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Richard Carlesco Comment On Regulatory Notice 23-11

Richard Carlesco

Unintended Consequences I have been a long time critic of the net capital rule. The vast majority of FINRA Members (Not Subjects) are Introducing Broker Dealers. We spend thousands of dollars each year to maintain net capital and the audited financials that are required. If a introducing Broker Dealer goes under who is harmed? The client has their funds held in separate accounts and they get statements directly from those companies. The registered representatives can block transfer their accounts to a new firm. Who is harmed? I would rather spend that money on a FINRA Audit that means something, such as a sales practice audit. Smaller firms are finding it more and more difficult to keep up with the constant roll out of new rules each of which require new expenses. It reminds of someone that breaks the law. So we create new laws that all the honest people have to adhere to and it costs them money because the bad guy broke the rules. How about we just punish the person that broke the rules and leave the rest of alone. Or how about this if you create a new rule you haver to get rid of an old rule. I am leery of a new addition to the net capital rule and the unintended consequences it will have on the vast majority of Introducing Broker Dealers.