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Finra Insists It Wants to Help Small Broker-Dealers

October 16, 2017

Finra CEO Robert Cook says the industry’s self-regulator wants to help shape an environment that’s encouraging to small broker-dealers, InvestmentNews writes. But many in the industry say Finra has been doing exactly the opposite.

Speaking at a conference of the American Institute of Certified Public Accountants and the Sifma Financial Management Society last week, Cook said Finra wants to help support smaller firms, reports InvestmentNews. About 90% of the 3,784 Finra member broker-dealers are small firms, the publication notes. But the number of firms under the regulator’s purview has fallen by 24% over the past decade, according to InvestmentNews. Cook said this has been due to “a lot of trends,” such as continuous industry consolidation.

But many broker-dealers have blamed Finra itself for creating a hostile environment for them — by overly aggressive enforcement, the publication writes. Some commenters on the InvestmentNews article were more aggressive.

“FINRA is a joke,” one commenter, who goes by the name of J Baz, writes. “Their relentless examinations and escalation of minor things to enforcement is killing small broker dealers.”

Another user says the regulator has been “systematically putting [small firms] out of business over the last decade.”


One user who’s allegedly a former U.S. Marine says Finra has taken to heart the Corps’ guideline: “To Err is Human, To Forgive Divine: However Neither is Marine Corps Policy.”

Other users say Finra could have simplified things for smaller firms by providing them with templates for audits and getting rid of “abusive examination practices.”

And one commenter says that a constructive first step for the regulator would be to support the fiduciary rule.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.