A study by a Georgetown University professor about advice industry regulation will suggest that accountants or another third party be put in charge of financial adviser examinations, according to Tom Bradley, president of TD Ameritrade Institutional, which sponsored the report.
After giving the study a preliminary review yesterday, Mr. Bradley said that the white paper by James Angel will offer suggestions that go beyond the current options being bandied about. Those include ramping up funding for the Securities and Exchange Commission — the current regulator of larger firms — or creating a self-regulatory organization such as Finra to police the industry.
“The paper that will come out from Jim Angel will suggest another potential option, to put this out to competition and potentially allow accounting firms, for example, to do the examinations for advisers under the guidelines of the SEC,” Mr. Bradley told about 400 advisers attending the firm's regional conference in Washington today.
The Dodd-Frank financial reform legislation called for increased scrutiny of investment advisers, which the SEC has said it can examine only about every 11 years. The commission has said it will need more resources in order to boost its examinations program.
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The Financial Industry Regulatory Authority Inc., which examines broker-dealers, has said that it would like to take on that responsibility for investment advisers, too.
Legislation has been drafted in the House that would give the exam duties over to one or more SROs.
Mr. Bradley said only one thing is clear: “Either way, what will likely happen is that you'll have to pay something.”
The paper is due to be released next week, according to TD Ameritrade spokeswoman Jessica Taylor.
