In Jan., the SEC
submitted a recommendation to Congress that offered an expansion of the Financial Industry Regulatory
Authority's (FINRA) powers of oversight to include some registered
investment advisers as one method for improving the regulatory system.
The suggestions for improvement were required by the 2010 Dodd-Frank financial
Yesterday, FINRA officials announced that the organization will "definitely
offer dispute resolution to investment advisers" if Congress votes
to expand its authority as recommended by the SEC, and that is now has
a plan for how to do so ("UPDATE: Investment Advisers Could Arbitrate
Through Finra Under New Plan," Dow Jones Newswires, Aug. 11, 2011).
The debate on whether or not FINRA should be allowed to expand its regulatory
oversight to include investment advisers has been a long and heated one.
Advocates for the expansion say that FINRA's new powers would streamline
the arbitration process and make it more consistent. It also would likely
help bolster the enforcement efforts of an expanded, but underfunded and
severely resource-limited, SEC.
InvestmentNews, the industry's "leading news source for financial
said that the expansion of FINRA's oversight is "logical and offers
the greatest hope of assuring that investors are protected from unscrupulous
advisers, shady business practices and even from their own worst instincts."
Linda Fienberg, president of Finra's dispute resolution unit, said
Wednesday that the new plan could be implemented within nine months of
Congressional approval. Whether Congress will approve the expansion remains
to be seen.