arguments previously offered by FINRA, said many investment advisers are not regularly examined by SEC. The federal agency, both groups also observed, faces budgetary constraints that would make it difficult to expand the number of examinations.
(Editing by Steve Orlofsky) Keywords: BROKERAGES/REGULATION (joseph.giannone@thomsonreuters.com; Tel: +1 646 223 6184; www.twitter.com/reutersjoe ) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Jan 12 (Reuters) - The U.S. brokerage industry's lead lobbying group wants the Securities and Exchange Commission to establish a comparable system of regulation for both brokers and investment advisers.
The Securities Industry and Financial Markets Association on Wednesday sent the SEC a letter calling for the agency to recommend that Congress create a regulatory system providing comparable oversight and examination for both groups.
'Putting into place a regulatory regime that puts clients' best interests first must also ensure there is comparable examination and enforcement of those providing personalized investment advice,' SIFMA General Counsel Ira Hammerman said in a statement.
Advisers and brokers, people who help individuals manage their finances, are often considered one and the same. Yet the two groups were born out of separate laws, subject to different standards and have been watched by different regulators.
The SEC is preparing to release two studies this month that could lead to major changes in how investment advisers and brokers who offer advice to retail customers are regulated. The studies are part of last year's Dodd-Frank regulatory reforms.
As early as Friday, the SEC may release a report to Congress on whether investment advisers need a new regulatory body. Next week, the SEC is to issue a second report that will conclude whether brokers should be subject to the fiduciary standard long applied to investment advisers.
(Click on to see a Reuters story on the studies.)
Investment advisers, a group that includes mutual fund managers and personal wealth advisers, have lobbied Congress to impose the a 'do no harm' standard on brokers. Brokers, who execute trades and help their companies sell securities, operate under a less strict 'suitability' standard.
Advisers vigorously oppose efforts that would place them under the watch of the Financial Industry Regulatory Authority, the brokerage industry's self-regulator. FINRA has strongly hinted it is ready, willing and able to serve as the adviser industry's regulator.
SIFMA contends that efforts to create a 'uniform' standard of care for both brokers and investment advisers must also be paired with comparable system of examination and enforcement. The brokerage group also says small, independent investment advisers are generally not subject to SEC supervision and do not have the resources to monitor regulatory compliance.
SIFMA, echoing arguments previously offered by FINRA, said many investment advisers are not regularly examined by SEC. The federal agency, both groups also observed, faces budgetary constraints that would make it difficult to expand the number of examinations.
(Editing by Steve Orlofsky) Keywords: BROKERAGES/REGULATION (joseph.giannone@thomsonreuters.com; Tel: +1 646 223 6184; www.twitter.com/reutersjoe ) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.