Financial Services Reform 


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    Read an overview of the impact of the Dodd-Frank legislation on CPA financial planners, including the AICPA’s position on various issues.



    UPDATE: SEC “Never-Before Examined” Initiative (February 2014)
    The SEC is pressing ahead with an initiative to examine financial advisers who have been registered for three years or longer but never examined. A letter sent to unexamined advisers outlined the SEC’s two-pronged approach. “The risk-assessment approach is designed to obtain a better understanding of a registrant. This type of exam may include a high-level review of an adviser's overall business activities, with a particular focus on the compliance program and other essential documents needed to assess the representations made on disclosure documents. The focused review approach includes conducting comprehensive, risk-based examinations of one or more of the higher-risk areas of the business and operations of advisers selected for an examination.

    UPDATE: SEC Chief says Fiduciary Rule is Primary, Immediate Focus (February 2014)
    At a conference in Washington, SEC Chairman Mary Jo White said the SEC is intensifying its consideration of the question of the role and duties of investment advisers and broker-dealers, with the goal of enhancing investor protection. After her presentation, she told reporters that a decision on a uniform fiduciary rule was a “primary, immediate focus” for the SEC this year, in addition to considering whether there should be harmonization of investment adviser and broker-dealer regulation. 

    The AICPA delivered letters to Chairman White last summer, emphasizing our position that the public’s interest must be placed at the forefront; that it is critical that all advisers providing personalized investment advice to retail investors be held to a minimum standard of care, with suggestions on what this minimum standard should entail; and that the enormous negative impact on capital markets, society and the economy when advice is driven by an adviser’s self-interest is not quantifiable. The AICPA will continue to monitor this issue and take action as necessary

    ADVOCACY: AICPA Submits Comments to SEC in Connection with Fiduciary Standard (July 2013)
    As previously communicated, on January 21, 2011, the SEC submitted to Congress its study on the obligations and standards of conduct of financial professionals. The study recommended that the SEC adopt and implement a uniform fiduciary standard of conduct for broker-dealers and investment advisers -- no less stringent than currently applied to investment advisers under the Advisers Act -- when those financial professionals provide personalized investment advice about securities to retail investors. The AICPA has had a long-standing position of supporting this elevated standard of care in this situation.

    Subsequently, on March 1, 2013, the SEC requested data and other information on such a uniform fiduciary standard of conduct, and also requested comments on proposed concepts. Various elements of this request raise concerns that the standard would ultimately be weakened.  The AICPA and other like-minded organizations sent a letter on June 4th to SEC Chair, Mary Jo White, urging her to establish a standard that is at least as strong as the existing standard for investment advisers.

    The AICPA delivered a second letter on July 5th to Chairman White, emphasizing our position that the public’s interest must be placed at the forefront; that it is critical that all advisers providing personalized investment advice to retail investors be held to a minimum standard of care, with suggestions on what this minimum standard should entail; and that the enormous negative impact on capital markets, society and the economy when advice is driven by an adviser’s self-interest is not quantifiable.

    The AICPA will continue to monitor this issue and take action as necessary.

    ADVOCACY: AICPA and Other Like-Minded Organizations Voice Opposition to Weakened Fiduciary Standard (June 2013)
    As previously communicated, on January 21, 2011, the SEC submitted to Congress its study on the obligations and standards of conduct of financial professionals. The study recommended that the SEC adopt and implement a uniform fiduciary standard of conduct for broker-dealers and investment advisers -- no less stringent than currently applied to investment advisers under the Advisers Act -- when those financial professionals provide personalized investment advice about securities to retail investors. The AICPA has had a long-standing position of supporting this elevated standard of care in this situation.

    Subsequently, on March 1, 2013, the SEC requested data and other information on such a uniform fiduciary standard of conduct, and also requested comments on proposed concepts. Various elements of this request raise concerns that the standard would ultimately be weakened. Therefore, AICPA and other like-minded organizations urged SEC Chair, Mary Jo White, in a letter delivered on June 4th, to establish a standard that is at least as strong as the existing standard for investment advisers.

    The AICPA will continue to monitor this issue and take action as necessary.

    UPDATE: Legislation Introduced to Impose SEC User Fees to Fund RIA Exams (July 2012)
    On July 25, U.S. Representative Maxine Waters (D-CA) introduced the “Investment Adviser Examination Improvement Act of 2012,” which would provide the SEC with the authority to impose and collect user fees on investment advisers (“RIAs”) for the purpose of increasing the number and frequency of SEC examinations.  This bill is co-sponsored by Reps. Barney Frank and Michael Capuano.

    ADVOCACY: AICPA Advocacy on Investment Adviser Oversight (June 2012)
    To reiterate our long-standing position in support of keeping investment adviser oversight with the SEC and/or states, in response to the June 6th hearing in connection with H.R. 4624, the Investment Adviser Oversight Act of 2012, AICPA sent further correspondence to House Financial Services Committee Chairman Spencer Bachus and Ranking Member Barney Frank. The AICPA strongly believes that the principles-based regulatory approach of the Investment Advisers Act and its related rules should continue to govern investment advisers and further, that regulatory oversight remain exclusively with the SEC and/or states. It is in the best interest of the investing public to keep oversight with the SEC. Moreover, the costs associated with paying fees to a SRO may threaten the success of smaller firms, harming small businesses across the country. Read the letter submitted to Bachus and Frank.

    ADVOCACY: AICPA Urges Congress to Keep Investment Adviser Oversight with SEC (April 2012)
    On April 26, the AICPA expressed its opposition to the Investment Adviser Oversight Act of 2012, which was introduced in the House of Representatives on April 25 by House Committee on Financial Services chairman Spencer Bachus (R-Ala.) and Representative Carolyn McCarthy (D-NY), and urged Congress to keep oversight of investment advisers with the Securities and Exchange Commission (SEC). 

    In response to the bill, AICPA CEO Barry Melancon, CPA, CGMA stated: “We believe that the SEC’s core mission to protect investors requires adequate regulation of the investment advisory profession. The SEC remains the proper regulatory body to protect the public’s best interest.” Melancon continued, “Providing the SEC with resources to properly enforce their rules is the best solution for investors and the public.”

    Since early 2009, the AICPA has advocated its position that investment adviser oversight remain with the SEC and states in lieu of shifting to an independent SRO.

    On November 24, 2010, AICPA submitted a comment letter articulating our position that the principles-based regulatory approach of the Investment Advisers Act and its related rules should continue to govern investment advisers and further, that regulatory oversight remain exclusively with the SEC and/or states. Providing the SEC with resources to properly enforce their rules, even if it means assessing additional fees on investment advisers, is the best solution for investment advisers and the public.

    We reiterated our position in a comment letter dated November 3, 2011 in response to the discussion draft, Investment Adviser Oversight Act of 2011, stating that an SRO is inherently conflicted and is not the right answer for regulation of investment advisers. We believe that FINRA would bring a broker-dealer perspective, and bias, to investment adviser examinations and that its rules-based, check-the-box approach is not conducive to adequate regulation of the investment advisory profession nor is it in the public’s best interest as it diverts the focus from placing the investor’s interest first to simply complying with rules.

    A study by The Boston Consulting Group in December 2011 found that funding an enhanced SEC examination program would likely cost half that of creating a SRO for investment advisers.  The report further found that funding a SRO would likely cost twice as much for each investment advisory firm as paying user fees to the SEC and that, given the SEC would still have to oversee the SRO, any cost savings to the SEC through creation of a SRO would be minimal.

    UPDATE: SEC Addresses Family Office Exclusion Questions and Posts FAQs on Form ADV and IARD (February 2012)
    On January 19, the SEC posted a set of staff responses to questions about the “family office rule” (rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940), and expects to update this page from time to time to provide responses to additional questions. The responses represent the views of the staff of the Division of Investment Management and are not a rule, regulation, or statement of the SEC, and the Commission has neither approved nor disapproved the information. Responses cover questions about: ownership and control of a family office, key employees, family members, non-advisory services and the grandfathering provision.

    Additionally, the staff of the Division of Investment Management also supplemented its “Frequently Asked Questions on Form ADV and IARD” with questions regarding mid-sized advisers (see additional FAQ page dedicated to mid-sized advisors), master-feeder arrangements, the identification of a private fund with its Form D file number, private fund identification numbers (PFIDs) and the calculation of regulatory assets under management.

    UPDATE: Form ADV Amendment Due March 30, 2012 (January 2012)
    The SEC is requiring that mid-sized advisers with assets under management (AUM) between $25 and $100 million switch to state registration by June 28, 2012 (with the exception of advisers with their principal office and place of business in New York or Wyoming).

    All investment advisers registered with the SEC must file a Form ADV amendment by March 30, 2012 declaring their regulatory assets under management. The SEC adopted revisions to the instructions of Part 1A of Form ADV to implement a uniform method for advisers to calculate AUM in addition to assessing whether an adviser is eligible to register with the Commission.

    Read the final rule implementing these changes. Read FAQs from the SEC on Form ADV and IARD.  Visit the North American Society of State Securities Administrators (NASAA) for contacts at the state level and the Switch Resource Center.

    UPDATE: New Study Supports AICPA Investment Adviser Position (December 2011)
    Since early 2009, AICPA has advocated its position that investment adviser oversight remain with the SEC and states in lieu of shifting to an independent SRO or FINRA. On December 15, Boston Consulting Group, commissioned by a group of like-minded organizations with positioning similar to AICPA’s, released a study that found that establishing a SRO to oversee investment advisers would cost at least twice as much as funding an enhanced SEC examination program via user fees. The cost of shifting oversight to FINRA did not fall far behind the cost of establishing an independent SRO. While AICPA chose not to be directly involved in the study in consideration of the best interest of the overall membership and our ability to positively impact the outcome of this debate, we are pleased with the result and will point to the study as support for our position as further advocacy takes place with the House Committee on Financial Services. Following are materials to help you get up to speed with the latest:

    • AICPA positions on Dodd-Frank
    • Boston Consulting Group Study on Investment Adviser Oversight                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
    • Press Release Announcing the Study
    • Survey of Investment Advisers in Terms of Their Preference for Regulator
    • Special Report from Bob Veres in connection with the Study

    The AICPA continues to actively monitor this issue and will take action as necessary to positively impact legislation. We will keep you apprised of developments as they unfold. Please email us at financialplanning@aicpa.org with any questions or concerns.

    UPDATE: Senator Bachus Postpones Action on Investment Adviser Oversight (December 2011)
    A spokesman for House Financial Services Committee announced that Chairman Spencer Bachus (R-Ala.) will not introduce formal legislation shifting oversight of investment advisers from the SEC to a self-regulatory organization (SRO), likely to be the Financial Industry Regulatory Authority (FINRA), until Spring 2012.

    The AICPA opposes the creation of a self-regulatory organization (SRO) for investment advisers and believes that FINRA would bring a broker-dealer perspective to investment adviser examinations and that its rules-based approach is not conducive to adequate regulation of the investment advisory profession.

    On November 3, the AICPA submitted a letter to Chairman Spencer Bachus and Ranking Member Barney Frank regarding the regulation of investment advisers and the standard of care for broker-dealers when giving investment advice to their clients. For more information, read an overview of the impact of the Dodd-Frank legislation on CPA financial planners, including the AICPA’s position on various issues.

    ADVOCACY: AICPA Submits Comment Letter Regarding Regulation of RIAs and Standard of Care for Broker-Dealers (November 2011)
    On November 3rd, the AICPA submitted a letter to the House Financial Services Committee Chairman Spencer Bachus and Ranking Member Barney Frank regarding the regulation of investment advisers and the standard of care for broker-dealers when giving investment advice to their clients.

    The letter reinforced our position that the principles-based regulatory approach of the Investment Advisers Act and its related rules should continue to govern investment advisers and further, that regulatory oversight remain exclusively with the SEC and states. Providing the SEC with resources to properly enforce their rules, even if it means assessing additional fees on investment advisers, is the best solution for investment advisers and the public.

    Further, we oppose the creation of a self-regulatory organization (SRO) for investment advisers and believe that FINRA would bring a broker-dealer perspective to investment adviser examinations and that its rules-based approach is not conducive to adequate regulation of the investment advisory profession.

    Finally, we support a uniform fiduciary standard of conduct for broker-dealers and investment advisers when those financial professionals provide personalized investment advice about securities to retail investors. We support this elevated standard of care so long as the fiduciary standard is no less stringent than the standard currently applied to investment advisers under the Investment Advisers Act.

    For more information, read an overview of the impact of the Dodd-Frank legislation on CPA financial planners, including the AICPA’s position on various issues.

    UPDATE: Hearing on Regulation and Oversight of Broker-Dealers and Investment Advisers  (September 2011)
    The House Financial Service Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on Tuesday on the regulation and oversight of broker-dealers and investment advisers, focusing on studies mandated by the Dodd-Frank Act on the effectiveness of standards of care applicable to broker-dealers and investment advisers, and on the need for enhanced examination and enforcement resources for investment advisers.

    Read an overview of the impact of the Dodd-Frank legislation on CPA financial planners, including the AICPA’s position on various issues. The PFP Division continues to actively analyze and monitor these issues in collaboration with the AICPA’s Congressional Affairs Team.  We will keep you apprised of developments as they unfold.

    UPDATE: New York Financial Planning Bill (August 2011)
    The New York State Assembly has introduced a bill (no. A05378) that would require financial planners advising the elderly to hold the CFP credential. The bill defines financial planner as “an individual, business or entity that sells, promotes or holds themselves out to sell or promote or provide investment planning, income tax planning, education planning, retirement planning, estate planning, risk management, and any other area with respect to the management of financial resources; including but not limited to 401(k)s, individual retirement accounts (IRAs), Roth IRAs, SEP-IRAs and IRA rollovers.” The AICPA is aware of this issue and will provide support as necessary in educating legislators that this definition of financial planner encompasses work that CPAs do in their normal course of business and for which they are already adequately and effectively regulated by the State and adhere to a stringent standard of care such that there is no need to be a CFP to provide this advice. We will keep you apprised of developments as they arise.

    UPDATE: Results from SEC’s Open Meeting (June 2011)
    On June 22, 2011, the SEC held an open meeting to consider adopting rules and rule amendments under the Investment Advisers Act of 1940 (“Advisers Act) to implement provisions of Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Key outcomes relevant to CPA financial planners are summarized below. Also, stay tuned for an AICPA web seminar to be held in the fall, Investment Adviser SEC to State Transition and Other Compliance Issues, with compliance expert, Ellen Bruno, which will dive deeper into these changes.

    UPDATE: Mid-Sized Advisors Must Switch to State Regulation by June 28, 2012 (June 2011)
    As reported in the June 23rd edition of PFP News, the SEC is requiring that mid-sized advisers with assets under management between $25 and $100 million switch to state registration.

    Note however, that advisers with their principal office and place of business in Minnesota, New York and Wyoming with between $25 and $100 million in AUM must remain registered with the SEC. New York did not provide confirmation that they conduct exams of advisory firms when surveyed by the SEC; Minnesota reported it doesn’t conduct exams; and Wyoming doesn’t have an investment adviser law.

    All investment advisers registered with the SEC must file a Form ADV amendment by March 30, 2012 declaring their regulatory assets under management. The SEC is adopting revisions to the instructions of Part 1A of Form ADV to implement a uniform method for advisers to calculate AUM in addition to assessing whether an adviser is eligible to register with the Commission.

    Note that the SEC is also providing a buffer to prevent advisers from having to frequently switch between SEC and state registration. Specifically, advisers currently unregistered or registered with a state must commence SEC registration once assets reach $110 million.  Firms need not withdraw from SEC registration until assets fall below $90 million per the most recent annual updating amendment.

    Read a press release from the SEC regarding this and other Dodd-Frank amendments to the Advisers Act.
    Read the final rule implementing these changes.

    Also on the agenda was whether to adopt a rule defining “family offices” that will be excluded from the definition of an investment adviser under the Advisers Act. The AICPA’s PFP and Tax Executive Committees previously commented on the proposed rule.  Many of the AICPA’s suggestions were adopted in the final rule.

    Read the AICPA’s comment letter, the summary of the AICPA’s recommendations, or a comparison of the AICPA’s recommendations with the provisions of the final rule.

    The final rule states that a family office is exempt from registration if it provides investment advice only to “family clients,” is wholly owned by family clients and is exclusively controlled by family members and/or family entities, and does not hold itself out to the public as an investment adviser.  Note the expansion of the definition to include “family clients” in lieu of the more narrow “family members” in the proposed rule.

    If family offices do not meet the terms of the exclusion, they will have to register with the SEC or applicable state securities authorities by March 30, 2012. A family office that does not meet the conditions of the rule may petition for an exemptive order from the SEC. Existing exemptive orders will not be rescinded.  Finally, the rule allows for a longer transition period (through December 31, 2013) for the termination of relationships with charitable entities or non-profit organizations that are not exclusively funded by the family.

    Read a press release from the SEC regarding this new rule.
    Read the final rule defining family offices.

    UPDATE:  RIA SEC to State Transition Extension Likely (July 2011)
    On July 21st, an estimated 4,000 investment advisers registered with the SEC with less than $100 million in assets under management must switch to state registration. This switch was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and requires that advisers file an amendment to their Form ADV no later than August 20, 2011, reporting the market value of their AUM within 30 days of filing.

    Note that the deadline for this transition will likely be extended to the first quarter of 2012, according to an April 8th letter from Rober Plaze, associate director of the SEC's Division of Investment Management, to David Massey, President of the North American Securities Administrators Association (NASAA). It is likely that the SEC will adopt implementing rules by July 21st, but will allow a grace period for advisers to come into compliance with requirements; however, this extension is subject to approval by the five SEC commissioners.

    NASAA has developed tools to provide information to those investment advisers preparing to switch to state regulation. NASSA's online IA Switch Resource Center contains background information, answers to frequently asked  questions, and a directory of state contacts. Users of the site also are able to send their questions to NASAA.

    UPDATE: FINRA Hires Oxley to Lobby for Oversight of RIAs (March 2011)
    In the wake of the Dodd-Frank-mandated SEC report on RIA examinations, FINRA continues to lobby for authority to regulate investment advisers. FINRA recently hired Michael Oxley, former congressman and co-writer of the Sarbanes-Oxley Act of 2002, to lobby for FINRA to promote self-regulation of investment advisers. The PFP Division strongly believes that the principles-based regulatory approach of the Investment Advisers Act and its related rules should continue to govern investment advisers and further, that regulatory oversight remain exclusively with the SEC and/or states. The AICPA submitted a comment letter on November 24, 2010 reinforcing our position.

    UPDATE: SEC Report Released on Broker-Duty Standard of Care (January 2011)
    On January 21st, the SEC submitted to Congress its study on the obligations and standards of conduct of financial professionals, as required by Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The study noted confusion among retail investors over the roles and standards of care applicable to investment advisers and broker-dealers providing personalized investment advice about securities. Furthermore, the study noted that investors should receive the same protection regardless of whether they choose to work with an adviser or a broker.

    As outlined in an accompanying press release from the SEC, the study makes the following recommendations:

    • That the SEC adopt and implement a uniform fiduciary standard of conduct for broker-dealers and investment advisers -- no less stringent than currently applied to investment advisers under the Advisers Act -- when those financial professionals provide personalized investment advice about securities to retail investors. Note that PFP Executive Committee supports this elevated standard of care in this situation.
    • That when broker-dealers and investment advisers are performing the same or substantially similar functions, the SEC consider whether to harmonize the regulatory protections applicable to such functions. Such harmonization should take into account the best elements of each regime and provide meaningful investor protection, while continuing to provide access to the various fee structures, account options, and types of advice that investment advisers and broker-dealers provide.

     We will continue to keep you apprised of developments as the SEC adopts and implements a uniform fiduciary standard of care and considers harmonization of the regulatory protections.

    Read the Bob Veres' summary and analysis of the SEC Report.

    UPDATE: SEC Report Released on Study of RIA Examinations (January 2011)
    On January 19th, the SEC released its staff report, Study on Enhancing Investment Adviser Examinations, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The study reports that the current SEC registered investment adviser examination program faces significant capacity and funding challenges.  The report recommends that Congress consider the following three options to strengthen the SEC’s current investment adviser examination program.

    1. Impose “user fees” on SEC-registered investment advisers that could be retained by the Commission to fund the investment adviser examination program;
    2. Authorize one or more self regulatory organizations (“SROs”) to examine, subject to SEC supervision, all SEC-registered investment advisers; or
    3. Authorize FINRA to examine dual registrants for compliance with the Investment Advisers Act of 1940.

    The AICPA submitted a comment letter to the SEC on November 24th, reinforcing our position that the principles-based regulatory approach of the Investment Advisers Act and its related rules should continue to govern investment advisers, and further, that regulatory oversight should remain exclusively with the SEC and/or states.  We will continue to keep you apprised of developments as Congress considers the three options proposed in the SEC’s report.

    UPDATE: GAO Report Concludes Additional Oversight of Financial Planners Duplicative (January 2011)
    On January, 18th, the U.S. Government Accountability Office (GAO) submitted the following report to Congress, “Consumer Finance:  Regulatory Structure for Financial Planners Is Generally Comprehensive, but Consumer Protection Issues Remain." This report summarizes the findings of the GAO’s study of the current state and federal oversight structure and regulation of financial planners, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. It also lays forth the GAO’s conclusions and recommendations.

    Given the current regulatory regime, the GAO concluded that additional financial planning regulation or oversight would be duplicative.  The GAO’s conclusion is generally consistent with the AICPA's position, which was articulated to the GAO by PFP Division staff in August 2010. On page 37 of the report, the GAO emphasized that “existing statutes and regulations appear to cover the great majority of financial planning services, and individual financial planners nearly always fall under one or more regulatory regimes, depending on their activities. While no single law governs the broad array of activities in which financial planners may engage, given available information, it does not appear that an additional layer of regulation specific to financial planners is warranted at this time.”

    The GAO recommended several “actions that can be taken that may help address consumer protection issues associated with the oversight of financial planners,” which can be found on page 38 of the report. 

    UPDATE: Dodd-Frank Wall Street Reform and Consumer Protection Act: A Primer for CPAs (December 2010)
    The AICPA’s newest white paper provides a comprehensive analysis of the many provisions of critical importance to CPAs, including those related to CPA financial planners. It highlights the key points of the Act and describes what they mean for CPAs and their clients or employers.

    ADVOCACY: AICPA Comments on Proposed SRO Oversight for Investment Advisers (November 2010)
    The AICPA has been monitoring the SEC’s regulatory initiatives under the Dodd-Frank Act, and have paid specific attention to the impact of possible FINRA or other self-regulatory organization (SRO) oversight for investment advisers. The Dodd-Frank Act required a study of the examination and enforcement resources for investment advisers, and the necessity of a SRO to “augment the Commission’s efforts in overseeing investment advisers.”

    In early November, the CEO of FINRA, Richard Ketchum, posted a comment letter to the SEC’s website laying out what a SRO for investment advisers might look like, and claimed that FINRA, not the SEC, was better able to handle the job. Given that the possibility of SRO oversight was gaining traction, the AICPA submitted a comment letter to the SEC on November 24th, reinforcing our position.

    Specifically, we emphasized that the AICPA strongly believes that the principles-based regulatory approach of the Investment Advisers Act and its related rules should continue to govern investment advisers and further, that regulatory oversight remain exclusively with the SEC and/or states. Providing the SEC with resources to properly enforce their rules, even if it means assessing additional fees on investment advisers, is the best solution for investment advisers and the public.

    UPDATE: SEC Proposes Rules to Improve Oversight of Investment Advisers (November 2010)
    The SEC proposed rules on November 19th to improve the oversight of investment advisers and to help advisers transition from SEC to state registration. The proposal implements exemptions from registration for advisers to venture capital firms and for certain advisers to private funds. The SEC also proposed changes to Form ADV to implement the transition of mid-sized investment advisers (between $25 and $100 million in assets under management) from SEC to State regulation as provided in the Dodd-Frank Act.

    ADVOCACY: AICPA Comments on Family Office Proposed Rule (November 2010)
    The AICPA PFP and Tax Executive Committees recently submitted comments to the SEC on the Proposed Rule 202(a)(11)(G), which would exclude “family offices” from the definition of an investment adviser under the Investment Advisers Act of 1940 and thus would not subject them to regulation under the Advisers Act. Our comments focused on various definitions and questions posed in the Proposed Rule and identified specific practical recommendations that we believe best serve the interests of the investing public, while taking into account the objective of the SEC to appropriately limit the scope of the family office exemption to traditional single family offices.

    Specifically, we addressed the definition of family clients, ownership and control of family offices, the provision that prohibits a family office from holding itself out to the public as an investment adviser, the need for additional guidance with respect to the grandfathering provisions, and previously issued exemptive orders. Lastly, we commented on two other matters not specifically addressed in the Proposed Rule that we suggest warrant consideration by the SEC, namely investment advisory services provided without compensation and relief provisions to rectify inadvertent and unintentional violations.

    Read a copy of the SEC's October 12th Release.
    Read a summary of the proposed rule from the October 20th edition of PFP News.
    Read more from Journal of Accountancy.

    UPDATE: Proposed Exemption for "Family Offices" Under Investment Advisers Act of 1940 (October 2010)
    The SEC is proposing a rule to define “family offices” that would be excluded from the definition of an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”) and thus would not be subject to regulation under the Advisers Act. Read a brief summary of the proposal from the October 20th edition of PFP News.

    ADVOCACY: AICPA Meets with GAO to Discuss Study on Regulation of Financial Planning (August 2010)
    As previously communicated in PFP News, one of the many studies commissioned within the Dodd-Frank Wall Street Reform and Consumer Protection Act is to evaluate the current state and federal oversight structure and regulations for financial planners. On Monday, August 16, the AICPA Congressional Affairs and PFP Division staff met with employees of the Government Accountability Office (GAO) who are commissioned to report their findings and recommendations as it relates to regulation of financial planning. AICPA believes:

    Additional oversight of financial planning would be duplicative since the Bureau of Consumer Financial  Protection (CFPB) created by the Dodd-Frank Act has oversight over financial planning that is not currently regulated, thereby eliminating any gaps in regulation. (Note that in recognition of the existing comprehensive regulation of CPAs, all licensed CPAs have been excluded from regulation by the CFPB).

    Because CPAs are subject to regulation by their state boards of accountancy in any advice that they provide and further, by the SEC or states when providing investment advice, additional regulation of the profession of financial planning is duplicative for CPA financial planners.  Our goal, first and foremost, is to protect the public’s best interest, while also recognizing the regulatory framework that currently exists for CPAs.

    All financial planners should be held to a minimum standard of care which includes acting with integrity, objectivity, due care, competence, providing full disclosure of any conflicts of interest, attaining client consent if a conflict exists, maintaining the confidentiality of all client information, disclosing to the client of any commission or referral fees, and serving the public interest when providing any of these financial services.

    The GAO has and will be meeting with many other stakeholders and will issue their report with recommendations by late January. The AICPA will continue to monitor the progress on this study and provide additional input to the GAO as it is requested. If you have any questions or concerns, please contact us at regulatoryreform@aicpa.org.

    UPDATE: The Dodd-Frank Wall Street Reform and Consumer Protection Act: Financial Regulatory Reform Legislation (August 2010)
    On August 12th, Wes Nissen, attorney with Winston & Strawn, shared some need to know information for CPA financial planners regarding recent regulatory reform. Download archived materials and listen to a web seminar recording of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The recording will cover:

    • High level overview of the bill and what led to regulatory reform
    • Consumer Financial Protection Bureau
    • Regulation of financial planning as a profession
    • AUM threshold change
    • Fiduciary standard for broker/dealers when providing investment advice
    • Possibility of self-regulatory organization for investment advisers
    • Family office impact
    • Brief overview of other issues including accredited investor, private advisor definition, hedge funds/venture capital, etc. 

    UPDATE: President Obama Signs Financial Regulatory Reform Bill (July 2010)
    President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law on Wednesday, July 21st.

    Read a brief summary of issues of relevance and interest to CPA financial planners, and how they are addressed in the Act.

    UPDATE: Congress Passes Financial Regulatory Reform Bill (July 2010)
    On July 15, in a 60-39 vote, the Senate approved legislation to overhaul financial services regulation. President Obama is expected to sign the bill this week. The legislation, entitled the Dodd-Frank Wall Street Reform and Consumer Protection Act , has now been approved by both Chambers. Read a brief summary of issues of relevance and interest to CPA financial planners, and how they are addressed in the Act.

    UPDATE: Financial Services Regulatory Reform Bill Reported Out of Conference (June 2010)
    On June 25th, the House-Senate Conference responsible for reconciling the House and Senate’s bills on financial services regulatory reform concluded. The legislation produced as a result of the Conference, entitled the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”), now heads to a vote by the House and Senate. If approved by both Chambers, it will be sent to the President for his signature. Read a brief summary of issues of relevance and interest to CPA financial planners, and how they are addressed in the Act.

    UPDATE: Senate Passes Wall Street Reform Bill (May 2010)
    On May 20th, the Senate passed, by a vote of 59-39, the “Restoring American Financial Stability Act of 2010” (“2010 Act”), or H.R. 4173 (as amended).  The next step in the process of financial services regulatory reform will be a House-Senate conference committee that will meet after the Memorial Day recess to reconcile the Act’s provisions with those of the House’s regulatory reform bill.  (The 2009 passed the full House on December 11, 2009 by a 223-202 vote).  Congress hopes to have a final vote on the bill by July 4. 

    Read the provisions included in H.R. 2173 (amended).

    UPDATE: Financial Services Reform (March 2010)
    On March 15, 2010, following several months of bi-partisan negotiations, Senate Banking Committee Chair Chris Dodd (D-CT) unveiled his version of financial services regulatory reform, the Restoring American Financial Stability Act of 2010 (“Act”). The House passed its financial services regulatory reform bill, the Wall Street Reform and Consumer Protection Act of 2009, on December 11, 2009, the details of which are summarized in prior communications. The AICPA’s Congressional Affairs and the Personal Financial Planning Teams are in the process of reviewing this bill in detail and its coverage of issues of direct relevance to our members. While not exhaustive, these issues include:

    1. SEC Study and Rulemaking Regarding Obligations of Brokers, Dealers & Investment Advisers.
    2. Increase of the AUM threshold for investment advisers to register with the SEC.
    3. New exception for “family office” under the Adviser’s Act.
    4. Establishment of a Consumer Financial Protection Bureau.

    Learn more about the Act.

    UPDATE: House of Representatives Approves Sweeping Financial Re-Regulation Bill (December 2009)
    The U.S. House of Representatives on December 11 adopted a sweeping financial re-regulation bill, “The Wall Street Reform and Consumer Protection Act of 2009,” by a vote of 223 to 202. The AICPA served as an advocate on several provisions of interest to CPA financial planners. Read the outcomes.

    ADVOCACY: AICPA Sends Letter of Support for Amendment to H.R. 4173 (December 2009)
    On December 10, 2009, the AICPA sent a letter of support for an amendment to H.R. 4173, the “The Wall Street Reform and Consumer Protection Act of 2009,” which would strip language giving the SEC explicit authority to allow FINRA to extend its inspection, rulemaking and enforcement jurisdiction to federally-registered investment advisers “associated with” a broker dealer.

    On December 11, 2010, the amendment was approved during the House’s consideration of H.R. 4173, which passed the full House. Thus, it appears that regulatory oversight of investment advisers will remain with the SEC and/or state securities authorities. AICPA believes that the SEC and states are best positioned to oversee investment advisers under the Advisers Act, and does not believe that FINRA’s broker-dealer perspective is conductive to adequate regulation of the investment advisory profession.

    Read the AICPA’s letter of support.




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