On April 19, the House Financial Services Committee Ranking Member Maxine Waters re-introduced a bill that would fund the SEC’s investment adviser oversight through the implementation of industry user fees. Representative Waters introduced a similar bill in 2012 but it did not progress because, at that time, other bills were being presented to bring advisers under oversight by a self-regulatory organization (a “SRO”).

The bill proposes to collect an annual fee from investment advisers that are subject to inspection or examination by the SEC to defray the costs of such inspections and examinations. The bill does not specify a mechanism for calculating the amount of such user fees. However, it includes several objective factors that will determine the amount of fees to be paid by an investment adviser, including assets under management, number of clients and other risk characteristics as the SEC may determine.

Representative Waters’ bill has gained support from various industry groups, including the Investment Adviser Association and the North American Securities Administrators Association. These groups have deemed the proposed bill to be a cost-effective solution to ensuring the funding of enhanced oversight of investment advisers without the use of additional taxpayer dollars.

Because the precise form the proposed SRO would take has not been specified, it is unclear whether these developments will be welcomed by investment advisers. We will keep you apprised of new developments regarding the oversight of investment advisers as we learn more.