FINRA Seems Determined To Fulfill Its Business Growth Goals Despite Falling Membership Numbers

Tuesday, May 29, 2012 08:30
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FINRA Seems Determined To Fulfill Its Business Growth Goals Despite Falling Membership Numbers

Tags: FINRA | registered investment advisors | regulation | sec

Growth in the number of registered investment advisors (RIAs) jumped 31% between 2004 and 2010. This growth has resulted in fewer members for FINRA as the number of retail broker dealers also shrinks. Nevertheless, FINRA has big growth goals and it hopes to acheive those goals primarily by expanding FINRA's oversight role over both institutional and retail advisors.

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Two focuses of FINRA's growth lie in improving its BrokerCheck system as well as increasing transparency through the system FINRA uses to trace order flow. BrokerCheck gives investors access to disciplinary and other records for brokers and financial services firms.
 
The growth in RIAs is significant and pits FINRA against the SEC as a regulatory body. FINRA took over the former NASD’s oversight functions after the Nasdaq exchange became separate from the regulatory body. RIAs are governed by a fiduciary standard.
 
Most object to FINRA’s broadening its regulatory authority because broker-dealers and registered reps are governed under a set of rules that do not measure up to the fiduciary yardstick. FINRA feels that Congress’s attempts at regulation so far have been inadequate. FINRA also has a business plan for growth that it wishes to accomplish. Such a business plan could possibly obfuscate the motives behind FINRA's push to become the major regulatory authority for the industry.

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