The Wall Street regulator of broker-dealers has decreased its spending on lobbying federal lawmakers substantially over the past year, in part because it's not pushing for legislation that would allow it to expand its reach to investment advisers.
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Financial Industry Regulatory Authority Inc. recorded $220,000 in lobbying expenses for the second quarter, according to a report filed today with the Clerk of the House of Representatives. That brings its total expenditures for Capitol Hill advocacy to $450,000 so far this year.
At the halfway point of 2012, Finra had spent $550,000. Last year, the organization was spearheading support for a measure that would establish a self-regulatory organization for investment advisers.
Although that bill, written by Rep. Spencer Bachus, R-Ala., then chairman of the House Financial Services Committee, didn't mention Finra by name, the organization argued that it was best positioned to become the adviser SRO — the role it currently fills for brokers.
Mr. Bachus' bill died without a committee hearing. Neither Mr. Bachus, who is no longer chairing the panel, nor any other legislator has re-introduced a SRO bill this year.
In 2012, Finra listed Mr. Bachus' bill, the Investment Adviser Oversight Act of 2012, as one of its issues on its lobbying disclosure form. This year, Finra's description is generic — “regulation of broker-dealers, securities industry and markets … investor protection and education.”
Even though it's declining, Finra's spending on lobbying towers over that of investment adviser groups.
The Investment Adviser Association spent $50,000 on lobbying in the second quarter and $40,000 in the first quarter. Halfway through 2012, the IAA had spent $130,000. The Financial Planning Association has spent $75,000 on lobbying through July 1, according to the Center for Responsive Politics.
The Financial Services Institute, which represents independent broker-dealers and financial advisers, has dramatically increased its lobbying over the last year. It spent $399,000 in the first half of this year, up from $180,000 in the first six months of 2012. Over the last two years, FSI has doubled its in-house lobbying staff to four people and has hired an additional outside lobbying firm, according to FSI spokesman Chris Paulitz.
Although it has backed off on its SRO advocacy because no Capitol Hill champion has emerged, Finra has not abandoned its effort to strengthen oversight of advisers.
Each year, the Securities and Exchange Commission examines only about 8% of the nearly 10,000 investment advisers registered with the agency. About 40% of registered advisers have never been examined.
Finra chairman and chief executive Richard G. Ketchum said in May at Finra's annual meeting that the organization is keeping an open mind about legislative fixes for what it deems an investor protection weakness.
“We would support anything that would effectively address this gap with the right resources,” Mr. Ketchum told reporters at the time. “We also still would support a bill that supports an SRO anytime anybody wanted to propose it.”
