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.
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.
I would also like to add my extreme disappointment in the job that FINRA and the SEC have done in uncovering and preventing fraud in the financial services industry. As usually happens, the honest practitioners that remain in the business end up paying for the failure of the regulators. I have been in the securities industry as both a registered representative and a registered investment advisor for over 30 years. Fraud happens; we must be ever vigilant to uncover it. But we must not punish those that do the right thing through ever-increasing rules, regulations, and the attendant cost, which are designed to catch the last fraud instead of looking ahead to the next one.
Mr Kevin Tucker