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AICPA supports bill to fund financial advisers regulation.

Congressman Rick Boucher (D-Va.) introduced the Investment Adviser Regulatory Enhancement and Disclosure Act (HR 578). The bill provides the Securities and Exchange Commission with additional funds for supervising investment advisers by charging the advisers an annual fee ranging from $300 to $7,000 (depending on the assets under the adviser's management). The money would be used to fund more frequent inspections of registered investment advisers.

"The bill appropriately focuses government resources on those activities having the greatest potential for fraud and abuse," said J. Thomas Higginbotham, AICPA vice-president-legislation.

Specifically, the bill requires the SEC to conduct more frequent inspections of advisers with certain risk factors, which include having custody of client funds, having authority to exercise investment discretion, being newly registered or having been found deficient during previous examinations.

Moreover, it requires investment advisers to provide prospective clients with information on their education and business backgrounds, compensation arrangements and business practices; to disclose any conflicts of interest that reasonably could be expected to impair the rendering of disinterested advice; and to provide clients with periodic written reports that include all sales commissions and fees paid by the clients.
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Apr 1, 1993
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