SFAB Email to Small Firms

May 14, 2014


Dear Small Firm Members:


The members of the Small Firm Advisory Board (SFAB) would like to update you on current issues that we think are important for small firms to focus on.


The SFAB meets five times a year with Rick Ketchum, CEO of FINRA, and various other FINRA senior staff. During those meetings we discuss rules being proposed by FINRA as well as issues that we bring to FINRA's attention, based on our calls and conversations with other Small Firm members. Our goal is to help FINRA understand where Small Firms are being burdened and how new proposals will affect Small Firms. We discuss with them possible changes to reduce or eliminate any negative effects on Small Firms.


In late April, FINRA's Board of Governors approved proposing amendments to FINRA's supervision rules that would expand the obligation of firms to check the background of applicants, including searching public records, which may require firms to use a for-cost service. Further, FINRA announced that it will be searching public financial records for all registered representatives as well as searching for publicly available criminal records for representatives who have not been fingerprinted in the last five years. FINRA is also considering whether additional data from the CRD system used by regulators should be included in BrokerCheck. To help make that decision, they have initiated a study to see if there is a meaningful relationship between CRD data, including failed examinations, and broker misconduct.


We want to ensure that the impact of proposals on Small Firms be thoroughly considered. While recognizing the necessity to comply with FINRA rules, the SFAB has been very vocal in opposition to these latest proposals due to what we believe could be negative economic impact. But we're just the front line. When the new rules are published for comment, you should carefully review the proposals. We cannot emphasize strongly enough how critical it is that all Small Firms use the opportunity to comment to help FINRA and the SEC understand how the proposals will impact members like us.


Our industry has been under pressure lately from the press, and that can't help but catch the attention of regulators. We as FINRA members must resist letting that pressure result in new and onerous rules. But the only way to stem the tide is with your involvement. The comments from member firms provide regulatory staff with the valuable information they need to understand the impact. (As an example, the membership excelled in their comments on CARDS and over 700 were received, causing a complete review of the concept.)


We also call to your attention FINRA's retrospective rule review, you have the opportunity to inform FINRA how to improve the advertising and gifts and gratuities and non-cash compensation rules. It's easy to send FINRA a comment, either via the FINRA website or by email to Publishing.


More than ever we need all firms engaged and, as the majority of FINRA members, Small Firms in particular need to speak up when afforded the opportunity. We're happy to take your comments, but your direct response to proposals is what has the greatest impact.


Help us protect your business.
 



Small Firm Advisory Board

 

Patty Bartholomew
Craig-Hallum Capital Group LLC
 

Eric A. Bederman
Bernardi Securities, Inc.
 

Betsy Brennen
Harbor Investment Advisory, LLC
 

Christopher Charles
Wulff, Hansen & Co.
 

John I. Fitzgerald
Leerink Partners, LLC

Steve Hart
Robotti & Company, LLC


Timothy Morton
TCFG Wealth Management LLC


Joseph R.V. Romano
Romano Brothers & Co.


Hardeep Walia
Motif Investing

David W. Wiley, III
Wiley Bros. - Aintree
Capital, LLC