At a regional meeting this week in New York sponsored by TD Ameritrade Institutional, several experts on regulatory affairs agreed that FINRA was likely to fail in its attempt to gain control over RIA regulation.
In a panel discussion moderated by Brian Stimpfli, TD's managing director of advisor advocacy, not a single panelist thought FINRA would succeed in its bold attempt to expand its regulatory powers to encompass the burgeoning RIA universe.
David Blass, formerly assistant director for the SEC's Division of Investment Management and currently special counsel to the law firm Willkie, Farr & Gallagher, told attendees that FINRA is unlikely to win control over RIA regulation because no one besides FINRA, including the SEC, has indicated they want FINRA to take it over. Although SEC Chairman Mary Schapiro, a former FINRA CEO, initially indicated she was open to the idea, she hasn't spoken up on the subject recently and seems more interested in other areas like insider trading in recent months.
Other panelists, including Duane Thompson of Potomac Strategies and Blaine Aiken, CEO of FI360, echoed Blass' sentiments.
The panelists also gave a bleak assessment of what might emerge from Congress on regulatory reform. Blass said one new bill winding its way through the House "totally blurs the fiduciary standard."
Thompson predicted that a "choppy, but uneven" fiduciary standard would leave investors "even more confused" than they are today.
Aiken acknowledged that it would be highly undesirable to "compromise on a singular fiduciary duty to the investor" but didn't offer any assurances that this wouldn't happen.