Groups Backed by Financial Industry Can Gain Power in House Plan

On 28.09.11, In Legal Industry, by Blake Houser

9/28/2011

 

Legislators on Capitol Hill are pondering on plans to outsource the authority of the government over Wall Street and shifting some of the powers of the Securities and Exchange Commission to groups that are backed by the financial industry.

A measure authorizing a self-regulatory group to examine over 10,000 investment advisory firms has been introduced by Representative Spencer Bachus of Alabama, a Republican and the chairman of the House financial services committee. This move highlights the precarious financial position of the S.E.C. The issue will take center stage Tuesday on Capitol Hill as the House committee conducts the highly anticipated hearing to scrutinize federal supervision of the investment world.

The hearing, as well as the supposed discussion draft measure floating around Washington, is turning out to be a big boon to Wall Street’s self-policing organization, the Financial Industry Regulatory Authority. Finra, a nonprofit that already inspects around 4,500 brokerage houses, is presently the only self-regulatory group well positioned to assume the new power.

On Tuesday, Richard G. Ketchum, the chief executive of Finra, is expected to say to the committee, “Given our experience operating a nationwide program for examinations and our ability to leverage existing technology and staff resources to support a similar program for investment advisers, we believe we are uniquely positioned to serve as at least part of the solution to this pressing problem.”

The S.E.C. is required to study its own efforts in policing Wall Street as mandated by the Dodd-Frank financial regulatory overhaul. The study, which was released in January, revealed that the agency was not equipped to monitor the thriving ranks of investment advisers.

According to the report, “The commission likely will not have sufficient capacity in the near or long term to conduct effective examinations of registered investment advisers with adequate frequency.”

Blake Houser

Client Relations Manager at The Wells & Drew Companies
About the author:
Blake Houser is Client Relations Manager at Wells & Drew. In addition, he is the third generation in this family-owned speciality printing business.

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