SIFMA Expresses Serious Concerns Regarding FINRA CARDS Rule Proposal

SIFMA submitted critical comments to FINRA regarding the FINRA rule proposal to implement the Comprehensive Automated Risk Data System ("CARDS").

According to SIFMA, FINRA's CARDS proposal would impose "undue costs and burdens" on member firms, and is an attempt to "diagnose a regulatory ill without appropriately accounting for the impact on investor privacy and civil liberties."

SIFMA explained that the "most troubling" aspect of the proposal is that CARDS would require the continued and regular disclosure to FINRA of "the most intimate financial details" of every investor's securities account. This information, SIFMA noted, would be stored on FINRA's computer system, thereby creating a "centralized, prime target" for computer hackers and cyber terrorists.

Additionally, SIFMA stated that FINRA lacks the authority to issue CARDS, and that FINRA has yet to complete a formal cost-benefit analysis of the proposal.

SIFMA recommended that the proposal not be filed with the SEC.

See: SIFMA Comment Letter.
Related news: FINRA Requests Comment on Rule Proposal to Implement CARDS (FINRA Reg. Notice 14-37) (with Lofchie Comment)(September 30, 2014); Congressman Garrett Issues Statement Questioning Need for FINRA CARDS Proposal (October 15, 2014).