Wall Street’s self-regulator has pulled back a plan to make brokers tell clients about big-money bonuses they get for changing firms, saying the proposal needs changes. The move follows criticism from the brokerage industry, which questioned some of the details of the Financial Industry Regulatory Authority’s proposed rule, including how much it would cost firms to comply. The said it needed more study and possible revision. Finra sent its plan to the Securities and Exchange Commission earlier this year for review and approval. But in light of the industry’s criticism it now needs some reworking, Finra said Monday. Because of time constraints built into the Dodd-Frank law, Finra decided to formally withdraw its proposal and file a new version later this year, it said. More in the Wall Street Journal [...]

Wall Street’s self-regulator continues to tweak its efforts to collect substantial data from the brokerage industry to shore up support for the heavily criticized initiative that would increase its oversight. Richard Ketchum, the Financial Industry Regulatory Authority chairman and chief executive, said Monday during the organization’s annual conference in Washington that the changes would ease the burden that the data surveillance would impose on firms. Finra said late last year it plans to introduce a proposal that would allow it to collect consolidated data about trading, brokerage products, and practices of firms and individual brokers to better understand—and potentially reduce—the overall risk in the industry, rather than responding only to individual violations and risks. More in the Wall Street Journal [...]

The Financial Industry Regulatory Authority, Wall Street’s self-regulator, is moving to curb a trading-surveillance system that has generated opposition from brokers, Chief Executive Officer Rick Ketchum said today. Smaller brokers that don’t use clearing firms will have more flexibility to send trade and commission data directly or to use a service bureau, Ketchum said at Finra’s annual conference in Washington. Trade information about products not held by brokers, such as variable annuities and direct mutual funds, won’t have to be submitted in the early stages of the project, he said. Finra told brokers in December it was working on the system, known as Cards, to help it spot suspicious activity including overcharges and selling unsuitable investments. More on Bloomberg BusinessWeek [...]

In the wake of revelations that hundreds of registered advisors have failed to publically disclose personal bankruptcies, criminal charges and other potentially damaging information, FINRA is moving to toughen the reporting requirements for BrokerCheck, its public-facing system for consumers to vet their financial advisors. On Thursday, the self-regulatory group’s board of directors approved new rules that would expand requirements for investment firms to conduct background checks on financial advisors. More in On Wall Street here. [...]

When a couple in Wichita claimed they lost $187,500 in what they called a Ponzi scheme orchestrated by a Morgan Stanley (MS) broker, the industry-funded Financial Industry Regulatory Authority (Finra) provided a list of potential arbitrators to resolve the dispute. Two of the people were dead, one for more than two years, according to Diane Nygaard, the couple’s lawyer. She calls the faulty list a sign of a broken system that has failed to protect investors. “If it were a regular judicial system, you would not have a case appointed to people who are dead,” she says. “Wall Street should not have a special pet court that they operate.” Millions of Americans who have brokerage accounts must take any disputes about their investments to arbitration rather than court, a requirement that was upheld in a 1987 Supreme Court ruling. After a string of lapses that cast doubt on the system’s fairness and quality, Finra is seeking to reform the system that lets Wall Street keep its dirty laundry out of court. Read More on Bloomberg BusinessWeek [...]

Securities regulators are expected to unveil plans to step up checks on stockbrokers’ records, after investigations by The Wall Street Journal revealed flaws in the information available to investors. The Financial Industry Regulatory Authority, a Wall Street watchdog, is set to propose rule changes on Wednesday that would require brokerage firms for the first time to do formal background checks on new employees, including brokers hired from other firms, according to a person familiar with the proposals. More in the Wall Street Journal [...]

Call it the question that won’t go away. Is the Financial Industry Regulatory Authority Inc. pursuing a campaign, either directly or indirectly, to become the self-regulatory organization for registered investment advisers? Nearly two years ago, Finra made a strong effort on Capitol Hill to promote legislation that would shift regulation of investment advisers to a self-regulatory organization from the Securities and Exchange Commission. It was no secret that Finra wanted to become that SRO. More in Investment News [...]

Finra is tackling one of its most complex and wide-ranging oversight areas — regulations surrounding broker communications with customers — as it launches a review of existing rules to see if they are cost-effective and keeping pace with the markets. On Tuesday, the Financial Industry Regulatory Authority Inc. said it would assess the communications rules as well as those that govern gifts, gratuities and non-cash payments to brokers. More in Investment News [...]

A disclosure system that Wall Street’s watchdog promotes as a tool for researching brokers lacks crucial details, a group of consumer lawyers says it will reveal in an analysis on Thursday. The analysis will raise questions about whether the BrokerCheck service, run by the Financial Industry Regulatory Authority (FINRA), gives investors all the information they need to make an informed decision about choosing a broker. The study is being released by the Public Investors Arbitration Bar Association (PIABA), a group of attorneys who represent investors in securities arbitration cases. More on Reuters [...]