Among the "more problematic provisions" of Dodd-Frank — a law that will have been in place for 15 years as of next week— is a requirement for the Municipal Securities Rulemaking Board to have more public board members than industry ones, a trade association said in a letter to the House Financial Services Committee.
The American Securities Association sent the
The Securities and Exchange Commission "also approved a rule to require [the] Financial Industry Regulatory Authority (FINRA) to have a majority-public member board," the ASA's July 15 letter said. Like the MSRB, FINRA is a self-regulatory organization.
"By shifting control to public members who are hostile to the industry and have limited or no direct industry experience, SROs have lost sight of their foundational role as bodies designed to leverage the expertise and accountability of industry participants," ASA's letter said. "Even worse, many of these so-called public directors have significant conflicts of interest that color their view of the regulation."
Rather than serving as effective stewards of market integrity, "these organizations are now being guided by individuals who lack a deep real-world understanding of the markets they oversee, and/or who have prioritized outside political agendas over the functioning of the market," the letter said.
"There is no benefit to investors to having academics, 'public interest' advocates, and other political actors wielding this kind of authority over the functioning of highly sophisticated financial markets," the ASA's letter said.
As a result of having such people in control, "SROs do not understand the markets, and the industry must sue them to stop their misguided regulatory priorities," the letter said.
"To restore effectiveness, integrity, and trust in SROs, Congress should require their boards to return to a composition rooted in actual real world industry expertise and leadership and free from special interest groups, academics, and other conflicted individuals with political agendas," ASA's letter said.
The Dodd-Frank Wall Street Reform and Consumer Protection Act — as it is more properly known — was signed into law by President Barack Obama on July 21, 2010.
An MSRB spokesperson declined to comment regarding the ASA's letter. A FINRA spokesperson also declined to comment on the letter.
