November 30, 2011
I am having a problem with FINRA asking for approval of a proposed rule where the specifics of the rule will be given after the SEC approves the rule. Why do we have to comment now when we do not know the specifics of the supplemental information that will be specified in a Regulatory Notice at some future date? This gives FINRA a lot of leeway to ask for all sorts of information that could be burdensome to the industry. I understand that Congress appropriates less and less money every year for regulation and things are tough all over, but shifting the burden to the industry can only go on so long. That being said, I am not advocating less regulation, but more intelligent regulation. The industry's regulatory burden has grown exponentially in the last few years and can only get worse in the future. I think careful consideration should be given to the comparison of the costs to the industry with the benefits FINRA will gain from such additional information This cost benefit analysis is difficult to determine because FINRA is still vague about their reasons for gathering such information. FINRA fails to be specific in how they are going to use such information and continues to use the generic term "necessary and appropriate for the protection of the public" In fact I wonder if the information that FINRA is trying to amass could not be appropriated from some other place. FINRA makes no argument to contradict that. Industry trends in unregistered offerings could possibly obtained from corporate finance department that reviews these offerings for reasonable compensation. What about the exam process for gathering information about expenses? There are probably many sources of information within FINRA that I am not even aware of. Why does this information need to be gathered monthly on the FOCUS filing? Has anyone contemplated another way of gathering such information or is this just a knee jerk reaction on FINRA's part - We need information, lets get it from the membership. Has any thought been given at all as to any other ways to gather this needed information? The membership submits a lot of information to FINRA every day. Do they really need to submit more? Is FINRA using this information wisely? I could never know, but the SEC could determine this and take at least one small step toward a more effective and efficient regulatory system for the country.
Pat Nelson