Richard Ketchum: A man, a plan, an expansion

Finra chief executive Richard Ketchum has a lot on his plate — a situation for which he has no one to blame but himself. Mr. Ketchum, 61, has been leading the charge in the Financial Industry Regulatory Authority Inc.'s push to gain jurisdiction over investment advisers, one of the most controversial issues facing the advisory community. He hasn't been shy about lobbying for adviser oversight and has laid out a basic plan of how Finra might operate a separate self-regulatory organization to do the job. The SRO idea is opposed by some Democrats, as well as state regulators and most registered investment advisers. But despite the breadth of the opposition, Mr. Ketchum may be making some headway. Leading House Republicans are working on a bill to authorize a yet-to-be-named adviser SRO, although the bill is not expected to come to the floor until next year. The Financial Planning Association opposes an SRO for advisers, but its president, Paul Auslander, has been impressed with Mr. Ketchum's willingness to have a dialogue with FPA members. “Maybe he's just being the good politician ... but I think he genuinely cares about getting it right,” he said. The SEC is also expected to come out next year with its proposed universal fiduciary standard of care. Mr. Ketchum has supported the effort and has insisted that a uniform standard must be accompanied by uniform oversight, as well, presumably by Finra. Meanwhile, Mr. Ketchum has other issues to deal with, such as high-frequency traders, who were blamed for the flash crash of May 2010, and mundane but important projects such as improving Finra's exam program and coming up with workable solutions for the use of social media by brokers. Broker-dealers continue chafing at what they view as heavy-handed enforcement for minor rule violations. “We've had some interesting and heated discussions” with Mr. Ketchum about policy, said David Sobel, chairman of the National Association of Independent Broker/Dealers, and general counsel at Abel/Noser Corp. “Although he's a regulator, [Mr. Ketchum] understands the broker-dealer side of it very well,” said Mr. Sobel, who also sits on Finra's small-firm advisory board. In addition, Finra must work through festering problems, such as the sale of allegedly fraudulent private placements that have forced many B-Ds into bankruptcy, and risky structured products created by the bigger firms. And questions still simmer about the behavior of Finra itself, especially given its history of missing major frauds. In October, it was hit with an SEC action for a record-falsification incident arising from its Kansas City office. [email protected]