A hearing this week will review “the accountability, efficiency, and transparency” of FINRA and the MSRB.
The role of U.S. self-regulatory organizations (SROs) — particularly the Financial Industry Regulatory Authority (FINRA) — is being re-examined via a Congressional hearing set up by the Subcommittee on Capital Markets, an extension of the House Financial Services Committee.
Grygo is the chief content officer for FTF & FTF News.
The subcommittee hearing, set for Thursday, March 5, has a title that seems to say it all: “The Role of Self-Regulatory Organizations in U.S. Markets: Examining FINRA and the MSRB.” The hearing is slated for 2 p.m. in Room 2128 of the Rayburn House Office Building.
First and foremost, the subcommittee will be focusing on H.R. 2689, the Restoring Accountability in Market Supervision (RAMS) Act.
The proposed RAMS Act from Rep. Lisa McClain (R-Mich.) was introduced last year “to restore transparency, public accountability, and congressional oversight to U.S. capital markets regulation. The bill transfers the rulemaking, examination, and enforcement authority held by [FINRA] to the Securities and Exchange Commission,” according to McClain’s office.
“FINRA has drifted far from its intended purpose of safeguarding investors and ensuring fairness in financial markets. This bill puts the power back where it belongs — with a federal agency that is subject to Congressional appropriations and oversight. It’s past time for Congress to put an end to FINRA’s abuse of its authority. We must restore regulatory integrity and accountability for the American people,” according to a statement McClain made in April 2025.
In fact, the hearing this week “will evaluate the accountability, efficiency, and transparency of the Self-Regulatory Organization framework, specifically [FINRA] and the Municipal Securities Rulemaking Board (MSRB), to ensure it aligns with congressional intent. Members will assess whether the current delegation of authority effectively promotes investor protection and competitive markets, while exploring modernization reforms to strengthen federal oversight,” according to the subcommittee announcement.
Officials at FINRA and MSRB have not been called as witnesses for the hearing.
“The goal of self-regulation in the securities industry is to provide strong investor protections by establishing and enforcing high standards of conduct that are informed by the expertise and experience of the industry, at no cost to taxpayers, and with due consideration to maintaining efficiencies of the capital formation process,” a FINRA spokesperson tells FTF News. “FINRA is accountable and transparent and believes in oversight and stakeholder engagement to achieve our mission in the most effective and efficient way possible.”
MSRB officials have declined to comment on the hearing.
Regarding MSRB, the subcommittee will investigate two related legislative proposals:
- “H.R.____, a bill to amend the Securities Exchange Act of 1934 to require fines collected for violations of the rules of the Municipal Rulemaking Board to be deposited into the Treasury: This discussion draft declares that fines collected for violations of MSRB rules shall be deposited and credited as general revenue of the Treasury.”
- “R.____, a bill to amend the Securities Exchange Act of 1934 to clarify the composition of the membership of the Municipal Securities Rulemaking Board: This discussion draft establishes additional requirements for MSRB Board Members, limits Board Member compensation, and requires the confirmation of Board Members by the SEC.”
Among those who will be witnesses and testifying are:
- Professor Onnig Dombalagian, professor of law, Tulane University School of Law;
- Ms. Valerie Mirko, partner and leader of securities regulation and litigation, Armstrong Teasdale LLP;
- Mike Nicholas, CEO, Bond Dealers of America; and
- Ms. Jennifer Shaw, executive director, Public Investors Advocate Bar Association.
This hearing can be viewed via YouTube and should be interesting. Here is the link: https://shorturl.at/35xsE
Need a Reprint?