Tuesday, September 13, 2011

FINRA's Ketchum Discusses House Draft Authorizing SRO for Investment Advisers

Praising the draft legislation authorizing an SRO for investment advisers of sponsored by Financial Services Committee Chair Spencer Bachus (R-Ala) as a thoughtful approach to investment adviser regulation, FINRA chief Richard Ketchum said that if FINRA becomes an SRO for investment advisers it would implement regulatory oversight that is tailored to the particular characteristics of the investment adviser business. FINRA would establish a separate entity with separate board and committee governance to oversee any adviser work, and would plan to hire additional staff with expertise and leadership in the adviser area.

That said, he continued, given FINRA'experience operating a nationwide program for examinations and its ability to leverage existing technology and staff resources to support a similar program for investment advisers, FINRA believes that it is uniquely positioned to serve as at least part of the solution to this pressing problem. In addition, FINRA’s current programs would be enhanced and investors would be better protected if it had the authority to examine the full operations of dually registered firms, where currently it can only see the brokerage side of what is typically a fully integrated business.

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