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October 14, 2014 at 12:08 PM
Rep. Scott Garrett, R-N.J., chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, told the Financial Industry Regulatory Authority on Tuesday to hold off on its “costly and burdensome” plan to collect broker-dealer account data through its Comprehensive Automated Risk Data System (CARDS).
“After a preliminary reading of the proposed rule, I remain far from convinced that this new, costly and burdensome proposal is needed,” Garrett said in a statement.
FINRA released at the end of September the second iteration of its controversial CARDS plan and is now seeking comments on it. CARDS would be a rule-based program that would allow FINRA to collect — on a standardized, automated and regular basis — account information, as well as account activity and security identification information, from firms.
Susan Axelrod, executive vice president of regulatory operations at FINRA, said on Sept. 30 at the Financial Services Institute’s second annual Advisor Summit in Washington that FINRA was “committed” to CARDS and that FINRA would “go back to its board for feedback” and consider further revisions before sending the plan to the Securities and Exchange Commission for approval.
But Garrett said in his statement that he questioned whether “the purported benefits” of CARDS “will justify the significant costs.”
Said Garrett: “But even beyond the costs of the proposed rule, significant privacy concerns still linger, especially when the data are combined with other data in FINRA’s database. Before moving forward with this proposal, there needs to be a much better explanation of why this burdensome rule is necessary in the first place and what steps are being taken to protect investors’ personal financial information.”
