AHEAD OF THE CURVE
MarketCounsel Writes to Congress Opposing the Adviser SRO Bill
(DISTRIBUTED JUNE 5, 2012)

In April 2012, House Financial Services Committee Chairman Spencer Bachus, R-AL, formally introduced a bill that would require most investment advisers to join a self-regulatory organization (“SRO”).  MarketCounsel believes this bill would be detrimental to the investment adviser industry, our financial markets, and the U.S. economy, while also negatively impacting investors.

The bill wreaks of politics.  There is not a single independent organization that has come out in favor of an SRO for investment advisers aside from the industry’s competitors or those with ties to FINRA.  None of the consumer watchdogs that will typically back any pro-consumer bill have supported this proposal.  Who is in favor of the bill?  The Investment Company Institute, the Managed Fund Association, the Financial Services Institute and other organizations whose members compete with fee based investment advisers.  Not surprisingly, those groups have used their lobbying power to secure exemptions from the bill for their members.

There will be a hearing on June 6, 2012 where the House Financial Services Committee (the “Committee”) will hear testimony about the bill.  Ironically, the insurance industry will have as many invited speakers as the investment adviser industry: one.

MarketCounsel is hard at work to stop this bill at every turn.  We have had numerous conversations with members of Congress as well as the Investment Advisers Association and will continue to push this issue day and night.  In addition, we sent the attached letter to all members of the Committee for their consideration in advance of the hearing.

We anticipate that the vote on whether to move the bill out of Committee will occur at the end of this month.  We will be in touch shortly with a specific appeal on what you can do to help defeat this bill.  Investment advisers struggle to get a strong voice in Washington because, by their very nature, independent investment advisers are, well, independent.  This weakness must be turned into our strength if we are going to defeat some of the strongest lobbyists in Washington and well-entrenched global financial services organizations.  We intend to mobilize our industry to defeat our larger, but less diverse, foes.

If you have any immediate questions about how these issues impact your firm or your clients, please contact us at (877) MKT-CNSL.