October 1, 2009
I am writing to express my strong objections to FINRAs proposed pricing increase.
The underlying basis of this proposal is fundamentally flawed. FINRA is proposing a fee structure that provides a more consistent and reliable foundation to fund its regulatory operations, while ignoring the fact that their members overall revenues have decreased substantially and they may be struggling to fund their own internal operations. Many members have had to work through cash flow concerns while ensuring compliance, operational, and businesses processes continue effectively they certainly did not increase their fees to customers in double-digit percentages in order to cover lost reserves and make-up for revenue reductions.
FINRAs proposed fee structure also disproportionately impacts the smaller firms – those that can least afford it and were least responsible for the financial meltdown. The SIPC assessment has taken a similarly illogical tack, increasing fees exponentially and burdening the firms whose customers are least likely to use the resource. FINRAs small firm members are working on the front lines to fulfill their supervisory obligations, monitoring transactions and representative conduct, the work that truly helps protect investors, while their regulatory burden increases each year with limited evidence of effectiveness, only more paperwork and expense.
FINRAs current assessment structure contains both a fixed and variable component, which seems fair as is. FINRA needs to reevaluate their programs and processes just as the rest of the private and public sectors have done during this most recent downturn – not take advantage of their captive audience.
President and CEO
RW Smith Associates, Inc.