The Securities and Exchange Commission (SEC) needs help managing its oversight of registered investment advisers (RIAs).
Since 2016, the number of SEC-registered investment advisers has increased to over 15,000, a growth rate that outpaces the number of SEC staff. During the same period, the SEC's exam staff increased by 4 percent.
900 new advisers registered with the SEC in 2021, notably the most significant increase in SEC-registered entities occurring in the investment advisory industry, according to Paul Roye, former head of the SEC's Division of Investment Management. Roye told ThinkAdvisor that the growth has been attributed to a migration from the broker-dealer industry.
Many believe that the investment adviser exam rate problem can be addressed only with help from Congress. The proposed options for increasing SEC exam frequency all require action by Congress. The options include increasing the assets under management cap for federal registration under the Dodd-Frank Act, allowing states to have more oversight responsibility, creating a self-regulatory organization just for RIAs, and/or authorizing the SEC to assess user fees to fund additional exams.
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