WASHINGTON -- Congress is not expected to take final action before adjourning this week on legislation that would strengthen federal regulation of financial advisers, congressional aides said yesterday.
"There isn't enough time," said a congressional aide. "The House and Senate bills are light-years apart."
The Senate did move the process forward on Saturday by passing its version of the legislation, but a conference committee will be needed to iron out the differences between the two bills.
"We hope to move on it as quickly as possible next year," the aide said.
Both bills would increase fees on advisers and require fidelity bonds for advisers with custody of, or discretion over, client assets.
The fee increases would allow the Securities and Exchange Commission to hire more inspectors to oversee the nation's 19,000 investment advisers, which manage an estimated $8 trillion in accounts.
The bill passed by, the House in May was much broader than the Senate measure. For example, the House bill would require investment advisers to recommend only suitable investments to clients. It would also require the SEC to target some of its examinations at riskier advisory firms, and advisers to make periodic reports to clients.
Groups representing investment advisers oppose the House bill's requirement for periodic reports to clients. They claim that it would pose a major paperwork burden for smaller advisers and could confuse investors who already receive extensive statements on their investments.
Congress' failure to pass an investment advisers bill this year "doesn't surprise me," said a municipal lobbyist. "They never were able to reach agreement last year." In 1992 the two houses also passed vastly different bills, then worked frantically in the final hours of the session to reach a compromise, but to no avail.