FINRA oversight discussed at subcommittee hearing

Oversight of the Financial Industry Regulatory Authority (FINRA) was the subject of a House subcommittee hearing held last week.

The Subcommittee on Capital Markets, Securities, and Investment examined FINRA’s activities and policies as an independent, not-for-profit organization authorized by Congress to act as a self-regulatory organization over the U.S. securities industry.

“As the primary regulatory authority for broker-dealers, FINRA plays an integral role in ensuring that capital markets are fair and efficient while protecting investors and other market participants,” Subcommittee Chairman Bill Huizenga (R-MI) said. “However, critics have noted that for the last decade, FINRA has engaged in mission creep and transformed itself from a traditional SRO into a quasi-governmental regulator more akin to a fifth branch of government, or a ‘deputy SEC.’”

The president and CEO of FINRA, Robert Cook, provided testimony on the work that FINRA is doing to streamline and improve its operations to better serve the broker-dealer community and its customers.

“FINRA is in the middle of a process of self-assessment and organizational improvement that will result in potentially transformational change,” Cook said. “However, as we continue this exciting exercise, we will remain firmly focused on our core mission of protecting investors and market integrity while promoting vibrant capital markets. I look forward to working with Congress, other regulators, market participants, and the public to further these important goals.”

Huizenga said Congress must make sure that FINRA, as a self-regulatory organization (SRO), remains accountable and transparent to those it regulates while being flexible to react and respond to changes in the market.