September 29, 2009
I am writing in regards to proposed rule change that the Financial Industry Regulatory Authority (FINRA)has filed with the Securities and Exchange Commission (SEC) concerning a proposed change to 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. We have all gone through adjustments in income. When I say all, I am including our clients, ourselves and anyone associated with the securities business. The market conditions were not a surprise and we`ve all had to adjust. The last 6 weeks have certainly made people happy and are helping to bring stability back into the market. I do not think that the fee structures need to be changed in order to stabilize revenues used to fund FINRA`s regulatory activities. It`s already happening through market changes.
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.
Sincerely,
Mrs. Sandra Hay Magdaleno
CFP