Fighting Finra’s grab for advisers

The most important issue that Congress needs to get right in overhauling financial services regulation is reform of the over-the-counter-derivatives market, investor advocate Barbara Roper believes.

But that’s not the issue that the 23-year veteran lobbyist with the Consumer Federation of America expects to spend most of her time on next year. “Others have more expertise” on that issue, explained Ms. Roper, director of investor protection for the CFA.

Instead, her top priority will be to try to push back efforts to give the Financial Industry Regulatory Authority Inc. jurisdiction over much of the investment advisory business, a proposal that gained traction in the House with a Republican-sponsored amendment added to the proposed Investor Protection Act in the Financial Services Committee.

“I don’t think an organization that has fought requiring brokers to be held to a fiduciary duty when they’re giving advice should be the primary rule maker for how the fiduciary duty is applied, not only for brokers but for the bulk of investment advisers,” Ms. Roper said.

When the Senate deliberates companion legislation, Ms. Roper will be campaigning for a provision introduced by Banking Committee Chairman Christopher Dodd, D-Conn., that would put brokers that give personal investment advice fully under the long-standing fiduciary standards of the Investment Advisers Act of 1940. Brokers are fighting that proposal, saying it would make it difficult for them to conduct their business as they have traditionally, earning commissions based on sales and selling products owned by their firms.

In addition, the CFA has long sought an end to mandatory-arbitration clauses in brokerage contracts. The House version of the Investor Protection Act would require the SEC to consider prohibiting such clauses, while the Senate Banking Committee’s version would require the SEC to prohibit or restrict the clauses.

One of the reasons Ms. Roper has such clout is that she has little company in the field of consumer advocacy for investors.

“She is clearly one of the leading investor advocates in this country,” said Mercer Bullard, president and founder of Fund Democracy Inc., one of the few other financial services consumer advocates in the United States. “She covers retail investors and is deeply engaged in complex derivatives and accounting problems as well,” Mr. Bullard said.