FPA conference stunner: Will Finra assume oversight of RIAs?

Oct 10, 2010 @ 8:10 pm

By Jessica Toonkel

<b>Tom Bradley:</b>
+ Zoom
Tom Bradley: "Advisers don't trust Finra."

Understaffing at the Securities and Exchange Commission — and a wave of new responsibilities for the agency as part of the Dodd-Frank Act — make it more likely than ever that advisers will be overseen by the Financial Industry Regulatory Authority Inc., industry officials said at the Financial Planning Association's annual conference in Denver.

“The resources at the SEC are completely inadequate and the answer being teed up is having Finra be the SRO for all advisers,” Barbara Roper, director of investor protection for the Consumer Federation of America, said during in a panel discussion yesterday about the Dodd-Frank law. Since Congress failed to approve a new budget by Oct. 1, the SEC is one of many federal agencies operating under its current budget.

Nancy Condon, a spokeswoman for Finra, declined to comment.

But attendees at the FPA conference said registered investment advisers would be outraged if they had to report of Finra instead of the SEC. “Advisers don't trust Finra,” said Tom Bradley, president of TD Ameritrade Institutional. “Most advisers don't feel that Finra has the competency to cover [registered investment advisers].”

Some advisers said they felt that choosing between the SEC and Finra at this point in time was like choosing between the lesser of two evils. “The SEC is too regulatory-minded and they don't think in practicalities,” said J. Alan Favre, a vice president at CIM Securities LLC, which has $250 million in assets under management. “Finra, however, doesn't understand our business.” (Get more of the inside scoop from the FPA conference directly from Denver.)

Specifically, advisers are concerned that Finra's rule-based approach won't be able to address the principle-based RIA business, said Daniel Barry, managing director for government relations and public policy at the FPA. “The SEC has been regulating advisers for 60 years,” he said. “They have the experience; it's just a matter of getting them the resources.”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Inside the financial adviser of the future

What does the financial advisory firm of the future look like? We spoke to some of the best and brightest young minds in the financial services industry at our inaugural Future of Our Business think tank to see what they think.

Latest news & opinion

Cetera broker-dealers to pay back $3.3 million to clients overcharged for mutual funds

Over an eight-year period, the B-Ds failed to properly supervise sales charge waivers to clients in retirement plans and charitable organizations.

Fiduciary advocates press CFP Board for specifics on standards changes

Meanwhile, few brokerages and their trade associations, which blasted the DOL's fiduciary rule in comment letters, are responding to the CFP Board's proposal.

Big gains attract new money to emerging markets, but should investors stay?

An estimated $6.7 billion has flowed into emerging-market stock funds and ETFs so far this year, according to Morningstar.

Attorney blasts Finra after regulator loses insider trading case

Lawyer says it was 'slimy' of Finra to publicize the case while it was still being litigated.

Will Jeffrey Gundlach's Trump-like approach on Twitter work in financial services?

The DoubleLine CEO's attacks on Wall Street Journal reporters is igniting a discussion on what's fair game on social media.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print