This story appeared in Bank Digest.
The House Financial Services Committee has marked up and approved four bills dealing with mandatory audit firm rotation, exemption of private fund advisers, the Dodd-Frank pay ratio requirement, and the Department of Labor and Securities and Exchange Commission adoption of fiduciary standards for brokers and advisers. Committee Chairman Jeb Hensarling (R-Texas) said that the bills are targeted, pragmatic, and hopefully bipartisan fixes to some provisions of the Dodd-Frank Act that many committee members may feel are unnecessary or unduly burdensome.
Mandatory Audit Firm Rotation. The committee approved by a vote of 52-0 legislation that would prohibit the mandatory rotation of independent outside audit firms and would remove the threat of unnecessary compliance costs for public companies. Introduced by Rep. Robert Hurt (R-Va.), the Audit Integrity and Job Protection Act (H.R. 1564) would amend Section 103 of the Sarbanes-Oxley Act to expressly prohibit the Public Company Accounting Oversight Board from requiring that the outside audits of a company's financial statements be conducted by different audit firms on a rotating basis. The bill also would prohibit the PCAOB from requiring that audits be conducted by specific auditors.
Private Equity Fund Advisers. A bi-partisan bill, the Small Business Capital Access and Job Preservation Act (H.R. 1105), was approved by a 38-18 vote. The bill would exempt advisers to certain private equity funds from the new Dodd-Frank SEC registration requirements. Specifically, H.R. 1105 would exempt from SEC registration private equity fund advisers that have not borrowed and do not have outstanding a principal amount in excess of twice their funded capital commitments. The bill was introduced by Rep. Robert Hurt (R-Va.).
Uniform Fiduciary Standard. The committee approved the Retail Investor Protection Act (H.R. 2374) by a 44-13 vote. Sponsored by Rep. Ann Wagner (R-Mo.), the legislation would prevent the Secretary of Labor from prescribing any regulation under the Employee Retirement Income Security Act of 1974 defining the circumstances under which an individual is considered a fiduciary until the date that is 60 days after the SEC issues a final rule relating to standards of conduct for brokers and dealers pursuant to Section 913 of the Dodd-Frank Act. Rep. Wagner said that Congress must act because the SEC and DOL are headed towards two separate and massive rulemakings, and the impact of this on retail investors has not been properly considered. The legislation says that the DOL must wait until the SEC acts before moving ahead.
• Financial Services Committee release.
• Opening statement of Committee Chairman Jeb Hensarling (R-Texas)
• Opening statement of Ranking Member Maxine Waters (D-Calif.).
• Rep. Robert Hurt (R-Va.) release.
• Rep. Bill Huizenga (R-Mich.) release.
• Rep. Ann Wagner (R-Mo.) release.