SEC’s Walter says she is open to alternatives to overseeing investment advisers

April 19, 2013

By Emmanuel Olaoye, Compliance Complete

WASHINGTON, Apr.19 (Thomson Reuters Accelus) –¬†There are several ways to ensure adequate examinations investment advisers: by charging investment advisers user fees, getting a bigger budget from Congress or through a self-regulated organization that oversaw investment advisers, SEC Commissioner Elisse Walter said. The important thing is to get on with it.¬†

“The key to solving the problem is very controversial. I think the most important thing is to solve it … I’ll be happy if we get a bigger budget to cover this … It is a problem that needs to be fixed and sooner rather than later,” said Walter.

Walter, who was chairman of the SEC until last week, was speaking to reporters after an address to the 2013 public policy conference of the North American Securities Administrators Association.

Questions about the oversight of investment advisers reached fever pitch when Bernard Madoff admitted using his brokerage firm to steal billions of dollars from his clients.

The Financial Industry Regulatory Authority (FINRA) has lobbied Congress for the right to oversee investment advisers, but the adviser industry is opposed to a self-regulatory organization and prefers to remain under the watch of the SEC.

Walter has said in the past that a self-regulated organization should oversee investment advisers because the SEC does not have the resources to regulate the industry by itself.


During her speech, Walter said the SEC continued to face challenges with examining advisers because of its limited resources.

Of the firms that registered as advisers with the SEC in fiscal year in 2012, the agency examined only 8 percent, she said.

The challenge was not the increase in the number of firms the SEC oversees but the information it must now analyze.

Despite the Dodd-Frank Act requiring mid-size investment advisers to switch from federal to state registration in June 2012, Walter said the squeeze has not eased.

The SEC inherited new responsibilities in overseeing private funds under Dodd-Frank. As a result, the agency faces challenges in analysing the information that the firms report on their registration filings, she said.

A substantial increase in the SEC’s budget could address the issue, she said.

“Congress needs to actively fund existing exam programs or create an effective alternative,” she said.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus ( Compliance Complete ( provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter at:

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