June 13 2016


Herb Perone

Statement of Investment Adviser Association President & CEO Karen Barr on H.R. 5424, the Investment Advisers Modernization Act of 2016

Washington, DC (June 13, 2016) – Following is the statement of Karen Barr, President & CEO of the Investment Adviser Association, on the introduction of the Investment Advisers Modernization Act of 2016 in the House of Representatives today:

“The IAA strongly supports H.R. 5424, the bipartisan Investment Advisers Modernization Act of 2016, introduced by House Financial Services Committee members Robert Hurt (R-Va.), with co-sponsors Juan Vargas (D-Ca.), Steve Stivers (R-Ohio) and Bill Foster (D-Ill.), which will provide much-needed updates to the Investment Advisers Act of 1940.

“The statutory framework of the Investment Advisers Act has proven remarkably robust in protecting investors. However, the financial services landscape has evolved significantly over the last 75 years and certain of the Advisers Act’s provisions have not kept pace with these developments. A number of these provisions impose undue burdens on investment advisers – most of which are small businesses – without commensurate investor benefit.

“For example, the legislation would repeal a rule dating to the 1960s that prohibits advisers’ use of testimonials and references to past specific recommendations, where the materials are distributed solely to certain sophisticated clients and high net worth individuals, relying instead on well-established anti-fraud standards.

“The legislation also amends the SEC’s complex Custody Rule, offering technical relief in situations involving privately offered securities that do not raise investor protection concerns.

“The IAA applauds Reps. Hurt's and Vargas’s leadership on these issues and looks forward to working with them to advance this significant piece of legislation.”

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The Investment Adviser Association (IAA) is the leading trade association representing the interests of SEC-registered investment adviser firms. The IAA’s more than 600 member firms collectively manage assets in excess of $16 trillion for a wide variety of institutional and individual investors. For more information, visit www.investmentadviser.org or follow us on Twitter, LinkedIn, and YouTube.