Regulatory process for advisers could slow in 2016

Given that the two major securities regulators are in the midst of making major personnel changes and Congressional elections are coming up, the pace of policy and regulatory action in the advisory industry is likely to slow down in 2016. That was the assessment of David Bellaire, executive vice president and general counsel at the Financial Services Institute, at the group's One Voice conference earlier this week. The Securities and Exchange Commission is currently operating with only three of five members after the departures of Republican Daniel Gallagher Jr. and Democrat Luis Aguilar last year. Their replacements — Republican Hester Peirce and Democrat Lisa Fairfax — have been nominated by the White House, but their Senate confirmation process has not begun. MAJOR CHANGE Meanwhile, the Financial Industry Regulatory Authority Inc. also is undergoing a major change. Last fall, Finra chairman and chief executive Richard Ketchum announced that he will retire this year. Mr. Ketchum has pledged to stay on the job until the Finra board selects his successor. “We don't expect major rulemaking out of Finra until that transition is complete,” Mr. Bellaire said. A Finra official, however, said that it will be business as usual at the industry-funded broker-dealer regulator. “I would be surprised if there's a slowdown in rulemaking,” Robert L.D. Colby, Finra's chief legal officer, said. “Rick has some priorities he wants to achieve before he leaves.” LAME DUCK It's unclear how long it will take the Finra board to hire a new CEO. Mr. Ketchum has said he would like to depart over the summer. “Getting the right person in place is more important than the timing,” said Finra spokesman Ray Pellecchia, who accompanied Mr. Colby at the FSI conference. An election year could be a quiescent time for Congress, too. Mr. Bellaire predicts “message votes designed to embarrass the other party.” Elected representatives would then be leaving town to focus on their campaigns. “We don't expect a lot of activity in Congress except for perhaps the lame duck [session] later on in the year.”