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How RIA forces squashed the Bachus bill by calling the implicit FINRA bluff

Faced with the threat of more SEC exams and higher fees to pay for them, RIA leaders said in effect: Bring it on

Author Lisa Shidler August 2, 2012 at 3:59 PM
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Skip Schweiss: I feel like democracy worked the way it is supposed to work and that should be encouraging to all advisors.

James W. Byrd

James W. Byrd

August 2, 2012 — 5:31 PM

This is good news – for now. However, we must not forget that they have an unlimited budget and many politicians and regulators in their pockets. More importantly, if we act like sheep the wolves will govern.

Peter Mafteiu

Peter Mafteiu

August 7, 2012 — 5:24 PM

Honestly, we work hard at making things complex. Since Form ADV requires IAs to disclose Regulatory AUM, that is also the standared to use for user fees. Honestly, why make it complex and give everyone who wants one an exception? Cap the user fees. RAUM is simple, end of story (I apologize for my use of common sense).

Secondly, the SEC must manage its IA Program and resources. One of my clients is living an SEC Exam nightmare:

Just concluded a 11 month “limited scope desk exam” by the SFO office of the SEC. This is a firm with $200 million AUM in 5 fund of hedge funds. The firm lost $200 million in Madoff by investing with a firm with a large due diligence team that “missed” Madoff like FINRA and the SEC. There is also investor litigation against my client, and the RIA has filed suit against the Fund he invested in and Madoff (Trustee) to “get back” investor dollars.

The desk exam included a 4 hr conference call Christmas Eve last year and 4 months of 2012 additional requests.

The reward? An on site exam, 3 people for 2 weeks (for a 1 person RIA!!). They came for 2 days, left and are coming back.

If you have limited resources, is this the best use? From my client’s perspective, no. From my perspective, no.

Who isn’t being examined that should be?? Who knows.

FInally: FINRA, how about pro-active work? you allow commissions of up to 15% in Privately Traded REITS?? Really?? Is the old saying still true today: If the firm makes money, the stockbroker / registered rep makes money (aka “financial advisor”) two of three isn’t bad (note: Client not make money). Perhaps this can be revised: firm makes money, rr makes money, FINRA makes money, 3 of 4 isn’t bad!

15% commission!? WOW. No wonder I have helped a couple investors this year process claims for sales practice violations….


1. Term limits for Congress – we need turn over and no more “career” politicians. Go home and get a real job, please.

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