Hagerty Raises Concerns Over Onerous FINRA Rules

NASHVILLE, TN-United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, today expressed concerns and requested information about the Financial Industry Regulatory Authority's (FINRA) proposal to adopt its Rule 6500 Series, which would expand reporting requirements for broker-dealers. In a letter addressed to Securities and Exchange Commission (SEC) Chairman Gary Gensler and Robert Cook, CEO of FINRA, Senator Hagerty warned that the proposal would unnecessarily increase costs for retail investors and broker-dealers.

"The Proposed Rules are yet another example of FINRA acting beyond its traditional mandate as a member-driven self-regulatory organization," wrote Senator Hagerty. "Approving the Proposed Rules as currently constituted would harm market participants, including retail investors, violate legal requirements around public notice and comment, and sanction FINRA's unnecessary and potentially harmful overreach with respect to the securities lending market," Senator Hagerty concluded.

The letter explains that the proposal lacks adequate economic analysis, depriving the public of transparency around the potential impacts of the rule on the broker-dealer industry, capital markets, and investors. It also emphasizes that the proposal raises confidentiality concerns for lenders and borrowers. The letter concludes by requesting answers concerning FINRA's rulemaking process and its justification for the proposal.

Read the full text of the letter here.

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