From the May 2006 issue of Investment Advisor • Subscribe!

The Cost of Compliance

The securities industry spent about $25 billion on compliance in 2005, up from $13 billion in 2003, while firms spent an average of 13.1% of their net revenues on compliance, according to the Securities Industry Association report, the "Costs of Compliance in the U.S. Securities Industry." The SIA found that mid-sized firms spent the highest percentage of their net revenues on compliance, averaging 17.5%. The highest out-of-pocket costs were for legal and "other"--mostly outside consulting costs--according to Stephen Carlson, VP and director of surveys at the SIA in New York. Carlson says SIA members' issue with compliance "wasn't so much the dollars; it was the redundancy, the inefficiency; they were spending the same dollar two and three times."

Go to for copies of the study and report.--Kathleen M. McBride

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