The House Financial Services Committee began debate Tuesday on three bills by Rep. Paul Kanjorski, the capital markets subcommittee chairman, to improve investor protections, reform the credit rating agencies and increase transparency of hedge funds and other private pools of capital.
The bills, are part of the committee's broader regulatory reform effort and are expected to pass.
The Investor Protection Act would enhance the Securities and Exchange Commission's enforcement powers and allow it to ban mandatory arbitration clauses in customer contracts.
It would establish that all financial intermediaries who provide financial advice including both investment advisers and broker-dealers have a fiduciary duty toward their customers.
The Accountability and Transparency in Rating Agencies Act would increase the accountability of the rating agencies by clarifying the right of individuals to sue nationally recognized statistical rating organizations. The bill would require each rating agency have a board with at least one-third independent directors tasked with overseeing policies and procedures aimed at preventing conflicts of interest and improving internal controls. The bill would also add provisions aimed at increasing transparency and public disclosure.
The Private Fund Investment Advisers Registration Act, which passed 67 to 1, would require hedge funds and other private pools of capital to register with the SEC. It would increase record keeping and disclosure requirements for private advisers.