The Financial Industry Regulatory Authority recently held its first Spring Securities conference in Hollywood, Fla. One of the subjects that came up repeatedly was the issue of rule book consolidation.
When NASD and the regulation arm of the New York Stock Exchange merged last year to form FINRA, the regulatory body predicted it would have a consolidated rule book in place by the end of 2008. Now, FINRA officials speaking at the conference acknowledged that “it will take years” to complete the rulebook consolidation. The reason? According to a legal alert issued by the Washington, D.C.-office of the law firm Sutherland, a lengthy comment and approval process makes it difficult to act on the new rules--including efforts to implement new guidelines on gifts, travel, and entertainment--in a timely manner.
In remarks before conference attendees, FINRA CEO Mary Schapiro called efforts to consolidate the rulebook “amazingly complex.” She said FINRA hoped to have the process completed by late 2009, but that the time frame depended upon how quickly the comment process moved ahead.
Monitoring Seminars for Seniors
In other regulatory news, FINRA continues to prioritize investigations into misconduct related to senior investors, including so-called “free lunch seminars.” “Interacting with seniors is one of the most important issues the securities industry, as well as individual brokers, will face in the coming years,” said Susan Merrill, FINRA executive vice president and chief of enforcement, in a speech at a Washington, D.C. conference in June. “FINRA has been stressing to firms and their representatives their obligation to deal with senior customers in an honest and open manner.
“Before any product is sold to a senior, it must be determined to be suitable for that individual,” added Merrill. “Firms should train their reps and insist that they ask detailed questions to find out how much income the customer needs to meet common expenses such as a mortgage, health care needs and long-term care.” More on Merrill’s speech.
New Gift Rules Proposed
In response to the subprime mortgage mess, the Securities and Exchange Commission has proposed new rules for credit rating firms that includes a gifts-and-entertainment-related provision.
The provision would ban employees who work on credit ratings from accepting more than $25 in gifts or entertainment from securities issuers, underwriters, or sponsors. Click here for more details.