Thursday, February 12, 2015
HESTER PEIRCE, George Mason University - Mercatus Center
Broker-dealers in the United States are regulated by the Financial Industry Regulatory Authority (FINRA). Although commonly perceived to be a self-regulator, FINRA is not accountable to the industry in the way a self-regulator would be. Nor is it accountable to the public, Congress, the president, or the courts. FINRA’s structure and monopoly status shield it from close oversight. Consequently, an important part of the securities markets is under the control of a regulator with limited accountability. As FINRA seeks to expand its regulatory footprint into areas such as investment adviser regulation, its unique form of regulation warrants reconsideration.