Independent Dealers Group Opposes Escalation of FINRA Fees
September 30, 2009
On the eve of final comments being delivered to the Securities and Exchange Commission, a trade group representing independent broker dealers and independent financial advisers said it opposes the securities industry’s self-regulating body’s attempt to hike the assessments they face.
The Financial Services Institute says in a briefing dated Sept. 24 to its members that fee increases being sought by the Financial Industry Regulatory Authority, which acts to prevent abuse of investors and can levy fines on securities industry firms, pose an “unreasonable” burden. Under the proposal filed in August with the SEC, the “Personnel Assessment” to be paid to FINRA would double. Firms with one to five registered representatives and principals currently are assessed $75 for each such registered person; $70 each for 6 to 25 registered persons; and $65 each for 26 or more registered persons, $65 each. The proposed rule change would increase those rates to $150, $140 and $130, respectively.
Also changing is how FINRA calculates its other main assessment, the Gross Income Assessment. That is based on a seven-tiered structure.
But FINRA said, in its filing with the SEC, that it is trying to shift the balance of its funding toward the personnel assessment, given great swings in member revenues.
“In 2009, for example, GIA revenues are down approximately 37 percent due to 2008 fourth quarter write-offs taken by firms, particularly the largest ones. In 2009, FINRA absorbed a $100 million revenue shortfall fromthe GIA. While this did not hinder FINRA’s ability to fulfill its regulatory mission, this type of revenue loss cannot be sustained in the future,” it said.
The FSI briefing can be found here.
The FINRA proposal can be found here.
The deadline for submitting comments to the SEC is Thursday, Oct. 2.
The new assessment schedules would take effect January 1, if the SEC grants approval.
