Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, June 5, 2012

Massachusetts Report: State Registered Advisers Oppose SRO

State securities regulators have expressed concern about the establishment of an SRO that would include state-registered investment advisers. The Massachusetts Securities Division recently posted on its website a REPORT ON THE POTENTIAL IMPACT OF THE INVESTMENT ADVISER OVERSIGHT ACT OF 2012 ON SMALL ADVISERS reporting on a survey mailed to 649 advisers registered in Massachusetts (Download Mass.Report_on_IA_Impact[1]).

According to the report:

Small investment advisers are consistently and overwhelmingly opposed to the establishment of an SRO because of the financial impacts such a bill would have on their small business. 98% of survey respondents indicated that passage of a bill that required them to become an SRO member and pay membership fees would have a
financial impact on their ability to run their firm. 241 (69%) advisers characterized the financial impact to be “Severe” and the highest on the survey’s 1-9 scale. Advisers also indicated that they would be less likely to hire more personnel (81%) and may be forced to conduct layoffs (55%) given the additional costs the adviser would incur as a result of an SRO membership. Most significantly, approximately 146 of 353 (41%) advisers volunteered additional information in the optional comment section suggesting that they would be forced out of business if the Bill passes in its current form.

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