The Securities and Exchange Commission is charged with overseeing self-regulatory organizations (SROs) like the Financial Industry Regulatory Authority (FINRA), which is in turn charged with policing sales practice abuses by its member brokerage firms. The SEC, however, lacks sufficient information about FINRA to properly oversee it, according to Dan Jamieson’s InvestmentNews article, “SEC should step up scrutiny of Finra: Report.”
The SEC apparently lacks information in part because SROs like FINRA “are not currently required to regularly disclose information to the SEC regarding their regulatory operations,” according to the article, quoting a report by Boston Consulting Group (BCG), which completed a six-month review mandated by the Dodd-Frank financial reform law.
The BCG report concluded in part that the SEC needs to beef up its oversight of FINRA’s member regulation and enforcement units. FINRA is reportedly one of twelve SROs being inspected by about 50 full-time SEC employees. The study recommended that the disclosure of data by SROs to the SEC be formalized, and that the SEC assign inspectors dedicated to overseeing FINRA.
The BCG study also stated that the SEC’s Division of Trading and Markets “could benefit from a deeper understanding of how the markets and market participants operate,” the consulting group found.
The analysis “confirms the concerns I have been expressing ? that the SEC does not have the resources to perform all the activities expected of us,” SEC Chairman Mary Schapiro was quoted as saying.
The SEC, whose responsibilities have markedly increased under Dodd-Frank, has run into a brick wall trying to secure more funding from Congress.
Page Perry has over 125 years collective experience representing institutional and individual investors in securities-related litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.