New Securities Bill Could Streamline Regulations for Investment Advisers

Article excerpt

A bipartisan group of senators introduced legislation that would modernize a number of existing securities laws by eliminating many duplicative federal and state registration regulations. The Securities Investment Promotion Act of 1996 (S 1815), introduced by Senators Phil Gramm (R-Tex.), Alfonse M. D'Amato (R-N.Y.), Christopher J. Dodd (D-Conn.), Richard H. Bryan (D-Nev.) and Carol Mosely-Braun (D.-Ill.), would divide the responsibilities between the states and the Securities and Exchange Commission for supervising as many as 25,000 investment advisers.

The bill would exempt from registering with the SEC an investment adviser who manages less than $25 million in assets and who does not advise a mutual fund if the adviser is required to register with the state where he or she maintains the business. It would exempt other advisers from SEC registration if the SEC determined that registration would be unfair or a burden, and it would exempt investment advisers registered with the SEC from state investment adviser regulation; however, states may require registered investment advisers to file notices with the state and pay appropriate fees.

"This provision is good news for the increasing number of CPAs who offer investment advisory and financial planning services," said Andrea Andrews of Price Waterhouse in Washington, D.C. "It could relieve them of the burden of dual regulation and would solve the problems of applying many of the ambiguous registration requirements under the Investment Advisers Act of 1940." Andrews said the Senate bill was an improvement on past proposals that explicitly extended federal registration requirements to financial planners and permitted private rights of action against registrants. "Two things CPAs do not need are more regulation and more liability exposure. …