Project 2025, a policy initiative under the direction of the conservative Heritage Foundation, is calling for the Financial Industry Regulatory Authority (Finra) to be abolished and folded into the Securities and Exchange Commission.

The document, which is being touted as a policy blueprint for former President Donald Trump should he retake the White House in the November elections, also proposes an array of changes to streamline the SEC and redo all securities laws.

Trump himself recently has denied any knowledge of Project 2025. However, the group employs more than 200 former Trump administration officials, according to the Washington Post, and the group's senior advisor, John McEntee, has stated that they and the Trump campaign planned to "integrate a lot of our work." 

Finra, which is not a government agency but a self regulatory organization that operates under the jurisdiction of the SEC, is one of several entities Project 2025 has advocated eliminating. Another candidate is the Department of Education.

Greg Valliere, chief policy strategist for AGF Investments, recently said agencies ranging from the FBI to the Federal Trade Commission could be affected.

"A sweeping overhaul of the executive branch is more likely now that the Supreme Court has ruled in the Chevron case, making it much easier to curb the regulatory agencies," he wrote. In recent weeks, several news outlets have reported that the Trump campaign has sought to distance itself from some of the group's recommendations.

“To reduce costs and improve transparency, due process, congressional oversight and responsiveness ... Finra should be abolished, and their regulatory functions should be merged with the SEC. With regulatory authority delegated by the government ... FINRA has proved to be ineffective, costly, opaque, and largely impervious to reform,” stated the Project 2025 Mandate for Change.

“Under current law, the SEC Chairman has the authority to make almost all of the necessary changes. Unfortunately, financial regulators, particularly the SEC and the Financial Industry Regulatory Authority (FINRA), are poorly managed and organized,” the document continued.

Finra spokeswoman Rita De Ramos declined to comment on the blueprint. “Respectfully we will pass on commenting. As a not-for-profit, self-regulatory organization, we don’t take political positions,” Finra spokeswoman De Ramos said.

In the absence of merging Finra into the SEC, the GOP recommended that all self-regulatory organization fines, including those imposed by Finra, should go either to a newly established investor reimbursement fund or to the Treasury. “SROs should not have a financial interest in imposing fines,” the document said.

The blueprint also suggests that Finra arbitration and disciplinary hearings should be open to the public and reported, and that Finra arbitrators should be mandated to make findings of fact based on the evidentiary record and demonstrate how those facts led to the award given (except with respect to very small claims).

“These written FINRA arbitration decisions should be subject to SEC review and limited judicial review,” Project 2025 said.

Former Finra attorney Michael Edmiston said that the proposal is like “reorganizing chairs on the Titanic. It feels good for everyone who howls about excessive regulation, but doesn’t change the fact all it does is remove investor protection.”
Edmiston said that “absolutely, broker-dealers would have less regulatory checks," under the proposal. "Unless there is an increase in SEC funding, and that won’t happen under Project 2025, you’ll have less effective regulation not only over broker-dealers, but over the RIA space, too.” Currently, the SEC oversees Finra, which is charged with regulation and examinations of the broker-dealer industry and their registrants, including registered representatives.

The SEC says its funding allows it to examine less than 15% of registered investment advisor firms annually.

Edmiston, a former president of the Public Investors Advocate Bar Association (PIABA), called the arbitration proposal requiring a regulator to sign off on decisions “disingenuous.”

“Arbitration exists as a matter of contract. Having a regulator have final say before an investor is made whole just adds to the investor burden and would discourage claims. Courts exist at the state and federal level to review arbitration rewards. We don’t need to have securities regulators to do that too,” Edmiston said.
In contrast, another former PIABA president, Andrew Stoltmann, said there was much to like in the proposal.

“Finra’s functions being rolled up into the SEC would likely be a net positive development for investors. At least Congress directly oversees the SEC,” said Stoltmann, the founder of Chicago-based Stoltmann Law.
Project 2025 called for the Finra board of governors meetings to be opened to the public, its agenda and minutes made public and a new mandate that the self-regulatory organization announce when it is going to undertake rulemaking.
“Being open to the public is absolutely crucial,” Stoltmann added. “Sunlight truly is the best disinfectant and unfortunately right now. We see so many of these policy decisions are made or completely made in the dark without any public oversight. The same is true for Finra disciplinary hearings.”

The Project 2025 documents also said the SEC “needs to be reformed to achieve its important core functions more effectively, to improve transparency and due process, and to reduce unnecessary regulatory impediments to capital formation.”
The SEC and Congress “should fundamentally reform the securities laws governing issuers, broker-dealers, exchanges, and other market participants. Among other things, they should establish a simplified and rationalized securities disclosure system, according to the blueprint, which also wants the SEC prohibited from pursuing social justice reform rules,” the document said.
Current securities laws “are now extremely complex and do not constitute a coherent, rational regulatory regime. For example, the current SEC has proposed a climate change reporting rule that would quadruple the costs of being a public company. ... The Securities and Exchange Commission (SEC) should be reducing impediments to capital formation, not radically increasing them,” the document said.

Correction: A previous version of this story incorrectly called Finra a government agency.