FINRA CEO Testifies before House Financial Services Committee

The House Financial Services Committee held a hearing titled, “Oversight of the Financial Industry Regulatory Authority,” which examined FINRA’s oversight of financial markets. FINRA CEO and Chairman Richard Ketchum was the sole witness at the hearing.

During the hearing, Mr. Ketchum stated that FINRA will not move forward with its Comprehensive Automated Risk Data System (“CARDS”) proposal until FINRA has determined that the concerns that have been raised in the comments of market participants have been adequately addressed.

SIFMA’s Executive Vice President and General Counsel, Ira D. Hammerman, issued a statement commending FINRA for “recognizing the industry’s concerns” regarding clients’ sensitive information and the “burden of building yet another reporting system.”

Lofchie Comment: Mr. Ketchum should be commended for taking a go-slow approach to a regulatory initiative (CARDS) that he had previously favored and for being willing to address the reasonable concerns that have been raised with respect to it. There is nothing in the least wrong with regulators proposing rules that meet opposition; the problem is when they don’t listen to those opposing views that legitimately highlight problems. We also believe that Mr. Ketchum’s willingness to slow down on this issue is consistent with FINRA’s ongoing effort of performing more in the way of economic analysis before it adopts new regulations, as discussed in the portion of his testimony titled “Rulemaking, Economic Analysis and Retrospective Rule Review.”

We also note that Mr. Ketchum’s written testimony provides a good overall description of FINRA’s responsibilities.

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