FINRA enforcement chief Susan Merrill announced at a Practising Law Institute Gathering on “Coping with Dealer/Broker Regulation and Enforcement” that the Financial Industry Regulatory Authority rulebook, which consolidates NASD and NYSE Rules might not be completed until the end of 2008 or even into 2009.
Merrill said that the consolidation is causing FINRA to ponder whether different kinds of firms should be regulated differently and whether it makes sense to use principle-based standards more frequently.
Merrill says that different groups, including employees previously with NYSE and NASE, are looking at the different rules and trying to figure out how to best merge the two systems.
Established in July, FINRA consolidates the risk assessment, regulatory, arbitration, and enforcement functions of NYSE and NASD.
Prior to the merger, the close to 300 NYSE member organizations had also belonged to NASD’s 5100 membership. FINRA now regulates both memberships. Organizations that belonged to both legacy organizations must comply with NYSE rules and members that belonged to NASD only must follow NASD’s rulebook until the new consolidated rulebook is complete.
Merrill says that FINRA’s current targeted sweeps into certain practice areas confirms that organization’s enforcement priorities continue to focus on stopping brokers that use “professional designations” to defraud or mislead investors, the use of “educational” seminars to target senior investors, as well as the sale of life settlements and the collateralized mortgage obligations targeting seniors.
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