Finra stands down on RIA oversight
February 7, 2013 by Mark Schoeff Jr.
Investment advisers remain wary of attempts in Washington to shift oversight of the sector from the Securities and Exchange Commission to an industry-run group, even as the brokerage regulator indicates that it is no longer focusing on legislation that would establish an adviser self-regulatory organization.
Finra has spent nearly $2 million lobbying Congress over the last two years, with the SRO bill as its top issue, according to the Center for Responsive Politics. The self-regulator has positioned itself as the best choice to fill the role.
Last year, Rep. Spencer Bachus, R-Ala., who was then chairman of the House Financial Services Committee, introduced an SRO bill that failed to receive a vote by the panel. It drew bipartisan skepticism during a June 6 hearing.
In the new Congress, there doesn’t appear to be a champion for the measure.
“I’m not a big believer in beating a head against the wall,” Mr. Ketchum told Reuters. “We’ll focus on things we can impact.”
A spokesman for Mr. Bachus did not respond to a request for a comment. The new chairman of the committee, Rep. Jeb Hensarling, R-Texas, has not indicated any interest in an SRO bill. His office did not respond to a request for comment.
Finra’s decision to stand down on the SRO bill represents a victory for investment adviser organizations that opposed the measure.
Supporters of the SRO legislation said that an self-regulatory organization would strengthen investor protection by ensuring that more advisers would be examined than are currently examined annually by the SEC. Opponents, including many adviser organizations, said an SRO represented an additional costly layer of regulation. They support providing the SEC with more funding to oversee adviers.
“This is good news, but it’s not the final chapter,” Dave O’Brien, owner of O’Brien Financial Planning Inc., said of Finra’s move. “Not for a minute do I think this is the end of the story.”
The Investment Adviser Association, which led the charge against the SRO bill, has a similar attitude. Neil Simon, IAA vice president for government relations, said that Finra may be rethinking its legislative priorities but is probably not abandoning the SRO idea.
“It is essential that advisers remain vigilant,” Mr. Simon said. “This issue is not going away. It is essential that advisers educate their members of Congress about what their concerns are.”
