WASHINGTON - The House Energy and Commerce Committee yesterday approved broad legislation to increase federal regulation of financial advisers after easing some requirements included in the bill approved by its subcommittee last week.

The committee, chaired by Rep. John Dingell, D-Mich., adopted without revision provisions that would raise the fees advisers pay to register with the Securities and Exchange Commission, direct the SEC to pay particular attention in inspections to new or financially troubled advisers, and require the SEC to search for unregistered advisers.

Also unchanged are provisions requiring advisers to supply investors with brochures describing their background and practices as well their commissions or fees for various kinds of transactions.

But the committee, concerned about placing too heavy a burden on small investment advisers, watered down a provision that would have required advisers to provide periodic summaries of all charges to customers. Under the revision, advisers could simply report those charges to clients annually, if customers agree in writing that is acceptable.

In an effort to reduce the work load on federal regulators, the committee also authorized the SEC to designate an outside organization to handle much of the increased inspection activity called for in the legislation. Although the committee's bill does not specify the kind of organization, SEC has the option of selecting an existing "self-regulatory organization," such as the National Association of Securities Dealers, to do the job.

The committee made only technical changes to a key provision that would require advisers to determine whether the securities they recommend to investors are suitable for their income and investment strategies.

The House committee's proposal is much broader than a bill approved earlier this year by the Senate Banking Committee, which would do little more than require an increase in fees to pay for increased inspections by regulators.

House aides said it is unclear whether the House will vote on the legislation before its summer break, which begins Aug. 13. Action by the Senate on its version of the bill also has not been scheduled.

The proposals are in part a response to nationwide publicity concerning the activities of Irvine, Calif., investment adviser Steven Wymer, whose now-defunct firm, Institutional Treasury Management, managed millions of dollars in investments for roughly 60 municipalities across the country.

Mr. Wymer was indicted this winter in a Los Angeles federal court on criminal charges that he defrauded customers out of $100 million in investments by making unauthorized trades in risky securities without telling investors and then hiding the losses by illegally shifting funds between accounts.

Rep. Edward Markey, D-Mass., chairman of the Energy and Commerce Committee's telecommunications and finance panel and a sponsor of the bill, said the vast majority of financial advisers is "made up of hardworking and ethical" people. "But the small minority that views the client as the proverbial ~sucker' has fueled skepticism about the profession as a whole," he said.

An earlier version of the bill would have expanded the rights of investors to sue investment advisers, but it was dropped before the subcommittee acted on the measure following heavy opposition from SEC Chairman Richard Breeden.

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