The U.S. Government Accountability Office issued a report recommending that FINRA improve how it communicates rule interpretations for mutual fund advertising.  The Report maintains that FINRA should not communicate rule interpretations through individual comment letters, a practice that leads to inconsistent standards and competitive (dis)advantages.  Instead, FINRA should develop additional methods to communicate standards to the entire industry.  Industry participants complained about uneven and inconsistent comments on submitted materials.  GAO did not recommend a complete prohibition on performance information, arguing that investors don't overly rely on performance information or are particularly harmed by it.  The Report was mandated by the Dodd-Frank Act. 

 

OUR TAKE: Complete comment consistency is a noble goal.   We would all like to be richer and thinner, too.  According to GAO, each of FINRA's 65 Advertising Regulation staff reviews a staggering 250-300 pieces per month.  If the only industry complaint is that subjective comments are somewhat inconsistent, then FINRA is doing a pretty good job.