Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, June 29, 2011

Investors May Lose as Congress Saves Money on Adviser Oversight

Congress may hand oversight of almost 12,000 investment advisers to Wall Street’s self-funded regulator as a cost-saving measure. The price could be paid by investors.

The Financial Industry Regulatory Authority, deputized by the government to oversee brokers, is lobbying to replace the U.S. Securities and Exchange Commission as a regulator of registered investment advisers who manage about $40 trillion. Congress is considering the move as a cheaper alternative to increasing resources for the SEC, since Finra’s $877 million budget is paid by the brokers it regulates.

“It’s a very bad idea to expand the notion of self- regulation,” said Denise Voigt Crawford, former commissioner of the Texas State Securities Board. “They’re supposed to oversee the activity of the industry, but they are industry.”

Finra, established in 2007 by the merger of the National Association of Securities Dealers and most of the New York Stock Exchange’s regulatory unit, has done a poor job of protecting investors, said Crawford, who retired in February after 17 years as a securities commissioner. Fines imposed are usually a fraction of the damages suffered, and Finra fails to share information regularly with state regulators, she said.

The regulator fined members almost $43 million last year, while the SEC, working with a similar budget, issued more than $1 billion in penalties.

The Finra arbitration process is flawed, said Lynn E. Turner, who served as the SEC’s chief accountant from 1998 to 2001. Investors who won Finra arbitration awards last year got back less than half of what they sought, data from Securities Arbitration Commentator Inc. show.

Full Article
Source: Bloomberg 

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