California eyes renewal fee for advisers at B-Ds, RIAs

California is considering charging broker-dealer and investment advisory representatives $25 per year to cover the cost of regulating more investment advisory firms, the state’s corporations commissioner, Preston DuFauchard, told InvestmentNews today.
California is one of the few states that do not charge an annual “renewal” fee for brokers and advisers, Mr. DuFauchard said. “We have been looking at a renewal fee, a very minimal fee, for registered reps of the broker-dealers or investment advisers,” he said.
There are 267,171 broker-dealer representatives in California and 47,065 investment adviser representatives, Department of Corporations spokesman Mark Leyes wrote in an email. That would mean the state could reap nearly $7.9 million in annual income from the charge.
Under financial service regulatory reform legislation being considered by the House of Representatives and draft legislation being considered by the Senate Banking Committee, states would take charge of investment advisory firms that manage less than $100 million, while the Securities and Exchange Commission would supervise advisory firms above that threshold.
Currently, states supervise advisory firms managing less than $25 million. That higher threshold will lead to an increase in the number of firms that states oversee — and will likely stretch the resources of their securities regulators.