During the June 6^th hearing of the House Financial Services Committee, legislation was introduced by Representative Spencer Bachus (R-Ala.) that would create a new self-regulatory organization for Registered Investment Advisers “(RIA”) (H.R. 4624). During that session Representative Maxine Waters (D-Calif.) stated she was drafting alternative legislation that would allow the SEC to collect fees from advisers to fund the regulator’s examination program. As promised, on July 25^th, Rep. Waters introduced the Investment Adviser Examination Improvement Act of 2012. According to the press release for the new legislation, the bill “would provide the [SEC] with the authority to impose and collect user fees on investment advisors for the purpose of increasing the number and frequency of SEC examinations.” Under the proposed law, the SEC would have a mandate to collect fees directly from advisers to cover the costs of additional examinations by the SEC. Under Water’s bill, the amount of the fee assessed to advisory firms would be based on the firm’s assets under management, the number and types of clients, as well as the firm’s risk profile. Importantly, the measure would take funding for the SEC’s oversight of advisers outside the annual congressional budget process and create a stable source of finding for examinations.

On July 17, 2012 the California Department of Corporations Commission filed final amendments to Section 260.204.9 of Title 10 of the California Code of Regulations with the state’s Office of Administrative Law (OAL). As reported here earlier this year, the amended regulation does away with the old private fund adviser exemption and creates a California corollary to the new federal private fund adviser exemption created by Dodd-Frank. Under California Gov. Code §11349.3. The OAL must approve or disapprove the regulation within 30 working days (the old exemption, extended by emergency regulation, remains in effect while the new regulation is under OAL review).

This month, the SEC and the Commodity Futures Trading Commission (CFTC) adopted final rules defining what derivative products will be regulated under Title VII of Dodd-Frank. That Title establishes a comprehensive new regulatory framework for swaps and security-based swaps, giving the SEC and the CFTC authority to oversee the over-the-counter derivatives market.

On June 28, 2012 SEC Chairman Mary Shapiro appeared before a House subcommittee to testify about the agency’s implementation of the Jumpstart Our Business Startups Act (JOBS Act). Title II of that legislation requires the SEC to implement ground-shifting rule changes that will permit general solicitation and general advertising under Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933. While removing the general solicitation ban, the legislation does specifically require issuers to take reasonable steps to verify that purchasers of the securities are accredited investors or qualified institutional buyers, as applicable, using methods that will be determined by further SEC rulemaking. The Act also specifically called for the Commission to make the rule changes within 90 days of the bill’s April 5, 2012 enactment.