Plan to place B-D advisers under Finra scrapped

The House today killed a proposal that would have given the Financial Industry Regulatory Authority Inc. the authority to regulate investment advisers at broker-dealers.
DEC 11, 2009
The investment adviser community breathed a sigh of relief today after the House killed an amendment that would have given the Financial Industry Regulatory Authority Inc. the authority to regulate investment advisers at broker-dealers. The measure that scrapped the amendment was passed by a voice vote. The proposal to put advisers associated with broker-dealers under the regulation of Finra was introduced in October in Financial Services Committee by Alabama Rep. Spencer Bachus, the ranking Republican on the committee as an amendment to the Investor Protection Act, which is being deliberated by the House. But over the past several weeks, investment advisory groups, such as the Financial Planning Association, the Investment Advisers Association and the Certified Financial Planner Board of Standards Inc. have been rallying members to send letters and make phone calls to their representatives opposing the amendment. The measure to strip the amendment from the investor protection bill was introduced by Financial Services Committee chairman Barney Frank, D-Mass., and Rep. Frank Cohen, D-Tenn. Mr. Frank's committee passed the Bachus amendment over his objections. Calls to Mr. Frank's and Mr. Bachus' offices were not immediately returned by press time. “We are very pleased that Congress took this step,” said Neil Simon, vice president for government relations of the Investment Advisers Association, which represents federally registered advisory firms. The fact that Congress killed the amendment shows that it understands the flaws in Mr. Bachus' argument that the Bernard Madoff scandal would have been prevented if Finra had regulatory oversight of advisers, said Barbara Roper, director of investor protection for the Consumer Federation of America. Ms. Roper cautioned that it is premature to celebrate the apparent demise of the amendment. “We never declare a bill dead until the bill is signed into law,” Ms. Roper said. What's more, the full Investor Protection Act does call for a study of the role of self-regulatory organizations — and that could have consequences in the long term, said Dan Barry, director of government relations for the Financial Planning Association. “Finra would like to gain oversight of at least the dual-registered advisers and so we will keep an eye on this,” Mr. Barry said. “We are encouraged that language in this bill directs the [Securities and Exchange Commission] to study and report back to Congress on the potential need for an SRO for investment advisers," said Howard Schloss, executive vice president for corporate communications and government relations at Finra. The Senate Banking Committee is still working on its financial services overhaul bill, which could have implications for regulation over investment advisers. It remains to be seen just how far that version will go, Mr. Simon said. “The fight is not over,” he added. “This was a significant victory but we are going to have to remain vigilant and active.”

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.