FINRA appears to be pulling back from its campaign to regulate RIAs -- and advisors couldnt be happier.
Richard Ketchum, chairman and chief executive of the self-regulatory organization, which oversees the U.S. brokerage industry, told Reuters he was bowing to political reality.
Im not a big believer in beating a head against the wall, Ketchum told Reuters. Well focus on things we can impact.
FINRA spent much of the last couple of years lobbying to become the primary regulatory body for RIAs -- spending nearly $5 million on lobbying since 2008, according to Reuters.
But Ketchum said that, in the wake of leadership changes as a result of the 2012 elections, it was unlikely that the House of Representative Financial Services Committee would move to overhaul the current regulation of registered investment advisors through the Securities and Exchange Commission.
Advisors, who have overwhelmingly opposed FINRAs efforts to become their regulator, reacted positively to the news.
FINRAs decision is good news for consumers, said Steve Lockshin, chairman of Convergent Wealth Advisors and founder of Advizent, an industry organization that is advocating a new branding campaign for advisors. Cost aside, a self-regulating organization is likely to fall short of the current highest standard of conduct that exists through SEC regulation.
We think its the right move to let the investment advisor SRO issue rest at this point, given of the lack of consensus in Congress, Turf added. A solution that keeps oversight at the SEC is one that advisors highly prefer as well."
One investor advocate was particularly skeptical.
"It would be good news if FINRA decided to cease such efforts," said David Tittsworth, executive director of the Investment Adviser Association. "I dont think, however, that Mr. Ketchums remarks go that far. Instead, he seems to be saying that FINRA recognizes the reality that Congress has other priorities, that the SEC has not been united on the issue, and that FINRA has determined that, for the time being, it may be more fruitful to pursue other initiatives. But Mr. Ketchum makes it clear that the issues have not disappeared."
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