Congressional bill seeks to dismantle FINRA (CQ Roll Call)

Legislation recently introduced by the House would seek to severely diminish the regulatory role of FINRA and transfer its rulemaking, examination and enforcement authority to the SEC. The McClain bill follows a policy recommendation offered by Project 2025, an initiative of the Heritage Foundation, a conservative think tank. Amy Lynch, FrontLine’s Founder and President, discusses the consequences should FINRA’s regulatory authority be stripped and transitioned to the SEC. She explains that the SEC lacks the capacity to take on FINRA’s regulatory activities, with its staff not large enough and lacking the resources to oversee all the various market players. She adds that it is prosperous for legislation to advocate for fewer regulators when the industry has grown substantially and requires oversight of several different segments of the market. Ms. Lynch further warns that without FINRA’s regulatory role, if the markets were to fail from certain high-risk activities similar to that of the 2008 financial crisis, you would likely have a much deeper crisis at hand. See CQ Roll Call (subscription required), “McClain bill would roll Finra responsibilities into the SEC”