FINRA Chairman and CEO Ketchum on Consumer Protection (with Lofchie Comment and Suggestion)

FINRA Chairman and CEO Richard Ketchum delivered a speech in which he discussed how regulators and consumer advocates can work together to ensure that consumers are making sound financial decisions. Mr. Ketchum also discussed concerns as to a number of types of financial products, including structured products, closed-end funds and privately placed securities sold by issuers, about which there is limited available information.Mr. Ketchum expressed his support for a uniform fiduciary standard for broker-dealers and investment advisers, and suggested that broker-dealer regulation and investment adviser regulation should be significantly coordinated. Mr. Ketchum also expressed a number of other regulatory concerns, including with regard to risks to investors arising under the JOBS Acts.

Lofchie Comment: Generally, Mr. Ketchum's remarks reflect concerns that he has previously expressed, particularly as to the sale of structured products to retail investors. One opinion expressed by Mr. Ketchum, to which I hereby express reservations, is the statement that broker-dealers and investment advisers should be subject to the same fiduciary standard when making recommendations to retail investors. I think that this diminishes the fact that broker-dealers and advisers may perform quite different functions and be paid in quite different ways. In fact, as I remarked previously, I think the SEC's recent questionnaire on the suitability issue had embedded within it a willingness to attend to these differences. Accordingly, I urge firms very strongly once again to respond to the SEC's questionnaire on retail suitability. (See the link to the relevant news item below.)

View speech in full here (links externally to FINRA website).See News Item: SEC Survey on Obligations of Broker-Dealers and Investment Advisers to Retail Customers (with Lofchie Comment).