Monday, June 15, 2009

Keeping the Status Quo?

It looks like the Obama Administration is going to accept the status quo with regard to Wall Street and regulatory reform according to a recent article on the Investment News web site.

A source from the Obama Administration says that creating a new regulator for registered investment advisers "is not a core issue."

The Obama Administration is correct. We do not need a new regulator for registered investment advisers. Registered investment advisers are not the problem. FINRA is the problem. They are the root cause of the recent market meltdown due to their lack of regulatory oversight, in my opinion. Cronyism at its finest especially in their supervision of Bernie Madoff's firm.

Larry Doyle of had on his weekly radio show Bill Singer, an attorney with Stark and Stark, one of the nation's premier Securities Related Legal Firms. The transcript for A Real Regulatory Review: An Interview with Bill Singer is available here:

This interview is an eye opener about how and why we can expect nothing but idle posturing by Congress to fool us into believing that they are doing something on behalf of investors. When in fact, they will do very little to help investors.

FINRA's Tactics Appear to Have Shifted

I would like to point out that FINRA has now set their sites on fixed annuity and life insurance sales outside their broker/dealers. Currently, if you are an insurance agent and sell fixed annuities or life insurance outside the compliance of your broker/dealer, you are regulated by the state that you do business in.

FINRA would like to force all those who sell fixed annuities and life insurance to come under the supervision of their member firms (broker/dealers.) Why? Money of course. If they "make" you as an insurance agent run all your business through your broker/dealer, then your broker/dealer will take a percentage off the top. As a result, FINRA stands to make more money.

FINRA has already made it plain that they wanted to regulate registered investment advisers. If the Obama Administration is not considering such an arrangement by labeling it as not being a core issue, then it appears that FINRA may not be getting that extra revenue from registered investment adviser regulation like they thought. In order to keep their share of the pie as large as possible, they have shifted their focus. Did they do that quickly or what?

Insurance agents and their fixed annuity and life insurance business are a new source of revenue for FINRA's broker/dealers. A lot of these FINRA broker/dealers have allowed their FINRA registered representatives to sell fixed annuities and life insurance outside their firms. However, now these broker/dealers are hurting financially as a result of the market meltdown and the fact that consumers are not as engaged in the finances. These FINRA firms must keep producing revenue some how and it appears that they have found the answer. If you are an insurance agent and a FINRA registered representative, then you just were handed your notice by FINRA to get out. Or, you can stay with FINRA and give them more of your income for doing absolutely nothing except making it harder for you to sell fixed annuities and life insurance.

It would not surprise me if they tried to force anyone who sells fixed annuities or life insurance to be a FINRA registered representative. Even if you are not FINRA registered now, their next attack may be to make anyone who sells these products fall under their supervisory jurisdiction.

With FINRA, it always has been and it always will be about the money. Do not let anyone tell you otherwise.