The CFP Board, the Financial Planning Association and the National Association of Personal Financial Advisors (the “groups”) are urging the SEC to not delegate the oversight of independent advisers to FINRA. The SEC is in the process of analyzing this issue as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).
In their letter to the SEC, the groups acknowledge the severe workload and a lack of resources at the SEC, but state that Dodd-Frank puts the SEC in a better position. The groups note that the expansion of state-registered adviser jurisdiction will help lessen the SEC’s burden.
The groups do not believe that outsourcing oversight to FINRA would benefit investors. The letter points out that FINRA is an SRO for broker-dealers, not investment advisers and claims that FINRA does not have any experience examining or enforcing the Advisers Act. More generally, the groups do not believe that FINRA has the requisite experience interpreting and applying concepts of fiduciary duty, or enforcing as principles-based standard of care such as the one that applies to investment advisers.
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