As the SEC goes about enhancing and expanding its oversight of FINRA using a more risk-based approach, it should conduct more extensive oversight of FINRA’s governance and executive compensation, according to a report by from the Government Accountability office.
The report, issued on Wednesday, highlighted several other shortcomings in the way that the SEC oversees the brokerage industry’s self-regulatory organization. The report comes at a particularly sensitive time, as House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) proposed legislation that would subject investment advisors to oversight by an SRO, and all eyes are on FINRA as the eventual SRO for advisors. If passed, critics say, investment advisors might incur costly regulations that modeled on the brokerage model.
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