FINRA EVP Selman Re-Opens the Debate at Industry Conference.

[ by Howard Haykin ]

FINRA is once again making noise about expanding its regulatory reach beyond the scope of broker-dealers.  FINRA, which has lobbied many years for authority to oversee registered investment advisers ("RIAs"), was very active early in 2012 promoting its credentials.  As the U.S. Presidential election approached, FINRA went into the shadows and suspended its self-promotion. 

FYI, it shouldn't surprise anyone that investment advisers remain vehemently opposed to being regulated by a c (SRO), preferring to remain under the watchful eye of the SEC. 

At an industry conference last week, a FINRA official offered a very public view of why investment advisers should warm to the idea of its oversight:  FINRA and other SROs are in an ideal position to regulate because they're not held "captive" by the industries that fund them.  Nor are they insensitive to their business needs  -- that according to FINRA EVP Thomas Selman, 

The renewed FINRA push comes at a time when investment advisers face uncertainties about key regulatory issues during the coming year.  RIAs, along with Congressional leaders, are consumed with the tax and spending issues related to the dreaded "fiscal cliff, among other things.  Would it make a big difference if debate on RIA oversight was postponed for a year - not really.  Of course, that shouldn't stop FINRA from pushing its agenda - even if it's unlikely to have much of an impact. 

Ongoing Debate.   The debate is likely to continue in the coming months, but it may amount to nothing more than talk, said John Coffee, a professor at Columbia Law School and authority on securities regulation. "The House and Senate don't agree that much, so the prospect of legislation rushing through Congress strikes me as modest," he said.

Setting up a self-regulatory organization on their own could ultimately spare investment advisers the possibility of the FINRA oversight they dread, Coffee said.

"An SRO will eventually come. I don't think you can sit there and say 'never, never, never,'" said Coffee. 

For further details, go to:   [ Reuters, 11/21/12 ].