Spencer Bachus, who chairs the House Financial Services Committee, reintroduced on Wednesday his draft bill calling for a self-regulatory organization (SRO) for advisers.  On the same day, SEC Chairman Mary Schapiro appeared before the House Financial Services Committee’s Capital Market Subcommittee for an oversight hearing. When asked about her views of an SRO, given the fact that she had spent 12 years at an SRO - NASD / FINRA - Ms. Schapiro responded: "at a time when there are extremely limited resources in the federal government, the need to leverage an SRO is critical." Bachus Draft Bill - The Investment Adviser Oversight Act of 2012. Mr. Bachus introduced the bill with Rep. Carolyn McCarthy (D-NY) in response to an SEC study that revealed the agency lacks resources to adequately examine the nation’s nearly 12,000 registered advisors.  As part of its study, which was a requirement of the Dodd-Frank Act, the SEC recommended - as one of 3 options - that Congress consider an SRO to help the SEC monitor the industry. The Bachus-McCarthy bill would authorize "one or more SROs for investment advisors funded by membership fees."  A vote on the bill could occur in the committee as early as next month.  The 2 lawmakers noted in introducing the proposed legislation that IAs and BDs "often provide indistinguishable services to retail customers, yet only 8% of investment advisors were examined by the SEC in 2011 compared to 58% of broker-dealers."  That lack of oversight, particularly in the aftermath of the Madoff scandal, is unacceptable. As proposed in the legislation, the Investment Advisers Act of 1940 would be amended to provide for the creation of National Investment Adviser Associations (NIAAs), registered with and overseen by the SEC.  Investment advisers that conduct business with retail customers would have to become members of a registered NIAA, and the SEC would have the authority to approve the registration of any NIAA. The proposed bill also would recognize the authority given to the states over small investment advisors in Title IV of the Dodd-Frank Act by preserving state authority over investment advisors with fewer than $100 million in assets under management, so long as the state conducts periodic on-site examinations. Reaction Mixed. At best, reaction to the proposal is mixed - given the presumption that FINRA would be the SRO selected to oversee RIA's.   Some in Congress and in the industry just don't think too highly of FINRA.  David Tittsworth, executive director of the Investment Adviser Association (IAA), said that IAA "strongly opposes this ill-advised legislation ... when FINRA has demonstrated its lack of accountability, lack of transparency, and poor track record. The legislation also would force smaller businesses to bear the excessive costs of FINRA oversight." For further details, go to:  [AdvisorOne, 4/25/12].