The SEC is asking Congress to give it more power to strengthen its investment adviser examination program including through assessing fees to fund exams, according to a new study from the commission.
The Study on Enhancing Investment Adviser Examinations recommends authorizing the SEC to impose user fees on SEC-registered investment advisers to fund their exams by the Office of Compliance Inspections and Examinations.
The SEC has also asked Congress to authorize one or more self-regulatory organizations to examine, subject to the agency's oversight, all SEC-registered investments advisers and to authorize the Financial Industry Regulatory Authority to examine dual registrants, which are dually-registered broker-dealers and investment advisers, for compliance with the Investment Advisers Act of 1940.
More staff and resources are needed given that the number of registered investment advisers has grown 38.5% from 8,581 advisers to 11,889 advisers from October 2004 to Sept. 30, 2010, the SEC said. Their assets under management have also increased during that same period from $24.1 trillion to $38.3 trillion.
"While the Commission's resources and the number of OCIE staff may increase in the next several years, the number of OCIE staff is unlikely to keep pace with the growth of registered investment advisers," the SEC wrote. "The Commission's examination program requires a source of funding that is adequate to permit the Commission to meet the new challenges it faces and sufficiently stable to prevent adviser examination resources from periodically being outstripped by growth in the number of registered investment advisers."