Perhaps it was the recent victory of President Bush that heartened this business friendly crowd, or the tranquil Boca Raton setting, but the annual SIA conference exudes an oddly serene tone.
After all, this is an industry still dealing with an uncertain market, a midyear earnings slowdown and falling consumer confidence.
It’s likely that the positive attitude of presenters and guests reflected increased investor confidence in the industry and its reform efforts. According to the SIA’s investor survey released today, 57 percent of investor-respondents said they had either “some” or “a lot” of confidence in the industry’s efforts at promoting reform and increased regulatory scrutiny.
Despite some grousing about various broker/dealers, clients are more likely now to be satisfied with their b/d. Ninety percent of investors say they are satisfied, a slight increase from 2003’s figure of 88 percent.
“We’ve taken a hit in public trust and confidence, but our new survey shows clearly we’re back on the right track,” says Marc Lackritz, president of the SIA.
In other words, the regulation is for our own good, and it’s not going away. And that remains a concern for securities executives, because, as Lackritz pointed out, “we’re in a bull market for regulations.”
“The burden of implementing this blizzard of new regulations from both the SEC and the SROs has been heavy,” Lackritz added.
NASD head Robert Glauber said his organization’s aggressive regulatory efforts would continue, echoing statements made by other NASD officials in recent weeks. Indeed, the recent fine of $250,000 to Citigroup for putting out misleading hedge fund sales brochures and the SEC’s $37 million penalty against Wachovia for various violations related to its 2001 merger with First Union are the latest examples.
Glauber said it is important for firms to continue to develop a “culture of compliance” that until recently had not been a top priority for the industry.
The compliance focus, unfortunately, has created a significant burden on registered reps and their branch managers, as Registered Rep. detailed in its October cover story about branch managers. And regulation continues to hit firms from all sides, including investigations into mutual funds, hedge funds and the appropriateness of fee-based accounts. Glauber, in a press conference, said that the NASD is continuing to look at the latter issue, but didn’t have any findings to report.
The SEC is expected to rule on suits filed against the so-called “Merrill Lynch exemption” that allows b/d’s to offer advice without adhering to the 1940 Act governing registered investment advisors—and there are rumors that new rulings could come as soon as January.
