Wednesday, August 26, 2015

Small Percentage of Brokers Fined is a Bad Thing?

It is truly a bizarre world that we live in. Anyone involved in the financial services industry knows that  the overwhelming majority, in fact almost all of the registered representatives in this country, are honest, hard working professionals.

Everyone also knows that not all  of the 630,000 individuals holding a Series 7 license actually deal with retail investors - or investors in general. In FINRA's grab for regulatory turf there are a host of brokerage firm employees  who are required to have the license who do not deal with investors, or trading, at all.

Then why, in a year where FINRA enforcement proceedings are up, and fines are up, are critics complaining that the increase in fines and proceedings are not enough, since "[o]nly a small fraction of the 629, 980 registered securities representatives that FINRA oversees—not to mention the almost 4,300 brokerage firms under the regulator’s supervision—were served with enforcement actions."

How about the fact that financial professionals are honest and hard working. Why isn't it a good thing that less than 1% of all Series 7 licensees have been the subject of a FINRA enforcement action in a year? FINRA certainly isn't slacking off on its enforcement proceedings, and it has become a huge fan of conducting overlapping annual exams at smaller firms.

Do we really want to encourage regulators to 'bring their number up"? To simply bring charges against brokers and firms simply to make the numbers look "better" or to increase their revenue?

That is not the purpose of our regulatory structure, nor should it be the goal of enforcement proceedings.

.A "Tougher" FINRA? | Industry content from

Related articles
Post a Comment