There are certainly things that FINRA does well, and there does need to be some regulation and oversight. But will this become an actual model, or more closer to a "concept car" that looks good, but is not built for actual production or to be used? That may be the overarching question that the public and industry asks regarding extending the scope of this SRO.
Right now, FINRA oversees approximately 4,420 brokerage firms, 162,565 brokerage offices and 629, 280 Brokers. FINRA also argues that it’s the perfect candidate to create and implement an “investment advisor personnel qualification examination program,” because it already maintains more than 30 FINRA and New York Stock Exchange (NYSE) qualification exams and delivers more than 40 qualification exams on behalf of not only FINRA but the North American Securities Administrators Association (NASAA), NYSE, the Municipal Securities Rulemaking Board (MSRB), and the National Futures Association (NFA). They do all this now with a staff of 3,000.
Would the addition of potentially thousands more RIA's stretch FINRA even more thin? Could FINRA hire enough qualified personnel to handle the additional responsibilities? Are personnel performing current audits, exams and oversight qualified enough? What are the costs involved in setting up this additional function and who will bear the brunt? While section 914 of the Dodd-Frank bill put additional requirements on regulating this industry, caution should be used before rushing head long into a "solution" that may create more problems than the perceived cause.
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