Daniel Gallagher, a Republican commissioner on the Securities and Exchange Commission, said Monday he doesn’t know if the agency can shift money within the agency to expand financial advisor examinations without hurting its other functions.
House Financial Services Committee Chairman Jeb Hensarling (R-TX) and Rep. Scott Garrett (R-NJ), chairman of the committee's capital markets subcommittee, had previously asked SEC Chair Mary Jo White to tell them by last Friday how she would take money from other operations to increase the frequency of advisor exams. The SEC currently examines just 9 percent of SEC-registered investment advisors annually.
The congressmen also told White they opposed imposing a fee on advisors to fund more reviews, claiming the charge would be too expensive for the industry and could negatively impact the retirement savings of retail investors.
Elsewhere, Gallagher reiterated his refusal to take a position on requiring a fiduciary standard for broker-dealers if and until White presents a detailed proposal to the SEC.
Gallagher’s comments came after speaking at an American Institute of Certified Public Accountants conference in Washington, D.C.
He told the group he has a deep-seated fear the government’s response to the recent financial meltdown may not be sufficient to respond to next financial crisis.
Gallagher also criticized the Dodd Frank Act as single-party legislation that caused massive problems.
In addition, he said he thinks audit firm rotation should be a front-burner issue at the Public Company Accounting Oversight Board. Advocates for rotation contend changing a company’s outside auditor periodically would lead to more stringent oversight by bringing in fresh eyes and reducing the chance that auditors could become too close with the executives and the businesses they are examining.
Also speaking at the conference, SEC chief accountant James Schnurr said there are no emerging accounting concerns for advisors and broker-dealers.