FINRA Wants SRO for RIAs
In a letter to the SEC, FINRA Chairman and CEO Richard Ketchum advocated for the creation of a FINRA-like Self-Regulatory Organization for registered investment advisers. In the letter, Mr. Ketchum argues that an SRO would solve the SEC’s intractable examination resource problem because it would be self-funded by member firms. Mr. Ketchum notes that 55% of broker-dealers are examined each year while only 9% of advisers are examined. He asserts that an SRO would “raise the standard of conduct in the industry by imposing ethical requirements beyond those that the law can establish.” He also indicates that an SRO would regulate enforcement activity, registration and licensing of personnel, and advertising.
OUR TAKE: An RIA SRO would raise costs for all investment advisers because of the membership dues as well as the cost of increased compliance with more detailed rules. We think the biggest practical impact would be the regulation of marketing and advertising, which, we would assume, would follow the FINRA model of filing and review.
Posted by Todd Cipperman at 11/9/2010 6:47 AM 
Categories: Compliance and Operations
Tags: finra regulation investment advisers sro
Categories: Compliance and Operations
Tags: finra regulation investment advisers sro
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