FPA questions Finra B-D supervision rule

The FPA says the rule would add confusion and conflict regarding standards of accountability to the investor.
JUN 16, 2008
By  Bloomberg
A proposal by the Financial Industry Regulatory Authority Inc. could require brokerage firms to supervise entities unrelated to securities, the Financial Planning Association said in a comment letter to Finra filed Friday. “We are very concerned about maintaining a clear separation of functional regulation under the federal securities laws between broker-dealers and financial planning, investment advisory and other activities subject to the Investment Advisers Act of 1940,” wrote Dan Barry, director of government relations in the Washington office of Denver-based FPA. The comment letter pertained to Finra’s proposed broker-dealer supervision rule consolidating old NASD and New York Stock Exchange rules. he regulatory bodies of both groups merged last year. Finra’s proposal may exceed the New York- and Washington-based self-regulatory organization’s statutory authority, Mr. Barry suggested in the letter. The rule proposal, issued in May, is a “broad expansion” of the existing NASD rule that requires a brokerage principal to supervise business activities for which registration as a broker-dealer is required, and it could lead to conflicts because brokers are regulated differently than are investment advisory firms, the letter said. “Finra is proposing a rule that would add to this confusion and conflict between higher and lower standards of accountability to the investor,” it said. “On what basis is a [broker-dealer] qualified to supervise, and presumably thereby direct, non-securities business?” the letter asked. “We ask if it would be appropriate for the SEC to promulgate a rule under the Advisers Act requiring [registered investment advisory firms] to supervise the brokerage activities of an affiliated B-D?” the letter said.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.