Von Aldo

FINRA Wants You, RIAs. What Will the House Recommend Today?

The debate over self-regulatory organizations is building, since Congress introduced legislation to extend FINRA oversight of RIAs. And FINRA continues to push for regulating thousands of RIAs. Do RIAs like the idea? The SEC seems clearly overwhelmed. And that fact is, b/ds that are regulated by FINRA see a regulator FAR more requently than does an RIA under the SEC. The House Financial Services Committee is meeting today to discuss changes.

Most RIAs I speak to say they don't want FINRA, but the truth is FINRA --- though it is Wall Street policing Wall Street --- is probably more active in its regulatory activities than is the SEC. And the NYT notes this. Indeed, an RIA can go several years --- as many as nine --- without ever seeing an SEC regulator.

People point to the Maddoff scheme as a exhibit A in the SEC's ineptitude, since it was actually tipped off. Then there is the Stanford affair. But the truth is, if a b/d or an RIA wants to morph into a criminal enterprise, it can be difficult to uncover the fraud for long periods of time even.

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