In fall 2016, the Securities and Exchange Commission launched a dedicated team to oversee the Financial Industry Regulatory Authority and the Securities Industry Oversight committee. FINRA president and CEO Robert Cook said there’s definitely been an uptick in the amount of oversight from the SEC, and it has been constructive.
“It’s welcome, because I think it’s important to our model that there be rigorous oversight by the SEC,” Cook said, speaking at SIFMA’s Compliance & Legal Annual Seminar on Tuesday morning. “It should be something the firms welcome as well. I think it’s important to have a second set of eyes looking on what we’re doing, what we’re not doing.”
The FISIO team examines FINRA’s internal operations as well as the examinations it conducts of member firms, Cook said. The team will look at whether FINRA missed anything in its own exams, for example.
In general, the uptick has involved more information sharing with the SEC, more monitoring meetings and more points of contact on a regular basis, he added.
Part of the purpose of the FISIO team was to rely more heavily on FINRA to oversee broker/dealers, so the SEC could enhance its oversight of investment advisors, who are not under FINRA’s purview.
Cook previously worked at the SEC, as director of the division of trading and markets, so he “speaks SEC,” said Ira Hammerman, executive vice president and general counsel of SIFMA, who moderated the discussion. Hammerman asked what SEC Chairman Jay Clayton meant when he said on Monday that we could expect a best interest standard “soon.”
“Soon means before you know it,” Cook said. “All indications are that it is very high on the agenda. There’s a process it’s got to go through. There are five commissioners who need to weigh in on this, and that’s the structure we have, and that’s the way it should work.
“We’ve long supported the establishment of a best interest standard. It’s something we think is best done by the SEC as opposed to us. We will continue working with the SEC.”
