“To SRO or Not to SRO?” That is the question.

It seems there has been much in the news about whether to have the SEC (Securities and Exchange Commission), FINRA (Financial Investment Regulator Association) or an SRO (self regulating organization) perform annual examinations of registered investment advisers.

Read an article summarizing the issue, “Will Investment Advisers Be the Next Target of a Self-Regulatory Organization?” written by my partner Matt Pribila.

InvestmentNews, an online publication, did a survey about this very topic.  They surveyed 293 investment advisors and found 59% supported paying additional fees to the SEC to perform these examinations. The complete results can be found in an article entitled, “SEC or FINRA? No contest which one advisers chose, IN survey shows.”

Wasn’t the SEC also the governing body that missed the Madoff scandal when they performed their oversight inspection of RIAs?  Just saying….

Finally, I found an interesting take on the issue by Charles Schwab Advisers Services.  They disagree with the SRO approach.

My view on the matter is open your wallets because this will cost everyone more money.  The question will be as it always is: will more regulations protect the investor?  From the people I talk to (broker-dealers, RIAs hedge funds, etc.), they all seem to welcome more oversight if it helps to restore public confidence. Knee-jerk reactions are never welcome.


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