Money managers would face scrutiny by a self-regulatory organization under the wide-ranging financial regulatory reform proposal announced today by the Treasury Department. The proposal would essentially subject money managers to the same sort of oversight that broker-dealers now receive from the Financial Industry Regulatory Authority, formerly the National Association of Securities Dealers. The SEC currently has federal oversight of money managers. An SRO usually serves as the first line of defense for a regulatory agency such as the SEC, and the agency oversees the SRO.
In its 218-page The Department of the Treasury Blueprint for a Modernized Financial Regulatory Structure unveiled today, the Treasury Department said SRO regulation for money managers should enhance investor protection and be more cost-effective than direct SEC regulation.
A self-regulatory system can help to cover any gaps in federal regulation and can typically respond to market developments more quickly than can government oversight, according to the blueprint.
Were obviously very disappointed, said David Tittsworth, executive director of the Investment Adviser Association, Washington, a group that lobbies for money managers. Weve consistently opposed an SRO, and were gearing up to do battle.