On April 25, 2012, Representative Spencer Bachus (R-Ala.), Chairman of the House Financial Services Committee, and Representative Carolyn McCarthy (D-N.Y.), a member of the Committee, introduced the Investment Adviser Oversight Act of 2012. The proposed legislation would amend the Advisers Act to provide for the creation of one or more National Investment Adviser Associations (SROs), to be registered with and overseen by the SEC, and require that each SEC- and state-registered investment adviser, unless exempt, become a member of an SRO. The bill would exempt from the SRO membership requirement advisers that (1) advise one or more registered investment companies or (2) have total assets under management at least 90% of which are attributable to one or more of the following clients: (a) non-U.S. investors; (b) qualified purchasers (as defined in the 1940 Act); (c) private funds; (d) collective trust funds; (e) charitable investment funds; or (f) other institutional clients, such as mortgage REITs, issuers of asset-backed securities, employee securities companies or business development companies. Investment advisers that are affiliated with an exempt adviser could also claim an exemption from the SRO membership requirement if 90% or more of the combined assets under management of the exempt adviser and the affiliated adviser are attributable to the clients listed above. The bill provides, however, that the SEC may determine that an affiliate is an “independent affiliate” that has “compliance programs, operations and businesses that are sufficiently independent” from those of the exempt adviser such that membership of the independent affiliate in an SRO is necessary for the protection of investors. The proposed legislation would also grant an SRO the authority to conduct examinations of its members, provided that state-registered advisers that maintain their principal office and place of business in a state that adopts a plan to conduct on-site examinations every four years generally would be exempt from SRO examinations. Under the bill, an SRO would have the authority to enforce the provisions of the Advisers Act and the rules thereunder. Finally, the bill would allow an SRO to adopt its own rules, subject to the approval of the SEC after notice, a comment period and a cost-benefit analysis performed by the SRO.