Finra brands DOL fiduciary rule misguided, confusing

A Labor Department proposal designed to reduce conflicts of interest for brokers working with retirement accounts would create overlapping regulations that would baffle financial advisers and investors, Finra said Friday. The rule would require brokers to act in the best interests of their clients in 401(k) and individual retirement accounts, a standard investment advisers currently meet. Although the Financial Industry Regulatory Authority Inc. supports the DOL’s goal, it said the measure does not incorporate existing securities laws and introduces ambiguous new concepts. More on Investment News [...]

Finra Scrub of Broker Records Yields Frustration, Results

The effort by Wall Street’s self-regulator to check every registered broker’s public record for undisclosed tax liens and other hidden financial and legal matters has left some firms scrambling to verify missing information and update their records. And while the Financial Industry Regulatory Authority’s move to scrub the records of 638,019 registered brokers has resulted mainly in compliance headaches for many firms, the effort has yielded some tangible results as well. More in the Wall Street Journal [...]

Finra Chief Blasts Labor Proposal for Stricter Broker Rules

The head of Wall Street’s self-regulator blasted the Obama administration’s push to impose stricter standards on brokers who handle retirement accounts, saying the rule would make it difficult for smaller investors to get advice. In a speech Wednesday, Financial Industry Regulatory Authority Chief Executive Officer Richard Ketchum said that the Labor Department’s April proposal would create new legal risks for brokers and probably reduce the number of investment options they would offer. The remarks echo the lobbying talking points used by financial companies opposed to the proposal. More on Bloomberg [...]

Hundreds of Older Investors Call New Finra Hotline

A new regulatory hotline for older investors has been getting hundreds of calls from seniors seeking more information about investment products and in some cases reporting broker misconduct or delays in getting problems at brokerages resolved. The Financial Industry Regulatory Authority, Wall Street’s self-regulator, in late April established its toll-free Securities Helpline for Seniors, at 1-844-57-HELPS (1-844-574-3577). As of Tuesday, 350 calls had come in within about four weeks, says Susan Axelrod, Finra’s head of regulatory affairs. Issues raised by callers have ranged from fraud to questions such as “What is an annuity?” Ms. Axelrod says. Callers want to know how to compel brokers to give them access to account documents of deceased parents and how to check a broker’s regulatory record. More in the Wall Street Journal [...]

FINRA to Toughen Sanctions on Fraud, Unsuitability

The Financial Industry Regulatory Authority said Tuesday that it will call for tougher sanctions for those who commit fraud or make unsuitable recommendations to clients. Plus, it will increase suspensions under the self-regulator’s suitability rules from one year to two years. FINRA said that its National Adjudicatory Council is amending its “overarching principles” that apply to sanctions determinations and is revising its Sanction Guidelines to advise FINRA adjudicators to “strongly consider” barring an individual respondent or expelling a firm for cases involving fraud. More on ThinkAdvisor [...]

Wall Street’s regulatory chief says data collection plan on hold

A controversial proposal by Wall Street’s industry-funded regulator to collect massive amounts of customer account data will not proceed until the industry’s concerns are addressed, the regulator’s chief executive will tell lawmakers Friday. “To be clear, we will not move ahead with the present form of the proposal and will not move forward with an amended version until we conclude that the concerns… have been addressed,” Financial Industry Regulatory Authority (FINRA) CEO Richard Ketchum said in prepared testimony seen by Reuters. More on Reuters [...]

SEC Urged to Beef Up FINRA Oversight: GAO

The Securities and Exchange Commission is failing to adequately oversee the Financial Industry Regulatory Authority, the Government Accountability Office said Thursday. In its report, “Securities Regulation: SEC Can Further Enhance Its Oversight of FINRA,” Congress’ investigative arm states that while the securities regulator has taken some actions since GAO suggested in 2012 that the agency beef up its oversight of the self-regulator, the SEC has yet to develop “specific performance goals and measures, with corresponding targets to monitor its progress toward the goal of enhancing” FINRA oversight. More on ThinkAdvisor [...]

Regulators zero in on protecting elderly investors

An aging population has investment advisers and brokers zeroing in on older clients to build their books of business, while regulators target the same group for investor protection. On Monday, the Financial Industry Regulatory Authority Inc. filed a cease-and-desist order against Avenir Financial Group for sales of equity in the firm and promissory notes. Finra alleged that Avenir lied about the health of the firm and raised more than $730,000 over three years in sales mostly to elderly customers. Finra also barred an Avenir registered representative, Cesar Rodriguez, for the personal use of $77,000 in investor funds. More in Investment News [...]

FINRA’s holiday ‘CARDS’

Few Americans have even heard of the Financial Industry Regulatory Authority (FINRA), but the securities regulator is about to become intimately familiar with all Americans’ investment portfolios. FINRA recently proposed the Comprehensive Automated Risk Data System, known by the less scary-sounding shorthand “CARDS.” In the name of investor protection and investor confidence, FINRA plans to monitor all securities accounts and transactions. Investors should run from this kind of protection. FINRA is a quasi-governmental organization that oversees the brokerage industry. It derives its exclusive powers from, and is in limited measure accountable to, the Securities and Exchange Commission. FINRA sets its own agenda, salaries and budget and is governed by a board of directors, some of whom represent industry and the majority of whom purportedly represent the public. As a new working paper released by the Mercatus Center at George Mason University discusses, FINRA is not truly accountable to the public, the industry or government. This lack of accountability matters because FINRA’s influence and power are growing. FINRA has grand plans for CARDS. Brokerage firms will be required to transmit monthly to FINRA information about customer profiles, account transactions and holdings. FINRA will use these data to assess how well brokers are serving their customers and to watch for unusual customer behavior. More on The Hill [...]

Finra to Probe Broker Conflicts When Exchanges Offer Rebates

The brokerage industry’s self-regulator will spend 2015 looking into whether deals between brokers and exchanges are taking money out of investors’ pockets, regulators said in a letter outlining the year’s oversight priorities. The Financial Industry Regulatory Authority will also review whether customers get fair prices on electronic bond-trading platforms and how brokers market financial products that are sensitive to interest-rate changes such as alternative mutual funds, structured retail products and bank-loan mutual funds, it said. The letter lays out some of this year’s biggest concerns for Finra, which is funded by the brokerage industry that it polices. The group, which levied about $60 million in fines last year, has faced repeated criticism from other regulators and investors that it isn’t tough enough on Wall Street misconduct. More on Bloomberg [...]