Compliancex

Sometimes, members of Congress follow harebrained logic. If the consequences weren’t so serious, it would be hilarious. Consider a House bill co-sponsored by Reps. Spencer Bachus (R-AL) and Carolyn McCarthy (D-NY) that would essentially let investment advisers regulate themselves.This idea stinks. Everyone knows: You don’t let the fox guard the henhouse.

Bachus and McCarthy say their Investment Adviser Oversight Act of 2012 tightens up needed supervision of large investment advisers — the people you trust to handle your retirement nest egg. It’s true that the federal oversight of investment advisers is sorely lacking. The Securities and Exchange Commission (SEC) only regulates investment advisers handling more than $25 million in assets, while the states oversee the smaller-scale ones.

Yet the SEC is so understaffed it has never examined 40 percent of the investment advisers under its jurisdiction. The agency reviewed only 8 percent of the more than 12,600 investment advisers it oversees last year.

Read the full story at City Watch.