The SEC previously released a staff study on enhancing investment adviser examinations required by Section 914 of the Dodd-Frank Act.  The staff noted the SEC faces significant capacity challenges in examining registered investment advisers.  Some of the recommendations of the staff were that Congress should consider:

  • Authorizing one or more self regulatory organizations, or SROs, to examine, subject to SEC oversight, all SEC-registered investment advisers; or
  • Authorizing FINRA to examine dual registrants for compliance with the Investment Advisers Act.

As a result, on September 13, 2011, the House Committee on Financial Services will hold a hearing to consider proposals to improve investment adviser oversight.  As part of that hearing it will consider a draft bill titled the Investment Oversight Act of 2011.  The bill would require investment advisers to be a member of a registered national investment adviser association.  The bill however would exempt most advisors to hedge funds, private equity funds and venture capital funds from such registration.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.