Regulator Headlines: SEC Commissioner Stein Wants Updated Capital Rules for Brokerage Firms, FINRA’s BrokerCheck Link Proposal Faces Opposition, & CFTC Appoints New Enforcement Head

SEC Commissioner Wants Big Broker-Dealers To Hold More Capital
Securities and Exchange Commissioner Kara M. Stein wants the regulator to modify its capital rules for large brokerage firms so that they would be required to hold more capital in the event of a funding crisis. Stein wants the regulation to better factor the risk involved in short-term funding markets on which brokers depend. She also would like the latter to protect against failures that could upset the financial system.

Right now, the SEC is looking at new funding rules for brokers and placing limits on leverage, not unlike what regulators require for banks. However, Stein believes that the agency’s current approach, which is to protect customers but without considering how to keep companies in operation, needs work. The SEC Commissioner believes that the agency’s capital rules for big brokers should be based on preventing the failure of “systemically significant” firms. Stein also wants the SEC to finally implement the rules that were called for by the 2010 Dodd Frank Ac, including those that would limit the risks involving swap contracts.

FSI Unhappy With FINRA’s Proposal that Firms Link to BrokerCheck Site
The FSI, an interest group that represents independent broker firms, does not a approve of a Financial Industry Regulatory Authority proposal that would mandate that they include links to the latter’s BrokerCheck Database in broker-dealers’ online communications and on their websites. FINRA also wants a link to included in firm registered representatives’ profiles.

The FINRA proposal, which has already been revised, is geared toward upping investor use of the BrokerCheck database. Since it was originally presented, the self-regulatory organization has removed a mandate that would require the links to go straight to a broker’s summary page on the database.

However, FSI wants FINRA To totally get rid of the requirement that firms include a link to third party sites and in social media. While the proposal doesn’t mandate that brokerages include a link to BrokerCheck on individual messages posted on social media platforms, it does call for one in the “about” sections of Facebook, Twitter, PinInterest, and YouTube profile pages, as well as in the “background summary” area found on LinkedIn accounts.

New Chairman and Enforcement Division Heads at the CFTC
The U.S. Senate confirmed Timothy G. Massad as the Commodity Futures Trading Commission’s new head last week. J. Christopher Giancarlo and Sharon Y. Bowen were also confirmed as CFTC commissioners. They join commissioners Scott D. O’Malia and Mark Wejen.

Massad’s first major appointment as CFTC Chairman is Aitan D. Goelman, who is now the new head of the CFTC’s enforcement division. Goelman is a 45-year-old trial lawyer and a former federal prosecutor. He takes over for David Meister, who is also an ex-federal prosecutor.

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Brokers Need More Capital for Crisis, SEC’s Stein Says, Bloomberg, June 12, 2014

FSI gives revised Finra BrokerCheck link rule the thumbs down, InvestmentNews, June 12, 2014

Commodities Regulator Names New Enforcement Chief, The New York Times, June 10, 2014

CFTC Chairman Massad Announces the Appointment of Aitan Goelman as Director of Enforcement, CFTC, June 10, 2014

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