September 30, 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.
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.
FINRA has failed to adjust its internal processes or policies to reduce unnecessary and wasteful practices, such as biannual audits of firms which have not had regulatory issues (or minor administrative issues only) surface during prior exams. It remains focused on minor inadvertent violations of ever more complex regulations, all the while failing to direct resources to known problem firms and individuals.
I request that the SEC reevaluate FINRA`s rule proposal to increase the PA and GIA it assesses on its members and request that FINRA develop an alternative approach to fund raising in an effort to sustain itself, or look for further areas to reduce expenses, as its member firms have done.
Mr. Edward Wiles
SVP & CCO
Genworth Financial Securities Corp