KENNETH M. CHERRIER,JD, FLMI - Financial Services Institute

How Do We Take Responsibility For Our Industry?Stewardship is the Answer.By:Kenneth M. Cherrier, CCO Fintegra Financial SolutionsJoseph Fleming, CCO RBC Dain Rauscher“A man who neglects his duty as a citizen is not entitled to his rights as a citizen.” TiorioWe have all heard the old adage, “You have no right to complain about the president ifyou never voted in the election.” We have seen our industry take heed of this very adagein the recent NASD member vote to consolidate the regulatory arm of the New YorkStock Exchange with the NASD. This vote, which ratified the regulatory merger,generated considerable discussion and a high voting turnout. However, this “old adage” isapplicable to more than just voting.Many of us complain about over-regulation, harsh disciplinary sanctions, and hyperzealousexaminations. Others complain that the industry’s ethical majority is tarred byassociation with our relatively few, high-profile miscreants: the name Gruttadauria willnot soon be forgotten. Yet how many of us have actually taken any steps to improve ourindustry’s state of affairs?Indeed, looking back over the past five to six years, to say that this industry has sufferedconsiderable regulatory burdens and reputational woes would be an obviousunderstatement.To be fair, it must be noted that there are clear indications that regulatory mind sets arechanging for the better. The NASD, under the new leadership of Mary Shapiro, hasdedicated numerous resources to reach out to the industry: she conducted a six month“listening tour” to hear the concerns of hundreds of broker-dealers, she formed severaladditional small broker-dealer committees to ensure small broker-dealer issues weretaken into consideration by the NASD, the NASD Sanction Guidelines were amended inlight of concerns expressed by small broker-dealers, and she created a new positionwithin the NASD formed specifically to listen to the concerns of its members.In addition, several broker-dealer associations, including the Securities Industry andFinancial Management Association (SIFMA, formerly the SIA and BMA), the FinancialServices Institute (FSI) and the National Association of Independent Broker-Dealers(NAIBD), have improved information flow with regulators by communicating theirmember’s concerns and issues in a respectful and professional manner.Although some in the industry question the current momentum of the “regulatorypendulum” swinging back, all can agree that the regulatory bar has been raised.Therefore, the question still stands. What steps have we taken to lead our industry to abetter state?