There are disagreements in the industry on the type of person FINRA should hire to fill the enforcement position being vacated by Susan Merrill. But there is a general consensus that the industry regulator should take this opportunity to beef up oversight.
Merrill announced
Louis Harvey, a consultant for the industry, said that FINRA needs to adopt more of a detective role than auditor. It needs to focus more of its attention on looking for clues of wrongdoing, following up leads and encouraging people to come forward with information of misconduct, he said.
In that vein, he said the organization should broaden its search to find someone from law enforcement.
Richard Roth, founder of the Roth law firm, agreed on the general premise, although he’s not sold on the law enforcement angle.
“Now is the time to focus on what’s wrong with the system,” he said. But he said a person from within the industry would be better prepared to prioritize and really make significant improvements.
FINRA needs “to be tougher, but tougher on the right people,” he said. It needs to spend its energy on the bigger transgressions like stealing clients and years of churning, as just two examples, he said.
Rather than a law enforcement chief, he would rather see someone who served as a senior compliance manager at a big firm for about 25 years.
To be sure, FINRA has flexed its enforcement muscle several times in recent days. On