September 28, 2009
I am writing to express my concern about a rule proposal that the Financial Industry Regulatory Authority (FINRA) filed with the Securities and Exchange Commission (SEC) concerning a proposal to change FINRA`s regulatory pricing structure by increasing the Personnel Assessment (PA) and Gross Income Assessment (GIA) fees it charges financial advisors and broker-dealers, respectively. In its filing, FINRA indicates that these changes are needed in order to stabilize revenues used to fund FINRA`s regulatory activities.
I believe FINRA`s failure to properly prepare for the inevitable market downturn is the root cause of their operating cash flow concerns. It is unfair to burden broker-dealers, financial advisors and their clients, all of whom have all suffered greatly during the recent market downturn, with these additional fee assessments. More specifically, the doubling of the PA is simply unjustified by any reasonable calculation of inflation over the five-year period since the last increase in the PA. Additionally, the proposed method of calculation for the GIA will only heighten the disproportionate regulatory cost borne by independent broker-dealers, financial advisors, and their clients.
I request that the SEC reevaluate FINRA`s rule proposal to increase the PA and GIA it assess on its members and request that FINRA develop an alternative approach to fund raising in an effort to sustain itself.
FINRA owns multiple buildings, with multiple attorneys to manage each property lease. Why not consolidate office locations (ex. Dallas and New Orleans), allowing them to work out of the same building while continuing to oversee their respective districts? They could also consolidate staff, especially clerical and legal, as the number of B/Ds being overseen has reduced as well. Do we need multiple building locations, and accompanying overhead, when there could be one or two central locations to house the various district office personnel?
Some belt tightening might be in order at FINRA before placing an additional burden on financial advisors, broker/dealers and their clients with additional fee assessments.
Mr. John Terry
High Street Securities, Inc.