House Financial Services Committee Advances Investor Protection Act
The Financial Services Committee of the U.S. House of Representatives advanced H.R. 3817, the Investor Protection Act, out of committee yesterday. According to the Financial Services Committee's press release, key provisions of this bill include the following:
- an independent study of the regulatory structure for the securities industry;
- a doubling of the authorized fund for the U.S. Securities and Exchange Commission ("SEC") over five years;
- a requirement that every financial imtermediary who provides advice will have a fiduciary duty towards the customer; and
- an authorization for the SEC to prohibit mandatory arbitration provisions in customer contracts.
Although there was no reference in the Financial Services Committee's press release concerning the amendment to H.R. 3817 approved last week, which raises assets under management requirement from $25,000,000 to $100,000,000, this amendment will effectively result in many registered investment advisors being regulated at the state instead federal level.
Investment News is reporting that H.R. 3817 advanced out of committee with the controversial amendment that gives Financial Industry Regulatory Authority ("FINRA") regulatory authority over registered investment advisors, which are also dually registered as broker-dealers. According to Investment News, Financial Services Committee Chairman opposes this provision and will offer an amendment during the floor debate to strip out this provision from H.R. 3817.
Once the House releases a mark-up of H.R. 3817 as passed out of committee, RIA Compliance will share with its readers additional details about the proposed legislation.
Labels: Arbitration, Fiduciary, SEC, SRO
posted by bhill at 10:29 PM
Proposal for SEC to Study Use Mandatory Arbitration Clauses in Investment Advisory Agreements
The Obama Administration explains that the legislation should provide that before the SEC may exercise such authority, the SEC be required to study "whether investors are harmed by being unable to obtain effective redress of legitimate grievances, as well as whether changes to arbitration are appropriate."
Since many federally registered investment advisers utilize arbitration clauses in their client agreements and legislation on this topic has already been introduced in Congress, registered investment advisers will need to monitor the progress of this proposal to prohibit mandatory arbitration clauses and be prepared to make comments to lawmakers.
Labels: Arbitration
posted by bhill at 10:20 AM
