FINRA is not letting CT-based Euro Pacific Capital grow, complains Peter Schiff in an interview with The New York Post.  He wanted to open 10 more offices and hire people, but the regulator won't allow it.  Mr. Schiff and others who run small broker-dealers constantly gripe that FINRA has been hobbling their businesses with over-regulation. 

Critics charge that FINRA is beholden to big brokerage firms and boosts its investigation statistics by going after smaller firms that are more likely to settle than fight.  FINRA counters that its policies are even-handed, and it cites statistics - percentages of "actions" - to prove its point.  It's sometimes hard to identify the "good guys" from the "bad buys."  And in this never-ending battle, there apparently are few winners.

According to Schiff, His Battles Started ... a few years back, when FINRA alleged that he violated the rules by hiring more brokers than he was allowed.  Schiff, who's also the firm's chief global strategist and is known for a regular newsletter he writes, says he's getting "overwhelmed" by regulations and firing people.  He attributes the problem, in part, to FINRA's over-exuberance [in setting regulations], which he says has driven some firms out of business.

"I'm glad my business has grown to a size that I can afford to comply. Now, I have 150 employees. [But] it has slowed down my growth. I would have a much larger company, if not for FINRA."

A key problem in the U.S. today is the shortage of jobs - which has led President Obama to cut rules and regulations that were stunting job growth.  Yet, according to Mr. Schiff and other small business owners, rules and regulations have been the proverbial "straws that break the camel's back."

Schiff is careful in his criticism of FINRA, admitting that the regulator has the difficult task of showing Congress it's getting the job done.  "Unfortunately [small firms] are dropping like flies because Congress is coming up with too many rules and regulations and enforcing FINRA to implement them," Schiff added.  And he admits, FINRA management and staffers are not bad people - they just have bad jobs.

FINRA Statistics.   FINRA says it took “action” against 62.2% of large firms - i.e., 107 out of 173 large firms. By contrast, FINRA said it took action against only 6.5% of small-to mid-sized firms - representing 272 actions. But FINRA's “action” isn’t what the small firms are complaining about - their main gripe is that FINRA conducts lengthy investigations that cost brokers a lot of money in legal and accounting fees - and ultimately don’t result in any action taken.  To access the story, go to:   [The NYPost, 6/5/11]