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Day two of David Pecker testimony wraps in NY Trump trial; Supreme Court hears arguments on Idaho's near-total abortion ban; ND sees a flurry of campaigning among Native candidates; and NH lags behind other states in restricting firearms at polling sites.

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The Senate moves forward with a foreign aid package. A North Carolina judge overturns an aged law penalizing released felons. And child protection groups call a Texas immigration policy traumatic for kids.

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Wyoming needs more educators who can teach kids trade skills, a proposal to open 40-thousand acres of an Ohio forest to fracking has environmental advocates alarmed and rural communities lure bicyclists with state-of-the-art bike trail systems.

Financial Advisers Policing Themselves? Congress Takes a Look

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Wednesday, June 6, 2012   

WASHINGTON - A U.S. House committee today takes up a bill that would allow investment advisers to police themselves, through what's called a self-regulatory organization, or "SRO."

Critics of the idea say that's like putting a fox in charge of the henhouse - and claim that it's the same system that has failed to prevent investment scams such as the Madoff scandal.

The Project on Government Oversight (POGO) says SROs don't have the same transparency or accountability rules as do government agencies. POGO investigator Michael Smallberg says the Securities and Exchange Commission (SEC) should be providing this type of oversight.

"We are concerned that this is one way that Congress can essentially continue to starve the SEC of its resources - which is, for us, the worst of both worlds. You end up with a weaker SEC, and you end up with more authority in the hands of a private, unaccountable self-regulatory organization."

A current SRO, the Financial Industry Regulatory Authority (FINRA), has come under recent fire for being too cozy with the industry it's supposed to be watching. Smallberg says it levies small fines that investment companies pretty much view as a cost of doing business. He says FINRA is funded by fees from investment firms - and uses them to pay its top executives seven-figure salaries.

"We think these are pretty excessive compensation packages for a nonprofit group - especially one that really failed to crack down on a lot of the types of abusive trading practices that fueled the financial crisis. In addition, FINRA in particular has spent a lot of money on lobbying and on advertising."

Smallberg says the sponsors of the bill, the Investment Adviser Oversight Act (HR 4624), think there should be more oversight of the financial industry. However, he adds, taking that responsibility out of government hands could be asking for trouble.

The House Committee on Financial Services is to hear testimony on the bill at 10 a.m. EDT today at 2128 Rayburn House Office Building.


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Creedon Newell practices teaching construction skills in Wyoming's new career and technical educator bridge course, designed to encourage trades students and professionals to pursue a career in CTE teaching. (Photo by Rob Hill)

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