Finra collecting conflict data from 14 firms
Looking to find practices that might put investors at risk
The brokerage industry’s regulator is collecting information from 14 large firms regarding potential conflicts of interest related to compensation and product sales in an effort to flag problems and highlight best practices.
“We’re looking both to identify anything that we think is a serious exposure to investors and also to identify best practices, and give feedback to the firms and encourage adoption,” Richard G. Ketchum, chairman and chief executive of the Financial Industry Regulatory Authority Inc., said in an interview after addressing a Consumer Federation of America conference in Washington last Thursday.
He did not indicate which firms have been participating over the past several months. The findings will be posted on Finra’s website by June, Mr. Ketchum estimated.
WILL FINRA NAME NAMES?
“We’ll name firms if they’ve got a serious problem and we have an enforcement action,” he said. “Otherwise, our effort outside of that will be to show best practices and try to encourage increased controls.”
The review is designed to assess how the firms manage conflicts of interest and whether those conflicts — related to internal or third-party compensation, as well as proprietary-product sales — hurt investors.
“Knowing what firms do to address conflicts and the challenges they face also helps us determine whether Finra should issue guidance to the industry or consider other steps to improve how conflicts are addressed,” Mr. Ketchum said in his speech.
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