Survey of State Advisers Shows Opposition to SRO Oversight

Survey of State Advisers Shows Opposition to SRO Oversight (6/5/12)
A recent survey of state-registered investment advisers in Massachusetts shows consistent opposition to a recent bill that would require the establishment of an SRO for regulating advisers. The Massachusetts Securities Division sent the survey to 649 advisers, more than half of whom responded. The survey responses highlight advisers’ widespread opposition to an SRO because of the significant membership fees required, which are estimated to be at least $10,000 per year as compared to the $300 fee to register in Massachusetts. Most respondents had fewer than 5 employees and 43% had gross revenues less than $50,000 per year. The respondents indicated that an SRO would result in hiring fewer employees (or reducing staff) and many would have to close and join larger firms.

OUR TAKE: We think this will become a powerful lobbying point. The states will seek to maintain oversight of advisers with less than $100 AUM, arguing that an SRO would hurt small businesses. The SEC won’t likely lose oversight of fund managers and large institutional advisers. An SRO would be left to regulate all others.

http://www.sec.state.ma.us/sct/sctpdf/Report_on_IA_Impact.pdf