As the debate over regulatory reforms in the RIA sector has resurfaced on Capitol Hill, industry groups on both sides of the issue are making their case to lawmakers and staffers in the hopes of either advancing or derailing legislation that would establish a self-regulatory organization to oversee RIAs.

On Wednesday, the same day that the House Financial Services Committee held a hearing to consider the Investment Adviser Oversight Act, members of the Financial Services Institute (FSI), which supports the bill, made the rounds on the Hill for around 30 meetings with members and staff.

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Then on Thursday, the Investment Adviser Association (IAA), a staunch critic of shifting oversight to an SRO, had planned its own series of meetings with lawmakers in an effort to gin up opposition to the bill, backed by Financial Services Committee Chairman Spencer Bachus (R-Ala.) and Carolyn McCarthy (D-N.Y.).

The legislation would seek to enhance regulatory oversight of retail investment advisers by authorizing the Securities and Exchange Commission to empower one or more SROs to examine advisers, much the way FINRA currently does with broker-dealers. Supporters and opponents of the Bachus bill agree that the present regulatory framework is inadequate, but critics argue that instead of an SRO, the SEC should increase its own examinations through legislation that would authorize the agency to collect fees from industry members.

At Wednesday's hearing, several Democrats expressed reservations about the self-regulatory model, but Chris Paulitz, a spokesman for the FSI, said that after the group's meetings, he is hopeful for strong bipartisan support when the committee marks up the bill.

"I think it's going to be high. I think you're going to see Democrats coming along," Paulitz said. "I think there's a true opportunity here for some heavy bipartisan support."

It remains unclear when the Financial Services Committee will mark up the bill. A spokeswoman for committee Republicans did not respond to a request for comment on the timing of the markup.

Industry sources with knowledge of the matter had initially indicated that the markup was slated for the last week of June, but that now appears in question. Paulitz speculated that with a limited number of working days, the markup could slip to the fall, diminishing, but not eliminating, the prospect of a floor vote on the legislation this year.

"I'm not saying it can't be done, but I would be very surprised at this point if they do this markup in June," he said.

It seems clear that several portions of the legislation will change before the legislation passes out of the committee. Language specifying a carve-out from SRO oversight for advisers with institutional clients, for instance, could be modified to ensure that the retail portion of their practice would still be covered. It also appears likely that the committee will consider an amendment that would lessen the bill's impact on smaller firms that are currently regulated by state authorities.

"The great thing about all of this is [that] none of this is bigger than the bill," Paulitz said. "All of this can be accomplished easily within the framework of Bachus-McCarthy."

In its meetings with House lawmakers, the FSI is urging representatives to sign on to the legislation as co-sponsors. On the Senate side, where no companion legislation to the Bachus bill has yet emerged, the group is asking members to appeal to Tim Johnson (D-S.D.), chairman of the banking committee, to hold a hearing on the issue. With summer recess and the fall election looming, Paulitz allowed that there is probably only a slight chance that the committee will hold a hearing on the issue this year.

But critics, including some members of the Financial Services Committee, reject the self-regulatory model altogether. Rep. Maxine Waters (D-Calif.) has said that she is in the process of drafting legislation that would empower the SEC to collect user fees from advisers to fund more frequent examinations.

McCarthy, the Democratic co-sponsor of the SRO bill, said at Wednesday's hearing that while she favors an expanded role for the SEC, in the current climate in Washington, vesting the agency with additional funding or oversight authority is a political nonstarter. The FSI and others have been making the same point, going a step further to suggest that industry groups championing the SEC solution are doing so in an effort to beat back regulation of any sort. Paulitz called it a "stalling tactic."

Marilyn Mohrman-Gillis, managing director for public policy and communications at the Certified Financial Planner Board of Standards, or CFP Board, which has been lobbying against the SRO bill, flatly rejected that contention.

"What is not viable about a solution that would close the SEC resource gap in a way that has no impact on taxpayers or the federal deficit?" Mohrman-Gillis challenged.

Representatives of the IAA could not immediately be reached for comment on the group's meetings with lawmakers and the prospects for the legislation.