| June 7
June 7 The U.S. Securities and Exchange
Commission expects state regulators to take over oversight this
month for about 2,400 investment advisers that are now its
responsibility, but the change may not diminish the agency's
Changes required by the Dodd-Frank financial reform law,
including a shift of mid-size advisers from federal to state
registration, will leave roughly 10,000 investment advisers
under the agency's authority, according to new figures posted on
the SEC's website this week.
That total includes 1,369 advisers to private funds - mainly
hedge funds and private equity funds who have already registered
with the agency under another Dodd-Frank mandate.
Overall, the shuffling will reduce the number of advisers
the agency must oversee by about 25 percent, from 12,623 to
about 10,000. But at the same time, assets under management by
those remaining advisers will total about $48.6 trillion - about
12 percent higher than the total assets overseen by the agency
in July, 2011, just before the Dodd-Frank law became effective
The calculations are based on data as of April 4.
The figures were released during the same week that U.S.
lawmakers conducted a hearing about legislation that would
require many registered investment advisers to be overseen by a
national self-regulatory organization.
Financial Services Committee Chairman Spencer Bachus, a
Republican from Alabama, and Rep. Carolyn McCarthy, a Democrat
from New York, unveiled the controversial bill in April because
the two lawmakers believe the SEC lacks the resources to provide
Now, some industry observers question whether the decrease
in the number advisers the SEC will now oversee will alleviate
The 1,369 newly registered private fund advisers will
present more complex, higher risk operations for the agency to
monitor than those of the 2,400 mostly retail advisers who are
switching to states, said Barbara Roper, director of investor
protection for the Consumer Federation of America.
"It suggests that their work load is at best, only
marginally reduced and could even be increased under this
change," Roper said.
State regulators lobbied for oversight of mid-sized advisers
during the legislative process that led to the Dodd-Frank Act.
Frauds and other inappropriate behavior by those advisers
are more likely to occur locally and they were better positioned
to address those cases than the SEC, they said at the time.
In addition, the SEC's resources limited its focus to larger
advisers, they said. The law ultimately required investment
advisers who manage between $25 million and $100 million in
assets to switch from the SEC to state registration.