FINRA Will Renew Push for Shift in Investment Adviser Oversight

Posted on March 25th, 2014 at 10:00 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

FINRA plans to renew its lobbying efforts for legislation that would shift oversight of financial advisers away from the SEC and into the hands of a self-regulating body, Investment News reports.

In 2012, FINRA first attempted to push such legislation. Its efforts were resisted by advisors and the measure died. FINRA backed down when the new Congress convened last year and the champion of the SRO bill, Rep. Spencer Bachus, R-Ala., relinquished his seat as chairman of the House Financial Services Committee.

FINRA is motivated to expand its regulatory authority because the brokerage industry is shrinking.

Over the past two years, FINRA has maintained that it isn't mounting a lobbying campaign to become the adviser SRO and isn't engaged in talks with the House or Senate. But FINRA has repeatedly stated that adviser oversight should be increased.

Both FINRA and the Investment Adviser Association (“IAA”) agree that there is a regulatory gap regarding investment advisers. The SEC currently examines only about 8 percent of the nearly 11,000 registered investment advisors in the country on an annual basis.

The SEC’s failure to examine more investment advisers largely is due to a lack of resources. In adopting the current budget, Congress denied the SEC’s request to hire an additional 250 investment adviser examiners.

The restrictive budget leaves the door open for FINRA and its allies to argue that inadequate adviser oversight should be addressed by contracting out this critical function to a private organization like FINRA.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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You were most helpful with my FINRA deposition. You are a good lawyer and a good person.

Dan B.


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