Friday, February 13, 2015

SEC Commissioner Agrees - FINRA's CARDS Proposal is Nuts

FINRA, a non-governmental, private entity, is pushing to force brokerage firms to deliver details of every transaction in every brokerage account, including yours, to it, every day.  The concept, known as CARDS, is simply mind boggling. FINRA already has access to trade data of every trade done every day, and if is so desired, it could have it in real time, for every transaction on every exchange.
FINRA also has the ability to compel brokerage firms to provide data on any transaction, any account, at any time.

English: A candidate icon for Portal:Computer ...Commissioner Piwowar called the CARDS program a solution in search of a problem. And he is 100% correct.

We are still waiting for FINRA to explain 1) why it needs this data, and 2) how it is going to prevent hackers from accessing it, and using the data to trade, or engage in identity theft.

MIT says you cannot protect the information, hackers will figure out the identities of the account holders, even without names and social security numbers. The WSJ previously reported about the MIT findings - Metadata Can Expose Person’s Identity Even Without Name - New Analytic Formula Identifies People Without Names, Account Numbers

FINRA needs to stop putting the country's personal financial information at risk simply to make it's job easier...assuming CARDS makes its job easier. FINRA claims that having all of that account information and transaction information will enable it to spot suitability issues. Isn't that what is suitability rules are designed to do? Isn't that what its exam teams are taught to spot? Is the small percentage of trades which are possibly unsuitable, engaged in by an insignificant percentage of brokers, worth risking the financial and data security of every person in this country who maintains a brokerage account?

Has FINRA lost its collective mind?

For more information, go to US SEC's Piwowar says skeptical of FINRA's data collection proposal | Reuters

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