Image via WikipediaThe battle over whether FINRA, the private company that regulates U.S. brokerages, should also supervise investment advisers is escalating.
Among the changes prompted by the financial crisis and the Bernard Madoff fraud, the Securities and Exchange Commission is studying how it can improve the examination of investment advisers including hedge fund managers and mutual funds.
With a budget set by Congress, the SEC examines less than one in 10 of the 11,681 advisers under its bailiwick a year.
The Financial Industry Regulatory Authority, a private company founded by brokers to oversee brokers, urged Congress to authorize a self-regulatory organization to police advisers. Its prime candidate for the job? Itself.
That does not sit well with advisers, a group that -- unlike brokers -- is beholden to a fiduciary standard and does not charge commissions.
When the SEC issues a report in January, advisers and others worry it will make FINRA the cop on the beat.
"There is a lack of public accountability at FINRA, a lack of transparency and a less-than-pristine track record when it comes to their responsibility over brokers," said Investment Adviser Association Executive Director David Toothwort.
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