House holding oversight hearing on Finra today

Financial Services subcommittee will explore self-regulator's agenda, structure and in-house operational review

Sep 7, 2017 @ 2:09 pm

By Mark Schoeff Jr.

Editor's note: This story was updated after the conclusion of the hearing.

Lawmakers will scrutinize Finra's agenda, structure and its recent self-examination initiative in a House hearing this afternoon.

Finra CEO Robert W. Cook was scheduled to appear as the sole witness at 2 p.m. before the House Financial Services Subcommittee on Capital Markets, Securities and Investment. It will be the first time in two years that the panel has taken a look at the Financial Industry Regulatory Authority Inc., the broker-dealer self-regulator.

"Since the committee last held a general oversight hearing on Finra in 2015, Finra has appointed Mr. Robert Cook as the president and CEO, and there have been a number of significant changes that have taken place," Rep. Bill Huizenga, R-Mich. and subcommittee chairman, will say, according to his prepared remarks.

The subcommittee also will explore "the role that self-regulation plays in the U.S. capital markets and Finra's relationship with and oversight by the [Securities and Exchange Commission]," according to a hearing memo circulated to lawmakers.

InvestmentNews tackled many of the same topics in an in-depth story on Finra published earlier this week.

Lawmakers will focus especially on Finra 360, the regulator's self-examination that Mr. Cook launched earlier this year. It's part of an ongoing listening tour that has been the centerpiece of his tenure, which began in August 2016.

Although Capitol Hill doesn't set Finra's budget, and Finra reports to the SEC rather than directly to Congress, lawmakers can still weigh in on its operations.

"When most people think about Congress, they think about legislation, but oversight is critically important," said David Tittsworth, counsel at Ropes & Gray. "It's good to see that they're having some sort of hearing. One could argue that inviting some other witnesses [in addition to Mr. Cook] could give a more fulsome picture of what's going on."

He is hopeful about Finra 360.

"It looks like a good-faith effort by Robert Cook," Mr. Tittsworth said. "My understanding is that it's a work in progress. I'm taking a wait-and-see attitude."


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