InvestmentNews reported that executives from Charles Schwab & Co. and TD Ameritrade brought up the idea of third-party exams of investment advisers to legislators. As we have reported, SEC Commissioner Daniel Gallagher recently revived this potential solution to the SEC’s lack of resources to examine advisers. The third-party examinations would be in lieu of an SRO for advisers or user fees paid by advisers for SEC exams.
Schwab’s executive vice president for adviser services, Bernie Clark, and senior vice president and acting general counsel, Jeff Brown, both expressed interest in the idea of third-party exams. In addition, TD Ameritrade’s managing director of adviser advocacy, Skip Schweiss, also told legislators that the idea has potential to help increase the frequency of adviser examinations.
According to former SEC Chairman, Harvey Pitt, who first brought up the option of third-party exams during his term, the SEC would not need congressional permission to require third-party exams. This could make it the most practical option considering that the SEC’s budget has barely moved of late, and the user fee bill proposed by Rep. Maxine Waters seems to be dead.