In a meeting with reporters on the sidelines of FINRA's annual conference,
'FILL A GAP'
"This is his proposal, not ours. I applaud that he's looking at trying to fill a gap that we think is there, and we'll look carefully at what comes out of this if the commission pursues it," Ketchum said on Tuesday.
Just minutes earlier, Ketchum was sitting on the main stage at FINRA's conference with Commissioner Gallagher, where both lamented the shortfall of the
At a separate industry conference last week
SRO OVERSIGHT STALLED
In the past, FINRA has been vocal in its calls on
Had such a bill become law (it didn't come close), FINRA would have been the odds-on favorite to begin regulating advisors in a similar manner as it does broker-dealers. That prospect rankled many in the advisory industry.
Politically, the issue has stalled, and FINRA's chief has said his organization is giving up the fight, at least on the Hill. "We're not planning to go to
INDEPENDENT OF CONGRESS
But Gallagher's idea is for the
Unlike the earlier legislative proposal, however, it appears that under Gallagher's proposal advisors' interactions with the third party would be limited to the review, so they would not have to become full members of an SRO with enforcement and rulemaking authorities, as brokers are with FINRA.
Gallagher acknowledged that his plan is sketchy on the details at this early stage, though he and Ketchum both see it as a shorter path to increasing oversight of advisors than working to push legislation through a gridlocked
'CREATIVE AND WELL WORTH REVIEWING'
"We haven't changed our basic view, which is there's a huge disparity in oversight with respect to investment advisors. And it's not an okay environment where you can go decades without being examined, and that creates risk for investors. That's not appropriate," Ketchum said.
"I think the idea of the commission delegating responsibility — whether it be to SROs or other entities that they find a way to effectively do oversight over — and differentiating between examination responsibility and enforcement, interpretation and rulemaking authority, I thought was creative and well worth reviewing," he added. "But in the end that's a decision for the commission, not for FINRA."
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