RJ and Makay

Michael Oxley, the former Republican congressman from Ohio best known for co-authoring the Sarbanes-Oxley Act of 2002, has registered as a lobbyist for the Financial Industry Regulatory Authority (FINRA). His goal, as stated on his registration form: to work on the “harmonization of regulation of broker-dealers and investment advisors.”

Translation: to promote a self-regulatory organization (SRO) for investment advisors.

Broker-dealers involved in Regulation D private placements and other opaque or illiquid investments beware. The Financial Industry Regulatory Authority (FINRA) has its eye on you, reports Bruce Kelly of Investment News.

Monitoring these types of investments is a top priority of FINRA's enforcement department, warns James Shorris, FINRA's executive vice president and executive director of enforcement. That's because some firms have failed to perform the appropriate due diligence on these sorts of offerings, Shorris explains.

New recommendations by the Securities and Exchange Commission (SEC) about how best to regulate investment advisors are widely seen as a "punt" since the SEC provided no definitive advice on the issue. Rather, in a recent study, it suggested Congress take one of three steps:

• authorize the SEC to impose user fees on advisors to bolster its examination and enforcement efforts;
• allow the commission to designate one or more advisor self-regulatory organizations (SROs); or
• grant the Financial Industry Regulatory Authority (FINRA) the power to examine broker-dealers who are dually registered as investment advisors.

The SEC recommendations, mandated by the Dodd-Frank financial reform law, illustrated that the frequency of advisor examinations by the Office of Compliance Inspection and Examination (OCIE) has declined over the last six years. In 2010, for example, OCIE reviewed 9% of the 11,888 investment advisors registered with the agency.