Finra wants to ease membership application process, while still protecting investors

New report details proposed changes in rules and material it requires from broker-dealers

Mar 11, 2016 @ 12:35 pm

By Liz Skinner

Finra is taking a fresh look at its membership rules and requirements to make the process easier for applicants, while still trying to ensure the financial firms they oversee are protecting investors.

The Financial Industry Regulatory Authority Inc. said in a report issued Friday that its process of reviewing new membership applications and the material it requires when businesses make operational changes could be improved by considering the relative risk of the applicant and its operations to investors.

(More: Finra asks 8 questions to asses a firm's culture)

It also will propose new rules or otherwise issue new guidance on the extent of information requested by applicants and the nature of that material, the self-regulatory organization said in a statement that accompanied the 21-page report that examined current processes.

"With this thorough assessment in hand, we will explore a combination of guidance, rule amendments and changes in process or technology that will help enhance the efficiency and effectiveness of the membership application program, while still serving its goal of investor protection," said Robert Colby, chief legal officer for Finra.

The Finra report concludes that the group's existing rules have largely been effective at protecting investors.

The report comes as Sen. Elizabeth Warren, D-Mass., has criticized Finra for failing to protect investors from the firms it's supposed to be overseeing.

She cited an academic study that concluded one in 13 Finra-regulated brokers has committed misconduct that is part of their records. It also showed that 50% of advisers with ethical lapses are fired, but 44% of them are rehired within a year.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Are investors getting complacent?

Tom Florence, CEO of 361 Capital, discusses growing investor complacency and why he thinks overconfidence might be creeping into adviser and investor decision making.

Latest news & opinion

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

Raymond James executives call on industry to keep broker protocol

Also ask firms to pay for the administration of the protocol to 'ensure its longevity and relevance.'

Senate committee approves tax plan but full passage not assured

Several Republican senators expressed reservations about the bill, and the GOP cannot afford too many defections.

House passes tax bill, focus turns to Senate

Tax reform legislation expected to have more of a challenge in upper chamber.

SEC enforcement of advisers drops in Trump era

The agency pursued 82 cases against advisers and firms in fiscal year 2017, down from 98 the previous year.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print