FSI hopes to state case to SEC consultants

NEW YORK — The Financial Services Institute Inc. hopes to bend the ear of the consulting firm chosen by the Securities and Exchange Commission to consider the effect on investors of applying differing regulatory standards to broker-dealers and investment advisers.
RAND Corp., which was tapped by the SEC in September to look into the issue, soon will start talking with industry officials and consumer groups.
If given the opportunity, officials from the Atlanta-based FSI will emphasize what they consider an uneven playing field of regulation between brokers, which are members of NASD of Washington, and registered investment advisers, which are regulated by individual states and the SEC.
“I think it’s uneven in terms of how rules are enforced today,” John Simmers, this year’s chairman of the FSI and a member of NASD’s board of governors, said in an interview at the end of January. “I do believe that in a level playing field, you would have equal regulation, you would have equal enforcement.”
NASD is a “stronger regulatory body” than that of the “federal model” that oversees investment advisers, said Mr. Simmers, who compared NASD’s regional presence and its review of broker-dealers and registered reps with the SEC’s model of regulation for RIAs, in which the advisers are examined “once every three to five to 10 years.”
“So that leaves an opportunity for persons to not perhaps take as seriously as we do how the rules and regulations, and the record keeping [affect] the safety of the investing public,” said Mr. Simmers, who also is chief executive of ING Advisors Network Inc. of Atlanta.
So far, Santa Monica, Calif.-based RAND has not set up any interviews with industry executives, but interviews are expected to begin soon, according to SEC spokesman John Nester.
“The study is empirical in nature,” Mr. Nester said. “It will not result in policy proposals.”
The FSI, which has 105 members, is zeroing in on the RAND study, Mr. Simmers said.
“We want to participate in that study, vis-à-vis interviews with persons in our industry that are experienced in the dual platforms, so we can give [RAND] that information and assist them with their understanding with our participation in the industry, contrasted with the fee-only investment adviser,” he said.
The FSI wants to “give [RAND’s consultants] an idea of what we’re capable of, and perhaps where these RIAs that are solo should also be held to a comparable standard,” Mr. Simmers said. “We don’t think the playing field should be very uneven. Ideally, it should be level,” he said.