NAIFA Past President Tom Currey told the U.S. House Committee on Financial Services that legislation allowing a self-regulatory organization (SRO) to oversee investment advisers is the best way to close a regulatory gap that could harm consumers and undermine the integrity of all financial services professionals.
Mr. Currey explained that the majority of NAIFA members who are securities licensed are registered representatives of broker-dealers, and thus currently subject to regulation by the Financial Industry Regulatory Authority (FINRA). A substantial portion of these members are dually registered as investment adviser representatives for corporate Registered Investment Advisers.
Authorizing FINRA to examine investment advisers, as well as broker-dealers, would bolster consumer protection while keeping the process as manageable as possible for NAIFA members, Mr. Currey told the committee.
"Simultaneous broker-dealer and registered investment adviser exams would not only lead to a more effective examination process, it would be less burdensome and intrusive for financial professionals than having to submit to different exams at different times in order to comply with the rules and schedules of different regulators or SROs," Mr. Currey said. "It would clearly be more efficient and cost effective for NAIFA members if FINRA were allowed to expand its current, substantial examination capabilities to cover registered investment advisers than it would be to subject NAIFA members to a new SRO or to the SEC to perform this function."
Mr. Currey added, "Our hope is that the final result of this process will be an efficient regulatory scheme that protects middle market investors and the professionals who serve them."