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Pulling back the curtains on wage-theft enforcement in MN; Trump's latest attack is on RFK, Jr; NM LGBTQ+ equality group endorses 2024 'Rock Star' candidates; Michigan's youth justice reforms: Expanded diversion, no fees.

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Transportation Secretary Pete Buttigieg says rebuilding Baltimore's Key Bridge will be challenging and expensive. An Alabama Democrat flips a state legislature seat and former Connecticut senator Joe Lieberman dies at 82.

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Historic wildfires could create housing and health issues for rural Texans, a Kentucky program helps prison parolees start a new life, and descendants of Nicodemus, Kansas celebrate the Black settlers who journeyed across the 1870s plains seeking self-governance.

Who Keeps Your Investment Adviser Honest?

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Wednesday, June 6, 2012   

NEW YORK - A U.S. House committee in Washington today takes up a bill that would allow investment advisers to police themselves, through what's called a self-regulatory organization (SRO).

Critics of the idea say that's like putting a fox in charge of the henhouse - and 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.

Eight New York representatives - including a cosponsor of the bill, 4th District Democrat Carolyn McCarthy – serve on the House Committee on Financial Services, which is to hear testimony on the bill at 10 a.m. EDT today at 2128 Rayburn House Office Building.



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