Last week, the House Financial Services Committee completed its work on proposed financial regulatory reforms and released The Wall Street Reform and Consumer Protection Act (H.R. 4173), a comprehensive bill that incorporates nine major pieces of legislation, including the Investor Protection Act, which would extend the fiduciary standard to broker-dealers providing investment advice. The full House will begin to debate the comprehensive reform bill today. House Financial Services Committee Chair Barney Frank expects debate to continue over the next three days with a vote on the bill taking place on Friday. Frank and others have been working behind the scenes to resolve any outstanding issues and opposition to the bill, but still expect several amendments to be introduced on the House floor. For now, it appears that provisions related to fiduciary issues will survive, but oversight of investment advisers remains an area of concern, including a current provision that would give the SEC the authority to delegate to FINRA examination authority over firms dually registered as investment advisers and broker-dealers.
Despite the progress on the House side, the pace of financial reform has slowed down substantially in the Senate as a result of sharp criticism from Republicans and Democrats alike aimed at a proposal issued last month by Senate Banking Committee Chair Christopher Dodd. As a result of opposition to his bill, Dodd announced a new plan for addressing the legislation to his Committee right before the Thanksgiving break in hopes of reaching workable compromises and gaining bi-partisan suport. While the new approach will hopefully aid the eventual success of financial reforms, it has also created a delay that will prevent the Senate from considering a complete financial reform bill until the new year.
With financial regulatory reform looming in 2010, regulators appear to be gearing up for the large amount of work that will be required to implement legislative changes. In a speech delivered earlier this week, SEC Chairman Schapiro outlined her agency's efforts to improve investor protection and restated her belief that "all securities professionals [who provide advice] should be subject to the same fiduciary duty" as well as an "effective oversight regime." Meanwhile, NASAA President Denise Crawford, voiced support for a legislative approach that preserves the "authentic fiduciary standard" and also announced the signing of a Memorandum of Understanding that will allow states to work with each other to regulate additional investment adviser firms if the threshold for federal registration is raised to $100 million assets under management. Such statements seem to confirm that regulators are laying the groundwork and will be ready to act quickly once Congress enacts the much anticipated financial reforms.
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