To put it simply, says Tony Batman, chairman of First Global Inc., a Dallas-based independent broker dealer, “the entire financial services industry is under siege by the regulators — NASD [formerly the National Association of Securities Dealers], the SEC [U.S. Securities and Exchange Commission], and state securities boards.”

The number of new regulations that have been launched in the past two years is staggering enough, Batman says — 90 by the NASD alone. This works out to a new regulation every five or six days. “Firms of all sizes are unable to analyze the intended and unintended consequences of proposals that are coming in at such a fast and furious pace.”

How can agent/broker training and compliance programs keep abreast of the changing regulatory landscape? Not easily. “You have to dedicate the necessary resources to stay ahead of it,” says Batman. “Most financial services CEOs are spending a majority of their time on regulatory and compliance matters.”

The situation is exacerbated, says Michael Brown, by the fact “that the NASD and the SEC are not known for the clarity of writing when drafting these regulations. I have been in the compliance aspect of this business for 20 years,” says Brown, a former NASD compliance examiner and the founder of B/D solutions, an Atlanta-based consulting firm. “I have never seen such poorly worded and far-reaching regulations [as] we have now.”

In addition, say Batman and Brown, regulators are initiating enforcement actions at a steadily increasing pace that shows no sign of slowing down. “The fear is that regulators have set up a framework and attitude of ‘gotcha,’” says Batman, “[and] that every firm is in violation of something that we don't even understand.”

And the nature of the regulatory process makes it “difficult to train someone very quickly on the hot topic of the day,” says Brown. “It's hard for trainers to get into real detail and add to people's knowledge. It almost seems that the best you can do is provide reminders until the application of the rules and enforcement actions come together.”

Even that can be problematic. For example, Brown points to a clarification letter written by the SEC to NASD In July 2003, explaining a financial responsibility requirement. “It was a bookkeeping issue,” Brown explains. “But nobody understood it. We called several NASD districts. They said they weren't enforcing it because they didn't know what it meant. It took about a year for something as simple as a bookkeeping issue to be defined.”