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SEC Increases Examinations of RIA Firms

By Erwin J. Shustak, Esq.  of Shustak Reynolds & Partners, P.C. posted on Monday, November 9, 2015.

An increasing number of FINRA registered brokers, and smaller broker-dealers, have given up their FINRA licenses and moved to the Registered Investment Advisory model, primarily to avoid FINRA regulations, scrutiny and compliance costs. And the evidence supports that, historically, the SEC conducts much fewer examinations, and has much less scrutiny, than FINRA. The SEC, for years, has justified its lax examination policy by complaining a lack of funding by Congress. But, statistically, the average SEC examiner conducts only 3-4 RIA examinations per year, and Congress has authorized hundreds of millions of dollars in annual funding for the SEC so those complaints ring hollow.

The simple fact is that, at least for now and the forseeable future, there are many benefits and cost savings to switching from the FINRA to the SEC registered RIA platform, ranging from substantial savings in review and compliance to annual registration fees.

Shustak & Partners, P.C. has extensive expertise and experience in the areas of securities, financial services and business law. The firm routinely counsels brokers, broker-dealers and registered investment advisors.  For more information  contact Erwin J. Shustak, Esq, Managing Partner, at 619.696.9500  or via email at [email protected]

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