Investors May Lose as Congress Saves Money on Adviser Oversight

On 16.07.11, In Legal Industry, by Blake Houser

7/16/2011

 

Oversight of nearly 12,000 investment advisers may be handed by Congress as a cost-saving measure to Wall Street’s self-funded regulator. Investors could handle the cost.

The Financial Industry Regulatory Authority, or FINRA, which was commissioned by the government to administer brokers, is campaigning to replace the Securities and Exchange Commission as regulator of registered investment advisers who handle around $40 trillion. This is being considered by Congress as a cheaper alternative compared to increasing SEC’s resources, since the $877 million budget of Finra is being paid by the brokers it supervises.

However, Denise Voigt Crawford, a former commissioner of the Texas State Securities Board, said, “It’s a very bad idea to expand the notion of self-regulation. They’re supposed to oversee the activity of the industry, but they are industry.”

Voigt, who retired last February after almost two decades as securities commissioner, said that Finra has done a poor job of protecting the investors. The fines that are imposed are usually just a fraction of the damages suffered by the investors. Finra also failed to regularly share information with state regulators.

Finra was founded in 2007 after the merger of the National Association of Securities Dealers and most of the regulatory units of the New York Stock Exchange.

Last year, members were fined by Finra nearly $43 million, while the SEC, working with similar budget, has imposed penalties of over $1 billion.

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.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>